Recently some economists have posited “entrepreneurship” as a separate factor of production. The entrepreneur is thought of as orchestrating the other factors of production to create a successful enterprise. However, here we will view entrepreneurship as labor, and the skills of the entrepreneur as akin to those of other managers with perhaps additional components of imagination, leadership, and luck, thrown in. As we will see when we discuss actually quantifying factors of production, it is much easier to come by statistics on work hours than it is to measure “entrepreneurship”. The job description of an entrepreneur is “entrepreneurship”, and like other human capital, is quite difficult to measure and quantify.

If one looks at the actual production of goods and services, it is clear that one can slice and dice resources in many ways and, as we’ve seen in the case of labor, the traditional factors of production are hardly homogeneous. A robotics engineer may work in a manufacturing plant but the type of labor he or she supplies is not the same as a manager or machine operator. When considering productivity data in part two we will have to deal with such issues.