Caitlin Karna, period 2, Honorbound
I am a blanket—an ordinary cloth blanket familiar to all people who are cold. My writer agreed to transcribe this testimony in exchange for my most common service: keeping her warm on this cold December night. You may be wondering why I should write this account after reading my dear friend Pencil’s family tree as told by Leonard E. Read. I thought it of equal importance to tell my story and reinforce his idea: “Not a single person on the face of this earth knows how to make me.” Like Pencil, I am seemingly simple, but my ancestry is larger than you might think.
Since my original creation, I have come a long way. These days, you can purchase blankets made of cotton, fleece, or wool, or have them handmade by needlepoint, quilting, or stitching. You could even electrify me to provide real heat (a concept I do not even understand). Versions of me have patterns, images, personalization, intricacy, simplicity, you name it. One cannot possibly understand how to make me.
Just as Pencil said, there are many efforts that go into my creation. The cloth has to be created and acquired; trucks have to transport it to a factory where it will be cut and sized; any designing aspects need to be done; trucks transport me to various stores and I am sold and used. Well, that is the short form. But the most important fact about my creation I will reiterate from Pencil: “[None of the people involved in my production] performs [their] singular task because [they] want me…Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods or services he needs or wants” (Read).
And that, my friends, is called Division of Labor.
In his educational tale I, Pencil, Leonard E. Read presents this underlying idea that nobody can possibly know the entire workings, efforts, and processes of the creation of any product. Everything produced in our economy has a “story” like his (hence, the creation of the alternate story “I, Blanket” above). This idea of Division of Labor is emphasized and elaborated on in Adam Smith’s Wealth of Nations and easily relates to the overall system of Capitalism, explained in Ludwig Von Mises’s Liberty and Property.
When broken down, our system is essentially a way to control the scarcity of the economy. You cannot ever get a free lunch. But we are abundant in incentives and we have to find a way to productively control these incentives to create some sort of output. So we present society with an option: they can be motivated by profit that will allow them to attain their reward in exchange for work, a service they can provide with their natural skills and talents, or, individual incentives are removed altogether and people work under a classless society without currency or structure.
As evident with the United States economy today, we have shunned the latter idea, Marxian communism, and are now deeply invested in the former, capitalism. And as a result, today, we have the largest economy in the world with our GDP at $16.2 trillion in 2013 (“The New Global Economy”). So, obviously, we are doing something right. But why does it work?
The United States is composed of over 300 million individuals, each with their own skills, knowledge, strengths, and talents. According to Smith, “Whether be the actual state of the skill, dexterity, and judgment with which labour is applied in any nation, the abundance or scantiness of its annual supply must depend, during the continuance of that state, upon the proportion between the number of those who are annually employed in useful labour, and that of those who are not so employed.” Basically, each person in our population has something to contribute to our working society and economy. Smith’s concept of division of labor goes alongside Read’s main point by asserting that a functional, successful economy is run when productive powers are directed at one goal. Read supports this when he says, “Leave all creative energies uninhibited.” Let people be free to make their own use of their talent for their own incentives. That was the astounding fact Read emphasized: in the making of the pencil, nobody was working towards the actual pencil, but instead, they were trying to do their own job successfully with the incentive of their salary. In fact, some people may be unaware of that their service is aimed at that pencil, but to them that is irrelevant. Read is saying, everything falls into place when everyone does their job. That is why no one person knows how to create a pencil, they should not know. Every person with their individual job is a working force towards the overall economy, which supports the masses. Smith talks about the trade of the pin-maker. One person could make one pin in one day, he says, but if there was a person who “draws out the wire, another straightens it, a third cuts it…” and so forth, more pins could be created in one day. Therefore, division of labor provides a method of efficiency directed to uphold the masses.
The masses bring us to capitalism. According to Ludwig Von Mises in Liberty and Property, “Capitalism is not simply mass production, but mass production to satisfy the needs of the masses.” For many years, there has been debate on what economic system is the best or most effective. For example, while capitalism is dominant in many nations’ economies, many people are displeased with its results, claiming that there is disparity in pay, it is a “dog-eat-dog” competition, and the gap between the rich and the poor is continuing to expand (Kamp). However the alternative is Karl Marx’s Communist Manifesto and people would rather not take steps backward. So it could be possible that the reason capitalism is dominant is because we do not have any better options.
So for now we are focused on Mises. “The consumer is king, is the real boss, and the manufacturer is done for if he does not outstrip his competitors in best serving consumers,” he states. We do not have to look very hard to find evidence. How many times has a new Apple product been released, and how many times has a person, who already owns one, bought the new one? In the U.S. economy, consumers are always begging for “new” and “more.” We want innovation, something impressive, something that will make our lives even easier—and producers constantly scramble to stay ahead of the consumer in providing new, exciting technology. We, as the United States, are a nation of excess. We have too much and still want more. The consumers of the world set parameters for the rest of the producers. They have the authority, they are king. But why? What makes the consumers superior to the producers? To put it simply, it is a numbers game. The consumers, according to Mises, are the masses. The difference between communism and capitalism is that capitalists have liberty. They are free.
As mentioned before, Read said, “Leave all creative energies uninhibited.” Let people be free with their talents. When they are divided in labor, they will succeed, said Smith. Because their success will lie in benefitting the masses and that provides a wholesome economy, said Mises. The system is circular and intertwined. In our economy today, division of labor and capitalism are a joined force working together to ensure our success. Granted, there are issues and there will always be issues. But for now, that is all we have.
Whether the story is I, Pencil, I, Blanket, I, Cake, or I, Paper, every product in society will miraculously be created, thanks to the working force of our economy.
Kamp, Karin. “Does Capitalism Work for You?” Moyers & Company. N.p., 11 Oct. 2013. Web. 13 Dec. 2013. <http://billmoyers.com/content/does-capitalism-work-for-you/>.
“The New Global Economy.” CNNMoney. Cable News Network, n.d. Web. 13 Dec. 2013. <http://money.cnn.com/news/economy/world_economies_gdp/>.
Read, Leonard Edward, Richard M. Ebeling, and Milton Friedman. I, Pencil: My Family Tree. Irvington-on-Hudson, NY: Foundation for Economic Education, 2006. Print.
Smith, Adam. The Wealth of Nations. N.p.: n.p., n.d. Print.
Von Mises, Ludwig. Liberty and Property. N.p.: n.p., n.d. Print.