Economic Factors of Production

Dear Ladies and Gentlemen

From an economic perspective, the factors of production include land or its natural resources, capital, labour, and, I would argue, knowledge. Now, I have a fair amount of discussions with people of different backgrounds about the importance of capital, i.e. investments.

Something Neglectable

…and occasionally I almost do get the impression that in some people’s minds, capital is not seen as an important economic production factor but essentially as something neglectable, something close to being ashamed of. I do not understand why one could argue like this. Please allow me to share my thoughts with you.

Misunderstanding – Capital is Key

When talking to people, I often sense some socio-economic misunderstanding concerning «capital» and investments. Not considering capital as an essential economic factor ignores the fact that an economy’s stakeholders could not invest in land, labour and knowledge, produce and offer services, conduct research, drive innovation, promote and accumulate knowledge without capital. Capital is key! In other words, without the production factor capital, the other production factors are not or only marginally available. Therefore, investors, i.e. capital providers, are of crucial economic significance, which some political groups and probably even many participants in an economy, unfortunately, seem to underestimate.

Thank you!

Thanks to investors like you (people who are willing to accept risk and provide capital to companies), economies may prosper, create jobs, wealth and social security. Investors are doing something utterly important by providing capital, i.e. by investing. Investing is an active and productive attitude. If investors kept their money (capital) under a mattress in their bedrooms, this would be a passive attitude and not help any economy whatsoever.

Ladies and Gentlemen, you can be proud of supporting various economies with your capital, and I consider it self-evident that you are compensated for the risk you are taking with a return on your capital invested. Thank you!

Ladies and Gentlemen, what do you think, what is your opinion? Please let me know your thoughts.

… but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day, a wonderful weekend, and above all, good health!

Yours truly,

Stefan M. Kremeth