Although Millions of Pencils Are Manufactured Every Day, No One Knows How to Make Them; This “Intellectual Division of Labor,” as Mises Calls It, Is Present in Virtually All Market Exchange

How can the combination of fragments of knowledge existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on the part of the directing mind which no single person can possess? (Hayek 1948)

In an amusing little piece, written as if in the first person by an ordinary lead pencil, Read (1958) captures one of the fundamental qualities of modern production. Although millions of pencils are manufactured every day, strictly speaking no one knows how to make them. Many thousands of different people know partial aspects of how to make little bits of them. Thus, the graphite miner doesn't know much about the making of the wooden stem or of the eraser, and the miners of zinc and copper (for the brass ferrule) are largely ignorant of the production of factice (for the eraser) by reacting rape seed oil with sulfur chloride. All the millions of people engaged in the production of a given line of pencils, people who for the most part don't meet, don't know each other, and are not aware of each other's existence, effectively co-operate in producing pencils.

This “intellectual division of labor,” as Mises calls it, is present in virtually all market exchange. A community of pastoralists makes contact with a fishing community. Meat, milk, and horns are exchanged for fish. Both pastoralists and fishers benefit by the trade. The pastoralists are benefiting from the art of fishing, of which they are ignorant, and the fishers benefit from the art of herding cattle, of which they are ignorant.

--David Ramsay Steele, From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation (La Salle, IL: Open Court Publishing, 1992), Kobo e-book.