Land, Labour, Capital, we were told. They say these are the things an entrepreneur needs to get together in different combinations, in order to produce. But looking at it again, these factors sound rather primitive, because production here is viewed as something like factory production… of tangibles. Luckily we have evolved into more curious souls, and scholars are now asking whether it is every ‘production’ that requires land, labour and capital, and whether production must result in tangible things as organised by the entrepreneur.
The majority of physical production efforts today have not evolved along those lines, as the use of land, labour, capital and even entrepreneurship have not grown in proportion with the levels of production – which have taken on supersonic proportions. Something else must therefore be responsible for the ability of the relatively few numbers of entrepreneurs and other producers of value, to be able to keep up to pace in a world constantly yearning for more of everything. However, like science and technology, economics too has evolved as a subject and it is important to take notice of these developments.
A lot is happening daily, and if we look at the business activities of some of the largest companies in the world, there are certainly other factors to consider, either in getting production and productivity going, or in boosting such to limits never before imagined. Companies like Google provide information at the touch of a button, creating limitless value to billions of people around the world, and unleashing productivity and production in diverse places, by supplying information and how-tos to people around the world. Google has little to do with land, labour or capital… maybe a bit of entrepreneurship. Facebook connects people with ideas, and increases the frequency at which information is shared among people. It helps a few people create wealth through influence. A lot of productivity and production is engendered by the network effect. Even car manufacturers like General Motors, Toyota, Ford and of late those from China, India and South Korea, depend on a whole lot more to produce, than land, labour, capital, with some entrepreneurship controlling them all.
What are these things that we seem to be missing? Should we not be refining and enriching this subject and therefore documenting what really matters?
I went in search of ‘new factors of production’ on the internet, and came off with little. One person wrote eloquently about how ‘data’ is THE new factor of production, but reading through it was obvious that this person was merely working to the answer. As a data person, he tried to weave the entire subject around data. That, to me, is not the way to do analysis. One’s mind should roam free in order to do a good job of this. I would admit that data is important as one of the new factors of production but that is not enough. The car manufacturers do not combine data to land, labour and capital in order to produce. What about technology? Where in the spectrum of land, labour, capital or entrepreneurship can we stick in technology as a factor? Yet technology is certainly doing more for production than some of these legacy factors of production.
We should be thinking of the production and productivity process as a whole. In the time the world agreed that land, labour, capital and entrepreneurship were the factors of production, innovation and technology were not so rife as to almost render some of the solid factors irrelevant. For example, today, innovation and technology has rendered billions around the world jobless. Smart people have come up with clever ideas that make production easier, such that as against what happened in the Industrial Age, where many people were employed by factories, producing goods – and services – for many people, what we have now, is a situation where fewer and fewer people are producing for the majority. And that majority – the world population – is increasing. In this new era known as the Fourth Industrial Revolution, we are in an epoch in which everyone will soon become their own manufacturing industry; what with innovations like 3-D and 4-D printing.
Check this to see proportions: At some point, Instagram had 55 staff, servicing 350 million people, and WhatsApp 13 staff, serving over 500 million! That is the way of the new world. Where are those who talk of turning economies around through factory jobs? They belong in the realm of dinosaurs. If you want jobs for 180 million Nigerians you better think harder! We live in a world that punishes the tardy severely. There are no jobs for the masses anywhere anymore… except in countries that think really hard. There are no easy answers anymore. An article in the Economist magazine just last week was simply titled “The Manufacturing Jobs Delusion”.
‘Ergo’, the thinking, has to change. What factors now really matter? What have we omitted? What is wielding more impact than ever before? These are the questions that come to mind. But before then, I must note that unfortunately it seems that this received wisdom has not been adequately challenged in the academia. It ought to be. The prevalent definition of ‘factors of production’ is definitely for a long-forgotten era. Another thing we need to have in mind is the speed, ease and relative costlessness with which capital is replacing labour via the acquisition of technology. Why acquire labour that will have to join unions, fall sick, get married, have children and so on, when one can simply acquire an emotionless machine to do the same work better, with capital (money)? And that is what the smart capitalists of the world have done, thereby meeting the needs of billions around the world – at a profit – while countries like Nigeria deceive ourselves that the old order still persists where labour and capital are on the same pedestal. No way!
So I think we should consider the importance of the factors below to the production and productivity process:
There may be more, but in my thinking, these ones are hard to get rid of when considering real factors of production that matter today. And the interesting fact is that those who own some of these new factors can make money or produce value from them without waiting for land, labour, capital or entrepreneurship. INFORMATION for now, is money. You can sell information and make huge money, thus producing value. The world is now talking of Big Data, which can be mined for value by people who can create the TECHNOLOGY to so do. The world is now selling data. TECHNOLOGY, as noted above, has changed and continues to change the game. It is the cutting edge that sets many companies apart from the motley crowd. Technology has reached into almost everyone’s bedrooms in every corner of the world, extracting and giving value, via the internet for example – when people buy things they need for production via Amazon, Ebay or other shopping platforms. The owners of these types of companies are the richest in the world. Technology cannot be considered as labour, not even the fact that someone’s thinking brings technological innovation to reality.
Technology is far bigger than labour in today’s world. It is so powerful it can obliterate millions of labour capacity and create millions in a jiffy. Technology is bigger than capital, even though capital could be used to acquire technology. There are many technological innovations that are available freely today, with which someone with KNOWLEDGE of how they could be used can create immense value out of and generate production. Imagine what technology can do for urban dwellers versus those who are not aware of their existence? Imagine how productive we’ve now become such that we take things for granted!
TALENT/CREATIVITY now runs the world. Think of Nigeria’s music industry. Yes, capital can make you ‘blow’, but talent can at least generate you value, a lot of it, and talent will have to sustain you in the business in the long term, not capital. A talented musician can start busking at the corner of the street and earn value. I believe the parable of the talent in the Holy Bible has been misinterpreted by men who want to be clever. Talent is just talent. Use it well and it multiplies. Hoard it and it rusts and dies.
INTELLIGENCE (whether that which is defined by structured collation of knowledge, or mere natural-born or acquired aptitude, is priceless and is what countries like the USA uses to ‘trump’ the world (in the literal sense, and no reference to the new president). KNOWLEDGE acquired is what a mechanic feeds on, and is what is now almost freely available on e-platforms these days. But knowledge too, is serious money. Professor Igbimi of Obafemi Awolowo University has done serious work on the value of learning (knowledge) in transforming societies, but a country like Nigeria doesn’t recognise its thinkers. We revere those who steal money and flaunt this instead. And we revere liars and conmen who wear sharp suits and flowing babban riga.
Knowledge is akin to learning, and is different from Labour. The Labour referred to in the legacy definition is mostly unskilled labour. Knowledgeable labour is what shows up and changes every game. It is where innovation resides. Learning enables that kind of knowledge. Humans have continued to acquire this required knowledge, thus becoming even more productive on the job.
There is a need to make these distinctions. For it allows us to know what to place premium on. This type of exercise also does a great deal to inform policy makers on where to place their best efforts. We don’t have to wait for foreigners to define these things for us. We should not go to school to learn dogma but to think for ourselves. However, dogma (thinking or parroting the results of other people’s thought processes), is so common these days. When an IMF comes forward to predict that the Nigerian economy will now grow by 0.8 percent in 2017, and we clap for them, it means that we are telling the world that we don’t yet possess minds of our own. And they say if a man does not know where he is going, someone else will take him to another predetermined destination. How many times have such global bodies ‘predicted’, with every certainty, where the global economy is going and they just lead the rest of us by the noses? How many times have they been so wrong? I ran into an old article recently wherein Goldman Sachs predicted that crude oil will sell for $75 by the middle of 2016. The price was as low as half of that by then. This shows that we should not be cowed. We must just think for ourselves!