There are 7 billion people in the world. They have different values, different tastes, and different skills. Over the course of your lifetime, you will probably meet a few thousand of them, and you might really get to know a few dozen. Yet, every single day you cooperate with nigh-uncountable numbers of people. You are part of an incomprehensibly complex nexus of trade and specialization that has helped us move from a world where poverty was the norm to a world where some people have gotten fantastically wealthy by historical and global standards. Initially, this spectacular wealth was largely limited to Western nations and a few others. In the late 20th century, the Asian “tigers” joined the ranks of wealthy countries when they adopted free-market institutions. As countries like India and China undertake free-market reforms, they are growing rapidly, as well.
How does this work? Leonard E. Read explained it in his classic essay, I, Pencil, which traced the beautiful complexity of the social division of labor that nourishes the “family tree” of a simple pencil. Most of us spend very little time thinking about where pencils come from, taking them for granted. Read showed how, in spite of the pencil’s seeming simplicity, no single person knows how to make one. Even a skilled product designer or engineer who might know how to assemble a pencil from pre-existing parts probably won’t know how to make the parts—to say nothing of the tools and machines used to combine those materials into the final product.
As Read discusses in I, Pencil, the degree of social cooperation required to produce something as simple as a pencil is incomprehensibly complex. Yet, through voluntary cooperation, we are constantly producing new things and coming up with new ways to do things that are beyond the capacity of any one individual. Voluntary trade in free markets—like the Force in Star Wars—binds us all together.
“I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies–millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding!”
“Leave all creative energies uninhibited. There’s no limit to what we can accomplish.”