From Captain Capitalism:
If you recall high school economics or college freshman economics (both were the same, colleges just made you pay extra to re-learn what you did in high school) there were “The Factors of Production.”
These factors were essentially the ingredients you needed in order for a business or an individual to “produce” something. There were originally three of them.
Land – you can produce nothing without at minimum some kind of office space.
Labor – the machines will not only not take over the world, they’ll just sit there unless a human spends his or her time running them.
Capital – Nobody is doing nothing until they get paid. And that includes the people who produce the tools and machines you’ll need to get started.
A fourth one was entered as they realized even with the above three, nothing would get produced. You needed a leader. An innovator. A man with the plan.
Since there it was commonly accepted that there are three original, but most likely four real factors of production.
However, I would like to tender a fifth.
I’m doing this not to make things more complicated or to somehow be enshrined in the Economics Hall of Fame, but because our economy today practically proves there is a fifth and final factor of production that is required to produce, but is not accounted for in the current list. That fifth component is:
And then read my February 2009 post, Confidence.