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

Libertarians like Read define freedom in the strictly negative sense of freedom from external coercion. People are free if they can make their own economic decisions without government intrusion: decisions about where to work, which trees to cut, whether to start a pencil company, how much to charge for pencils at the drugstore, and so on. Individuals’ creative energies cannot be fully mobilized unless they are free to make these decisions independently, in response to their particular circumstances. Government’s role is chiefly to defend that freedom: “Leave all creative energies uninhibited” (10).

The 18th-century Scottish philosopher Adam Smith used this metaphor to describe how free-market exchange enables individual participants to make economically rational decisions without the “visible hand” of government intervention, guided only by price signals. Liberalism maintains that even when individual market participants are motivated purely by self-interest, their decisions tend to benefit society in the aggregate by ensuring that limited resources are put to their most efficient uses. The quest to maximize profits leads manufacturers to produce the goods most demanded by society at the least cost.

This is Read’s term for what Hayek calls “dispersed knowledge”: the particular, context-specific knowledge and skill sets employed by each individual participant in the pencil’s supply chain, from the iron miners to the label-printers and everyone in between. All of these “know-hows” are needed to produce the pencil, yet even the president of the pencil company comes to work with no more than his own necessarily limited know-how. Hayek complains that modern society tends to value know-how less than the scientific knowledge commanded by experts, even though the former is essential to rational economic decision-making. In “I, Pencil,” Read elevates the significance of know-how through personification, imagining these dispersed knowledge-sets as actors in their own right: “[T]hese know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand” (9).