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The Grandson of “I, Pencil”

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Steven Kates is an Australian economist and the author of Say's Law and the Keynesian Revolution: How Macroeconomic Theory Lost Its Way and Free Market Economics: An Introduction for the General Reader, now in its third edition  He has long been a perceptive and unrelenting critic of current Keynesian-style macroeconomics and an unabashed defender of ...

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Steven Kates is an Australian economist and the author of Say's Law and the Keynesian Revolution: How Macroeconomic Theory Lost Its Way and Free Market Economics: An Introduction for the General Reader, now in its third edition  He has long been a perceptive and unrelenting critic of current Keynesian-style macroeconomics and an unabashed defender of Say’s Law.  In addition he has composed a modern version of classical economics that focuses on prices, profits, and the entrepreneur as the motive forces of economic efficiency and sustainable economic growth . 

I am happy to report that Kates has just published a timely and lucid little pamphlet, I, Mechanical Pencil: Why a Socialist Economy Can Never Work, which as you may have guessed from its title, is inspired by Leonard Read’s classic essay “I, Pencil.”  The narrator of Kate’s piece is the mechanical pencil that is a descendent of the simple pencil in Read’s story and owes its existence to the economic progress that an unhampered market economy brings about.  According to the mechanical pencil, its ancestor “just didn’t go far enough” in explaining the seemingly miraculous results of the market economy.  Thus, Kates’s mechanical pencil explicitly identifies and clearly spells out the six key elements necessary for a market economy to work its magic and argues that the socialist program negates all of these elements. 

Our modern pencil narrator sums up its lesson thusly:

In its own way, it’s sad that no one really appreciates just how complex even a pencil actually is. . . . But I hope that now that you have read this you will have a deeper understanding of the way our market economy works, and will never be bamboozled by anyone who tells you that you can become more prosperous by getting rid of our economic system; based as it is on entrepreneurial decision making, the price mechanism and the incentives provided by the desire to earn profits. And you should especially make sure you realise that the market economy is the source of your own personal freedom as well. Without the one you cannot have the other.

Kates’s essay stands on its own but is well worth reading in conjunction with Read’s classic essay.   

Joseph T. Salerno
Joseph T. Salerno is an Austrian School economist in the United States. He is a professor at Pace University, an editor of the Quarterly Journal of Austrian Economics, and Academic Vice President of the Mises Institute. Salerno specializes in monetary theory and policy, comparative economics, and the history of economic thought. Dr. Salerno received his Ph.D. in economics from Rutgers University. His most recent publication is Money: Sound and Unsound.

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