SFEcon's theoretical framework must be shown adequate for resolving the inherent conflict between production functions and bill of materials considerations. A sector and the firms that compose it all produce the same product; so, presumably, they all have approximately the same bill of materials. The logistics of an automobile factory, for example, would specify exactly four wheels per chassis; and the same specification would apply to the entire automotive sector. In describing the sector, a production function expressing diminishing marginal utility would have to allow unrealistic variations around this 4:1 ratio. Production theory per se does not preclude the possibility of an automobile made entirely out of wheels.

Here we can only appeal to the economist’s sense of analytic practicality. While no automotive bill of materials would fail to distinguish between wheels and chassis, neither would any sensible macroeconomic model be designed with both an automotive sector and a wheels sector. It is much more likely that personal vehicles would be made by a HEAVY INDUSTRY sector that would make vehicles of all descriptions, as well as wheels in such quantities as are required for new vehicles, plus those required for spares, repair stocks, etc. The HEAVY INDUSTRY sector would buy inputs from the CHEMICAL, CERAMIC, PRIMARY INDUSTRY, and LIGHT INDUSTRY sectors; and the mix of inputs would involve economic considerations as much as industrial design.

Vehicles are designed with considerations as to the prices of the inputs. If the sheet steel provided by the PRIMARY INDUSTRY sector trends up in price, then autos will be designed with more plastics from the CHEMICAL sector and more glass from the CERAMIC sector. Thus production theory precedes a product’s design, while the bill of materials follows from a product’s design. The former is an economic consideration, the latter is industrial engineering.

To participate in our view, the macro economist must step back from familiar economic activity to an observation point at which bills of materials fade into the background and production functions emerge to take shape as full descriptors of economic sectors. An individual firm’s bill of materials is perhaps best analogized to an individual dot in a pointillist painting: any one dot is meaningless to the overall impression conveyed by the larger work, which would be analogous to the production contours describing an entire industry. And these contours would necessarily disappear from any view close enough to reveal the individual dots.