The essay “I, Pencil,” also known as “I, Pencil: My Family Tree as Told to Leonard E. Read,” was first published by the American businessman and libertarian advocate Leonard E. Read in 1958. The essay first appeared in The Freeman, a publication of the Foundation for Economic Freedom (FEE), a think-tank he co-founded in 1946. Read was a staunch critic of US President Franklin D. Roosevelt’s “New Deal,” an ambitious series of government policies and public-works programs aimed at re-inflating the US economy during the Great Depression of the 1930s. The essay is considered a classic critique of economic central planning and defense of free-market capitalism.

This guide uses the PDF ebook published by FEE in March 2019.

Writing in the first person from the perspective of a pencil, Read opens with the counterintuitive claim that this seemingly simple object should elicit “wonder and awe,” because “not a single person on the face of this earth knows how to make me” (4). He illustrates the point with a “genealogy” identifying the complex, globe-spanning chain of events required to produce even so simple an object as a pencil, let alone something as complex as “an automobile or an airplane or a mechanical dishwasher” (4). From there, Read concludes that no centralized authority could ever possess all of the knowledge and skills needed to efficiently coordinate these events, whereas market economies do it automatically.

Beginning with the logging of a cedar tree in the Pacific Northwest, Read catalogs “the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding,” and then “all the persons and the numberless skills” required to produce that gear: “the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope” (5). Read posits that the loggers could not do their job without “the logging camps with their beds and mess halls, the cookery and the raising of all the foods” (5).

Read continues through the remaining links of the supply chain, detailing how the logs are shipped by rail to a mill, where specialized machines fashion them into pencils; how the “lead” core is made from graphite mined in Sri Lanka and mixed with Mississippi clay, Mexican candelilla wax, and various chemicals; how the lacquer, made from castor oil, is applied; how the label is imprinted using resins and carbon black; and how the ferrule is manufactured from brass and black nickel, and the eraser from Indonesian rapeseed oil, Italian pumice, and cadmium sulfide.

Read’s point is twofold: “[M]illions of human beings have had a hand” in making the pencil, and no single individual “contributes more than a tiny, infinitesimal bit of know-how” (7) to the complex process. Because each step in the supply chain is indispensable, so, too, are the knowledge and skills of each worker. Even the president of the pencil company represents only one link in the chain; he knows no more about mining iron ore than the miner knows about running a corporation, and without iron there would be no pencils.

Furthermore, none of these individuals “performs his singular task because he wants me” (8). In other words, what motivates the oil-field worker to show up at his job every day is not a specific desire to produce petroleum for making paraffin wax used in pencil leads. Nor is he compelled to do so by some “master mind […] dictating or forcibly directing these countless actions” (8). Instead, all of this labor is elicited and coordinated by “the Invisible Hand”—a metaphor for market economics famously coined by the Scottish philosopher Adam Smith in his groundbreaking 1776 book The Wealth of Nations. The oil worker is motivated solely by the desire to “exchange his tiny know-how for the goods and services he needs and wants” (8), which may or may not involve pencils. From the miners and loggers to the company executives, everyone works in order to earn money to spend as they see fit; then others work to supply them with those desired goods and services. This is the “extraordinary miracle” of markets: “[M]illions of tiny knowhows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding!” (8).

People who fail to understand the “miraculous” logic of supply and demand often conclude, erroneously in Read’s view, that such complex coordination can be achieved only by a central authority. When the government monopolizes the provision of a good or service—he gives the example of mail delivery—many citizens come to believe that the private sector would be incapable of providing it efficiently. However, humans successfully perform much more complex tasks than delivering mail, such as manufacturing an automobile or operating an airline, when they are “left free to try” (9) without government coercion. This pernicious lack of “faith in free people” has encouraged an expansion of government control that is presently making societies less free. Read argues that maintaining a free society requires widespread public understanding of “the Invisible Hand” (9).

The final piece of Read’s argument is implied rather than explicitly stated: that government “masterminding” is not only unnecessary but inherently less efficient than spontaneous market coordination. The best role for government, therefore, is to stay out of the way as much as possible and “leave all creative energies uninhibited,” intervening in economic affairs only for the purpose of removing “all obstacles” (10) to the free functioning of markets. For Read, the logic of “the Invisible Hand” is so unerring that it is akin to natural law: faith in free markets is as “practical,” or reasonable, as faith in “the sun, the rain, a cedar tree, the good earth” (10).