Capitalistic Renaissance 4: Productivity
Another analogy is the chain reaction that generates the power inside a nuclear reactor. With one unit of input, the public company can actually produce more power and value than a nuclear power plant (whose output cannot be greater than the input per current energy laws). Unfortunately this chain reaction was derailed for the consumers by government interference and a lack of capitalistic knowledge on the part of public company managers.
Now we can look at the mechanics of economic growth from a fresh consumer perspective and understand how the tree of pure capitalism becomes fruitful. By the formation and correct use of public companies, we can harness the nuclear chain reaction of equity value creation for every consumer. The needs of the many and the needs of the few are met simultaneously without any need for worthless “trickle-down” theories.
The mechanics of running a public company are broken down into four factors of economic production. Economists and corporate managers do not yet understand the power and simplicity of this four-fold economic concept.
It is not a matter of academically stating what the four factors of production are. They must be mastered for their scientific reconciliation with other sciences, particularly with the four states of matter in Physics. Economics does not exist in isolation from scientific reality no matter how hard the science may be.
The four factors of production – entrepreneurship, labor, capital and land – are like the four cylinders of an engine. Think of the public company as an engine that creates multiple values of $3, $5, $11, $20 or over $40 in equity from a single dollar of input.
When any one of these factors is not accounted for, the effect is like running the engine of the public company on three cylinders instead of four. The optimized capacity to produce equity value is reduced.
Budget planning, which is a function of these four factors, suffers. Organization is also a function of these four factors. Companies are inefficiently managed because their organizational designs do not reflect these four production factors. The engine is still running on two or three of the four cylinders – far below full potential.Go to Section 5: New Economic Reality