Sunday, April 17, 2011

I Pencil: A product of the mixed economy

I Pencil: A product of the mixed economy

The excellent John Quiggan puts up a response to Leonard Read’s I, Pencil.

I, Pencil is an extensive piece of invisible hand propaganda that by directing you only to the vastly complex network of market resources mobilized in creating pencils, misdirects you away from the equally complex network of government resources that enable those market resources.


Bhagirath Baria said...

Absolutely a rubbish usage of the "invisible hand" doctrine by Libertarians. I simply urge these Lib-champs to kindly read Wealth of Nations thoroughly. Adam Smith wrote NOTHING about Free-markets & Capitalism, he NEVER used this phrase in the sense as being exploited today. He meant to signify it as 'God' as evident in his previous 'Theory of Moral Sentiments'. He rather proposed a STRONG government in his Book VI.

This is what happens when ideologues jump without reading the so-called foundation of Laissez faire Economics.

The criticism of the article 'I Pencil' is excellent. The complex network of Government resources, both: Natural resources & support resources(Eg. Loans to poor, Marketing channels, Agro-sector aids, many more)- in reference to Developing nations, is always overlooked as if there exists no need for it.

The thriving Private sector(the Entrepreneurs at the local levels) so dearly need strong Government backing. A very successful example of that is 'Amul' of India. One may google it up! Regards.

Trey said...

isn't the point of the essay to show that no single person, or even a single group of people, possess the necessary information to produce a pencil - a common everyday object. Thus, the world economy is an incomprehensible social phenomenon?

Here is some more "propoganda" if you don't want to read the essay:

Mike Huben said...

Trey, if you read Quiggan's essay, he cites Read making a much bigger, stupider, and more typically libertarian propaganda claim:

"There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work."

And your simplification makes a claim which does not follow: the (very misused) term "invisible hand" is just one way of comprehending an economy.

Trey said...
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Trey said...

yes, Quiggan's essay is interesting. But why is the quote from Read so contentious? Government involvement in market activity does in no way diminish the point of Read's sentiments that market coordination, freely functioning of course, is a spontaneous order.

How is it "stupider"? Since we are for some reason focusing on the pencil, surely they were provided to those who needed them before the benevolent Teddy Roosevelt came along...Furthermore, how do people, whether the entrepreneur or the politician, know what is valued by others? A market based on the price mechanism, which is in the background of Read's essay, and free of intervention is perfectly capable of allocating resources to users who value them.

Again, an economy is an incomprehensible complex system. How do you propose comprehension?