In his seminal article, I, Pencil, Leonard Read shows that, “not a single person on the face of this earth knows how to make [a pencil].” Sure, the pencil maker knows how the near-finished parts are assembled, but the pencil maker does not possess complete knowledge of how those constituent parts—the paint, metal, eraser—were made. Nor does he know how the inputs to those parts were made, and so on. And the pencil maker does not even know how the machines he employs, or their constituent parts, were made. He simply knows how to utilize his capital structure in a manner that takes near-finished parts and modifies and assembles them into pencils.

This true proposition leads to its corollary: not a single person on the face of this earth makes a pencil. Some entrepreneurs modify inputs and assemble pencils, but none make them. So it is not technically correct to say the owner of the pencil factory makes pencils. He simply modifies and assembles parts—whose genesis is unknown to him—into pencils. Not only is the above corollary true, but it’s also now jurisprudence.