"I, Pencil: My Family Tree as told to Leonard E. Read"

by Donald J. Boudreaux

Afterword,

There are two kinds of thinking: simplistic and subtle. Simplistic thinkers cannot understand how complex and useful social orders arise from any source other than conscious planning by a purposeful mind. Subtle thinkers, in contrast, understand that individual actions often occur within settings that encourage individuals to coordinate their actions with one another independent of any overarching plan. F. A. Hayek called such unplanned but harmonious coordination “spontaneous order.”

The mark of the subtle mind is not only its ability to grasp the idea of spontaneous orders but also to understand that conscious attempts to improve or to mimic these orders are doomed to fail. “Why so?” asks the simplistic thinker. “How can happenstance generate complex order superior to what a conscious mind can conceive and implement?” In responding to this question, a subtle thinker points out that spontaneous orders do not arise from happenstance: the continual adjustments by each individual within spontaneous orders follow a very strict logic—the logic of mutual accommodation. Because no central planner can possibly know all of the details of each individual’s unique situation, no central planner can know how best to arrange each and every action of each and every individual with that of the multitudes of other individuals.

In the eighteenth century, a handful of scholars—most notably David Hume and Adam Smith—developed a subtle understanding of how private property rights encourage self-regarding producers and consumers to act in mutually beneficial ways. Spontaneous ordering forces were thus discovered, and with this discovery modern economics began to take shape.

Over the next two centuries economics achieved enormous success in furthering our understanding not only of industry and commerce, but of society itself. Modern economics—that is to say, economics that explores the emergence of spontaneous orders—is a sure-fire inoculant against the simplistic notion that conscious direction by the state can improve upon the pattern of mutual adjustments that people make within a system of secure private property rights.

But learning modern economics requires some effort—in the same way that breaking free of any simplistic mindset requires effort. It isn’t surprising, then, that those economists who’ve contributed most to a widespread understanding of the subject have been clear and vivid writers, skillful in using analogies and everyday observations to lubricate the mind’s transition away from superficial thinking and toward a grasp of subtle insights. The best economic writers cause oncesimplistic thinkers to say “Aha!
Now I get it!” Skillfully tutored, a simplistic mind becomes a subtle mind.

For its sheer power to display in just a few pages the astounding fact that free markets successfully coordinate the actions of literally millions of people from around the world into a productive whole, nothing else written in economics compares to Leonard Read’s celebrated essay, “I, Pencil.” This essay’s power derives from Read’s drawing from such a prosaic item an undeniable, profound, and spectacular conclusion: it takes the knowledge of countless people to produce a single pencil. No newcomer to economics who reads “I, Pencil” can fail to have a simplistic belief in the superiority of central planning or regulation deeply shaken. If I could choose one essay or book that everyone in the world would read, I would unhesitatingly choose “I, Pencil.” Among these readers, simplistic notions about the economy would be permanently transformed into a new and vastly more subtle—and correct—understanding.