Factors of production in economics: definition and classification. Capital - as a determining factor in the production of a market economy

29.09.2019

2 .1 . Factors of production – 1) resources with the help of which the production of goods can be organized; 2) resources used in production, on which the quantity and volume of manufactured products largely depend; 3) factors used in the production of goods and services.

Factors of production = economic resources.

Economic resources (from French. ressource – auxiliary tool) – fundamental concept economic theory, meaning sources, means of ensuring production.

Economic resources are divided into : 1) natural (raw materials, geophysical), 2) labor (human capital), 3) capital (physical capital), 4) working capital(materials), 5) information resources, 6) financial (monetary capital). This division is not strictly unambiguous.

The production process is the transformation of economic resources (factors of production) into goods and services.

2.2 . What are factors of production? ?

2.2.1. Version No. 1: Factors of production = economic resources: 1) labor (the activity of people in the production of goods and services by using their physical and mental capabilities); 2) land (all types of natural resources available on the planet and suitable for the production of economic benefits); 3) capital (industrial building, machines, tools). No less important is another factor that connects all the others, 4) entrepreneurial abilities.

2.2.2. Version No. 2: Factors of production = 1) labor + 2) means of production ( Natural resources+ [produced resources = capital]).

2.2.3. Nowadays, another very specific type of production factors has acquired immeasurably greater importance than before - 5) information (knowledge and information that people need for conscious activity in the world of economics). Possession of reliable information is a necessary condition for solving the problems facing an economic entity. At the same time, even full information is not a guarantee of success. The ability to use the information received to make the best decision under the current circumstances characterizes such a resource as knowledge. The carriers of this resource are qualified personnel in the field of management, sales and customer service, Maintenance goods. It is this resource that gives the greatest return in business. “What distinguishes a strong company from a weak one is, first of all, the level of qualifications of its specialists and management staff, their knowledge, motivation and aspirations.

In addition to the listed factors, the following play an important role in the economy: 6) general culture; 7) science; 8) social factors(state of morality, legal culture).

2.3 . Work- a set of physical and mental abilities that people use in the process of creating economic wealth.

Labor characteristics : 1) labor intensity (labor intensity, which is determined by the degree of labor expenditure per unit of time); 2)labor productivity (performance = labor productivity, which is measured by the amount of products produced per unit of time).

2.4 . Under " earth"Economists understand all types of natural resources. This group includes free benefits (???) of nature that are used in the production process: plots of land on which industrial buildings are located, arable land on which crops are grown, forests, water, and mineral deposits.

2.5 . Capital(from lat. capitalis - main) was understood by Smith and Ricardo as a means of production. Other economists have argued that capital is “a sum of money” and “securities.” There is a view that capital is a person's knowledge, skills and energy used in the production of goods and services. Today at in a broad sense Capital is understood as everything that brings income to its owner. These can be means of production, leased land, cash deposits in a bank, and labor used in production.

Capital can be 1)real(or physical) and 2) monetary, or financial(money used to purchase physical capital).

!!! Factors of production include not all capital, but only real capital - buildings, structures, machines, machinery and equipment, tools, etc. – that is, everything that is used to produce and transport goods and services.Financial capital (stocks, bonds, bank deposits and money) does not apply to factors of production, since it is not associated with real production, but acts as a tool for obtaining real capital.

Investments(from lat. investre – to clothe) – 1) long-term investments of material and monetary resources in production.

The continuously occurring circular movement of capital forms its turnover. At the production stage, different parts of productive capital turn over in different ways (over different periods). Therefore, capital is divided into fixed and working capital.

Main capital (machines, equipment, buildings): 1) used for a number of years, 2) transfers its cost to the product in parts, 3) costs are returned gradually.

Working capital (raw materials, materials, semi-finished products, wages of workers): 1) consumed in one production cycle, included in the entire newly created product, 3) costs are reimbursed after the sale of the product.

2.6 . Entrepreneurial skills are the most important productive resource. They are possessed by a very small proportion of people performing whole line functions without which organization and successful production activities are impossible.

Entrepreneurial functions : 1) the ability to correctly combine factors of production - labor, land, capital - and organize production; 2) the ability to make decisions and take responsibility; 3) ability to take risks; 4) be receptive to innovations.

2.7 . Factor income : 1) labor?> wage; 2) earth?> rent(income of someone who owns land); 3) capital?> percent(payment for using other people's money); 4) entrepreneurial skills?> profit.

Rent(from lat. reddita - returned) - income regularly received by the owner from the use of land, property, capital, which does not require the recipient of the income to carry out entrepreneurial activities, or the cost of additional efforts.

Loan capital– loans provided temporarily free cash on terms of repayment and payment.

Percent(from Latin pro centrum – for a hundred) – 1)credit interest (loan interest -mouth.) – the fee that the borrower must pay for using a loan, money or material assets; 2)deposit interest – payment to a bank depositor for providing the bank with money on a deposit for a certain period.

2.8 . Karl Marx on the factors of production .

German economist and philosopher of the 19th century. Karl Marx identified personal and material factors of production, while the person himself, as the bearer of labor power, acts as a personal factor, and the material factor of production refers to the means of production, which in turn consist of means of labor and objects of labor.

Productive forces (= factors of production ) = 1) personal factor (person) + 2) material factor, means of production (means of labor + object of labor).

Means of laboris “... a thing or a complex of things that a person places between himself and the object of labor and which serves for him as a conductor of his influences on this object.” Means of labor, and above all instruments of labor, include machines, machine tools, tools with which man influences nature, as well as industrial buildings, land, canals, roads, etc. Application and creation of means of labor – characteristic human labor activity. In a broader sense, the means of labor include all the material conditions of labor, without which it cannot be carried out. The general labor condition is the land, the working conditions are also industrial buildings, roads, etc. The results of social knowledge of nature are embodied in the means of labor and the processes of their production use, in engineering and technology. The level of development of technology (and technology) serves as the main indicator of the degree to which society has mastered the forces of nature.

Subject of labor- a substance of nature that a person influences during the labor process in order to adapt it for personal or industrial consumption. An object of labor that has already undergone the influence of human labor, but intended for further processing, is called raw material. Some finished products may also enter the production process as an object of labor (for example, grapes in the wine industry, animal oil in the confectionery industry). “If we consider the entire process from the point of view of its result - the product, then both the means of labor and the object of labor both act as means of production, and the labor itself - as productive labor.”

The totality of production factors act as productive forces that are inextricably linked with production relations. Some characterize the material content of the process of social production, while others characterize its historically determined form. Evolving, each stage of development of the productive forces, characterized by the type of production relations, constitutes a unique mode of production.

Mode of production = productive forces + relations of production.

In a narrow sense, the concept of “production” is usually associated with the process of producing material goods to satisfy needs; in a broader sense, economists refer to production as any activity of people through which they satisfy their needs.

It is generally accepted in the economic literature that production is the process of creating not only goods, but also services through the processing of raw materials, materials, the use of equipment and the labor of workers. Therefore, the end result of production is goods and services. To get more of them and cheaper, it is necessary to make the most efficient use of all available production elements. The level of production costs and profits of business entities depend on this.

On rational use elements of production are greatly influenced by the technologies used.

Technology is a set of methods and methods based on scientific knowledge and used in the processing of raw materials, materials, semi-finished products, as well as in the assembly of finished products using certain tools.

Resources are usually divided into four groups:

1) natural - natural economic and production resources available in nature in the form of land and land, water resources, air basin. They, in turn, are divided into exhaustible (renewable and non-renewable) and inexhaustible;

2) material (capital) - all means of production created by human hands (tools and objects of labor), which themselves are the result of production and are in material form;

3) labor - the economically active, able-bodied population, part of the population that has the physical and spiritual abilities to participate in labor activities. Labor resources are usually assessed according to three parameters: socio-demographic, professional, qualification and cultural-educational;

4) financial (investment) - the totality of all types of funds, financial assets that the company has and is able to allocate them to organize production. Financial resources are the result of the interaction of “receipts and expenses”, the distribution of funds, their accumulation and use.

In economics, factors of production are everything that, participating in the production process, creates, makes, produces goods and services.

Economists early XIX V. They usually talked about three factors of production - land, labor and capital. The concept of three factors is easy to understand using the example of any, even the simplest, type of human activity. In order, for example, to practice fishing, it is necessary, firstly, that there be a lake in which fish live ("land"), secondly, that someone knows how to catch them ("labor") and, thirdly, that there are some tools, allowing you to catch fish, i.e. fishing rod, net, boat, etc.

There are no major or minor factors among the factors. The participation of each of them is equally necessary, and they all complement each other in the production process. In this sense, the production of Picasso’s paintings would have been equally impossible both without Picasso himself and if he had nothing, nothing and nowhere to paint.

In modern economic theory, the division of factors of production into three classical main types is becoming generally accepted: land, capital, labor.

Land - as a factor of production means all natural resources used in the production process, benefits given by nature. It can be used for the production of agricultural products, for the construction of houses, cities, railways, etc. The earth is indestructible and non-multiplyable, but is subject to quite severe destruction due to predatory use, poisoning or erosion.

Capital - in a broad sense, is everything that can generate income, or resources created by people to produce goods and services. In a narrower sense, it is a working source of income invested in a business in the form of means of production manufactured by labor (physical capital). Capital can be increased to any size.

Labor is a conscious, energy-consuming, social, purposeful activity of a person, people, requiring the application of mental and physical effort in the process of creating material goods and services, realized through the person himself. Labor as a factor of production is improved through the training of workers and their acquisition of production experience.

Later, in late XIX century, economists have identified a fourth factor of production - entrepreneurship, i.e. activities related to organizing the work of factors in the production of a certain product, associated with the assumption of risk and responsibility for the economic results of production.

The appearance in the economic literature of the “fourth” factor of production was due to the realities of that time: in society, the role of people increased who, often not owning any of the “three factors”, were able to guess what kind of production the market needed in this moment, and involve all the necessary factors in this production. Economists call the income of entrepreneurs profit.

Entrepreneurial abilities - the ability to organize production, the ability to navigate market conditions and fearlessness of risk.

Most theorists and practical economists recognize that entrepreneurial ability is one of the the most important factors formation and development of an economy with a market economic mechanism.

The attention of modern economic theory to man, the human factor, has increased sharply. In society, everything comes from man, and everything comes down to him. He is required to have creative activity, a conscientious attitude to work, and initiative. Such a person can only be if he is not only an executor of decisions coming from outside, and if his initiative is not limited or suppressed. Since the slightest violation of production technology can lead to serious accidents or even disasters such as Chernobyl, discipline is an integral element of any joint work. Labor discipline is the precise implementation by each participant of production of technology and organizational order, compliance with established rules and employee responsibilities.

To summarize, we can say that in economics, factors of production are everything that, participating in the production process, creates, makes, produces goods and services. Economists of the early nineteenth century identified three factors of production - labor, land and capital. Later, at the end of the 19th century, economists identified a fourth factor of production - entrepreneurship, i.e. activities related to organizing the work of factors in the production of a certain product, associated with the assumption of risk and responsibility for the economic results of production.

Kozyrev V.M. Fundamentals of modern economics: Textbook. – M.: Finance and Statistics, 2001. – 432 p. – P.26.

Modern economics. Lecture course. Multi-level tutorial; edited by Mamedova O.Yu. – Rostov-on-Don: publishing house “Phoenix”, 2000. – 544 p. – P.39.

Economic theory / Ed. N.I. Bazyleva, S.P. Gurko. – Mn.: Ecoperspective, 2002. – 637 p. – P.74.

IN modern economy The main factors of production are labor, land, capital and entrepreneurship, which appear on the factor market as specific goods purchased to produce products and services.

The land is considered as a natural factor, as natural wealth and fundamental principle economic activity. Here, from the material factor, natural conditions are allocated to a special fund. In this case, the term “land” is used in the broad sense of the word. It covers all the utilities that are given by nature in a certain volume and over the supply of which man has no control, be it the earth itself, water resources or minerals. Unlike other factors of production, LAND has one important property - limitation. A person is not able to change its size at will. In relation to this factor, we can talk about the law of diminishing returns. This refers to returns in quantitative terms or diminishing returns. A person can influence the fertility of the earth, but this influence is not unlimited. Other things being equal, the continuous application of labor and capital to land and to the extraction of minerals will not be accompanied by a proportional increase in returns.

Labor is represented by a person’s intellectual and physical activity, the totality of a person’s abilities, conditioned by general and professional education, skills, and accumulated experience. In economic theory, labor as a factor of production refers to any mental and physical efforts made by people in the process of economic activity in order to produce a useful result.

“All work,” notes A. Marshall, “has as its goal to produce some result.” The time during which a person works is called working time. Its duration is a variable value and has physical and spiritual boundaries. A person cannot work twenty-four hours a day. He needs time to restore his ability to work and satisfy his spiritual needs. Scientific and technological progress leads to changes in the length of the working day, in the content and nature of work. Labor becomes more qualified, time for professional training increases, productivity and labor intensity increase. Labor intensity is understood as its intensity, the increase in the expenditure of physical and mental energy per unit of time. Labor productivity shows how much product is produced per unit of time. A variety of factors influence the increase in labor productivity.

Capital is another factor of production and is considered as a set of means of labor that are used in the production of goods and services. The term "capital" has many meanings. In some cases, capital is identified with the means of production (D. Ricardo), in others - with accumulated material wealth, with money, with accumulated social intelligence. A. Smith considered capital as accumulated labor, K. Marx - as a self-increasing value, as public attitude. Capital can also be defined as investment resources used in the production of goods and services and their delivery to the consumer. Views on capital are varied, but they all agree on one thing: capital is associated with the ability of certain values to generate income. Outside of movement, both the means of production and money are dead bodies. In economic theory and business practice, perhaps, there is no concept that is used so often and at the same time so ambiguously as capital. This term is used in relation to equipment, buildings, money and securities, as well as in relation to a talented engineer and an enterprising manager ("Human Capital"). What all these examples have in common is that capital is consistently associated with the ability to generate income.

In the factor market, capital refers to physical capital, or production assets, is a capital good, using which you can increase your income stream in the future. Thus, not only labor, but also capital is productive. If the labor factor is a phenomenon created outside the economic system, then capital is a factor produced by the economic system itself. Capital is in demand because it is productive. The subjects of demand for capital are entrepreneurs and businesses, the subjects of capital supply are households. The demand for capital is a process for investment funds, not just money. Businesses demand certain amounts of money to purchase capital in physical form. The demand for money has a different nature; it is not related to entrepreneurial activity. The graphical demand for capital can be represented as a curve that has a negative slope, since in relation to capital, as well as to other factors of production, the law of diminishing returns applies: the level of income on capital tends to decrease as investment funds grow. The level of income on capital is also called the net productivity of capital, and expressed as a percentage - the natural rate of interest. The supply of capital should not be understood in the sense that households (population) offer machines, equipment, etc. to businesses. They offer investment funds i.e. sums of money that a business uses to acquire productive assets. This happens with the help of intermediaries - investment funds, commercial banks, etc.

Entrepreneurial activity is considered as a specific factor of production, bringing together all other factors and ensuring their interaction through the knowledge, initiative, ingenuity and risk of the entrepreneur in organizing production. This special kind human capital. Entrepreneurial activity in its scale and results is equal to the costs of highly qualified labor. The concept of “entrepreneurship” was first used as a scientific term by an English economist of the late 17th - early 18th centuries. Richard Contillon. In his opinion, an entrepreneur is a person operating under risk conditions. R. Contillon considered the source of wealth to be land and labor, which determine the actual value of economic goods. Entrepreneurial ability is a special type of human capital represented by the activity of coordinating and combining all other factors of production in order to create goods and services. The specificity of this type of human resource is the ability and desire to introduce new types of manufactured products, technologies, and forms of business organization during the production process on a commercial basis, with a certain degree of risk and the possibility of incurring losses. Entrepreneurial activity in its scale and results is equal to the costs of highly qualified labor. An entrepreneur is an integral attribute of a market economy. The concept of "entrepreneur" is often associated with the concept of "owner". According to Cantilhomme (18th century), an entrepreneur is a person with an uncertain, non-fixed income (peasant, artisan, merchant, etc.). He receives other people's goods at a known price, but will sell them at a price still unknown to him. A. Smith characterized an entrepreneur as an owner who takes economic risks in order to implement a commercial idea and make a profit. The entrepreneur acts as an intermediary, combining factors of production at his discretion. The union of the owner and the entrepreneur in one person began to collapse with the advent of credit and became most pronounced with the development of joint stock companies. In a corporate economy, property as a legal factor loses its administrative functions. The role of property is becoming increasingly passive. The owner only owns a piece of paper. The manager is responsible for performance results. He is driven by the will to win, the desire to fight, a special creative nature his work.

Labor, land and capital are thus the most universal types of resources used to produce material goods and are called factors of production. Various theoretical concepts are based on a more granular division of these factors (instead of the labor factor, for example, the labor of skilled workers, managerial labor, the labor of scientists, etc. can be taken). Global stocks of production factor resources are constantly changing in volume and proportions by country. Historically, the first was the separation of land and its associated natural resource parameters. As a result of the long evolution of populations and numerous movements of peoples, the modern territorial and natural-climatic area of nations-states has emerged. Trade exchange between them and the specialization of countries and peoples determined by it in the production of certain material goods predetermined different kinds international division labor, i.e. separation of various types of human activity, accompanied by their cooperation. Finally, the formation of capital as a factor of production in all its forms also occurred unevenly, with the result that its distribution (the division between nation-states) is also characterized by uneven sizes and proportions. The best confirmation of this is the state and dynamics of development of international financial resources. Thus, different nation-states have different endowments of factors of production, which determine their production and trade capabilities, the size of trade gains and, ultimately, the possibility of growth in well-being. Along with the concept of “endowment with factors of production” great importance also has the concept of “intensity of use of production factors”. Researchers often associate it with technology. The intensity of use of individual factors can compensate for the relatively small endowment of any country with any factor and in this case itself become an acquired factor of production. For example, Japan successfully compensates for the lack of land and mineral reserves with a highly developed level of technology, which can be interpreted both as an intensive use of the skilled labor factor and as an independent factor. In any case, an advantage can only be called an advantage resulting from the intensive use of a surplus factor.

The rental price of a production factor is the price of hiring or renting a production factor per unit of time. This includes workers' wages, rent, interest, etc.

Factor markets

Factors of production markets are areas of commodity turnover of such important groups of economic resources as land, natural resources and artificial raw materials, labor resources of various specialties and qualifications, capital and technical resources. The movement of factors of production is mediated by money and securities markets and is regulated by appropriate economic policy states. The market for production factors has its own characteristics. In general, the same laws of supply and demand and the same mechanism of competitive price equilibrium apply here. However, the factors of production themselves as commodity groups, their appropriation, distribution and use affect deeper socio-economic relations.

Therefore, factor markets are a special type of market in the system market economy. Unlike markets for final goods and services, where firms are sellers and consumers of goods and services are buyers, in factor markets firms are buyers of labor, natural resources, land, capital in its various forms - monetary, productive, loan or fictitious capital (capital represented in the form of securities). Firms use different types of inputs (factors of production) to produce goods and services. Some of them are raw materials and supplies, others are goods produced by other companies, others are different types labor of various classifications, the fourth are capital goods (produced means of production, for example, a machine or building), the fifth are various shapes entrepreneurial activity, sixth – information.

There are many different ways of combining factors of production to produce a given volume of output. To maximize profits, a firm must choose a production technology that minimizes the cost of producing its chosen volume of output. To do this, the company must have an idea, firstly, of the production function of this enterprise, and secondly, about the prices emerging in the market of production factors. When purchasing factors of production on the market, an enterprise faces the problem of pricing them. Prices in this case are determined by the interaction of changes in supply and demand for one or another factor; after all, they also act as goods. However, this demand is derivative. It depends on the demand for products manufactured using this resource, and the dependence here is directly proportional. Prices for resources, for example, labor, capital, are the main factor determining monetary income, and at the same time they perform the function of allocating resources across various industries and firms.

Features of entrepreneurship

The combination of the owner and the entrepreneur in one person began to collapse with the advent of credit and became most pronounced with the development of joint-stock companies. In a corporate economy, property as a legal factor loses its administrative functions. The role of property is becoming increasingly passive. The owner only owns a piece of paper. The manager is responsible for performance results. He is driven by the will to win, the desire to fight, and the special creative nature of his work.

Naturally, all this applies to countries with established market economies. During the transition period to the market, different laws apply.
The difference in the classification of factors of production between Marxist and Western economic theory is due to the class approach to the analysis of natural production. The given classification is flexible. The level and efficiency of production is increasingly influenced by modern science, informational and economic factors. The environmental factor of production is becoming increasingly important, acting either as an impetus for economic growth or limiting its capabilities due to the harmfulness of technology.

In specific industries, its elements are used in various combinations and in various proportions. Such interchangeability and quantitative variability are typical for modern production and are associated with limited resources on the one hand and the efficiency of their use on the other.
IN real life the entrepreneur strives to find a combination of production components that ensures the greatest output at the lowest cost. The multiplicity of combinations is due to scientific and technological progress and the state of the market for production factors. Production is fluid. It constantly undergoes large and small revolutions in technology, technology, and labor organization. The company is constantly searching for the most rational solutions. What gives a greater effect - “investments in the human factor, or in the growth of means of production” (capital)? How will an increase in factor A and a decrease in factor B affect the company's costs and income? At the same time, it is necessary to take into account constant changes in prices for production resources.

Main Factors of Production

The functioning of enterprises and households is based on the use of production factors and the receipt of corresponding income from their use. Factors of production are understood as particularly important elements or objects that have a decisive impact on the possibility and effectiveness of economic activity.
In previous lectures, the laws of supply and demand were discussed, regardless of which product groups are included in market turnover and competitive pricing. Meanwhile, the market turnover of production factors has its own characteristics, although in general the same mechanism of competitive price equilibrium operates here. Behind the production resources involved in economic activity are always their owners (land, capital, labor, knowledge, etc.) and none of them will transfer the right to use this or that resource to other persons free of charge. Therefore, the movement of the main elements of production, their appropriation, disposal and use affects deeper socio-economic relations.
Recent decades have been characterized by an increase in resource costs and, as a result, a decrease in profitability from their use. Prices for land, energy, raw materials, and wages are rising. All this leads to a change in the behavior of people and firms in the global economy, encouraging them to find substitutes for increasingly expensive resources and ways to reduce production costs.
Demand for factors of production is made only by entrepreneurs, i.e. that part of society that is capable of organizing and implementing the production of products and services necessary for final consumption.
Production is the process of making material or spiritual goods. In order to start production, it is necessary to have at least someone who will produce and what they will produce from.
Marxist theory identifies human labor power, the subject of labor and the means of labor as factors of production, dividing them into two large groups: personal factor of production and material factor. The personal factor is the labor force, as the totality of a person’s physical and spiritual abilities to work. The means of production act as a material factor. The organization of production presupposes the coordinated functioning of these factors. Marxist theory proceeds from the fact that the interrelation of factors of production and the nature of their combination determine the social orientation of production, the class composition of society and relations between classes.

Marginalist (neoclassical, Western) theory traditionally identifies four groups of factors of production: land, labor, capital, and entrepreneurial activity.
LAND is considered as a natural factor, as natural wealth and the fundamental basis of economic activity. Here, from the material factor, natural conditions are allocated to a special fund. In this case, the term “land” is used in the broad sense of the word. It covers all the utilities that are given by nature in a certain volume and over the supply of which man has no control, be it the land itself, water resources or minerals. Unlike other factors of production, LAND has one important property - limitation. A person is not able to change its size at will. In relation to this factor, we can talk about the law of diminishing returns. This refers to returns in quantitative terms or diminishing returns. A person can influence the fertility of the earth, but this influence is not unlimited. Other things being equal, the continuous application of labor and capital to land and to the extraction of minerals will not be accompanied by a proportional increase in returns.

WORK is represented by the intellectual and physical activity of a person, the totality of an individual’s abilities, determined by general and professional education, skills, and accumulated experience. In economic theory, labor as a factor of production refers to any mental and physical efforts made by people in the process of economic activity in order to produce a useful result.
“All work,” notes A. Marshall, “has as its goal to produce some result.” The time during which a person works is called working time. Its duration is a variable value and has physical and spiritual boundaries. A person cannot work twenty-four hours a day. He needs time to restore his ability to work and satisfy his spiritual needs. Scientific and technological progress leads to changes in the length of the working day, in the content and nature of work. Labor becomes more qualified, time for professional training increases, productivity and labor intensity increase. Labor intensity is understood as its intensity, the increase in the expenditure of physical and mental energy per unit of time. Labor productivity shows how much product is produced per unit of time. A variety of factors influence the increase in labor productivity.

CAPITAL is another factor of production and is considered as a set of means of labor that are used in the production of goods and services. The term "capital" has many meanings. In some cases, capital is identified with the means of production (D. Ricardo), in others - with accumulated material wealth, with money, with accumulated social intelligence. A. Smith considered capital as accumulated labor, K. Marx - as a self-increasing value, as a social relation. Capital can also be defined as investment resources used in the production of goods and services and their delivery to the consumer. Views on capital are varied, but they all agree on one thing: capital is associated with the ability of certain values to generate income. Outside of movement, both the means of production and money are dead bodies.

An entrepreneur is an integral attribute of a market economy. The concept of "entrepreneur" is often associated with the concept of "owner". According to Cantilhomme (18th century), an entrepreneur is a person with an uncertain, non-fixed income (peasant, artisan, merchant, etc.). He receives other people's goods at a known price, but will sell them at a price still unknown to him. A. Smith characterized an entrepreneur as an owner who takes economic risks in order to implement a commercial idea and make a profit. The entrepreneur acts as an intermediary, combining factors of production at his discretion.

The rental price of a production factor is the price of hiring or renting a production factor per unit of time. This includes workers' wages, rent, interest, etc. Rental prices form the current income of the owners of production factors. At perfect competition in commodity and factor markets, the rental price of a factor is equal to the value of the marginal product of a given factor, i.e.: r = VMPK - MRPK. CAPITAL PRICE OF A FACTOR OF PRODUCTION is the price at which the purchase and sale of a particular factor of production is carried out. For example, the price of a company’s industrial building is 10 million rubles. This is its capital value. Funds for the purchase of this building are required today. When deciding to purchase a factor of production, the consumer compares the additional income obtained as a result of the use of a new unit of the factor with its rental price. The firm will purchase the services of a factor of production as long as the rental price of this factor is less than the additional income that this factor provides.
By purchasing a factor at its capital price, the future owner thereby acquires the services of the factor for the entire period of its use. Funds for the acquisition of a production factor must be spent at the moment, and the owner will receive income from its use over a long period of use of the factor in the form of a stream of future income distributed over time. This raises the problem of balancing current expenses associated with the acquisition of capital factors with the stream of future income. Current expenses are compared with future income streams through discounting. Let us assume that an entrepreneur, purchasing, for example, a machine, estimates the expected income from its use.

The expected future income is summed up from the annual income from the use of the machine. Therefore, it is necessary to determine how much money needs to be paid for the machine at the present time in order to extract the desired income after a certain period of its use. The discounted or present value depends on: the interest rate; a specific amount of annual expected income. Let's look at these dependencies using conditional examples. Let's say interest rate is 5%, then the discounted cost is 1 thousand rubles. with a deposit for one year it is equal to: PV = 1000/(1+0.05) = 952.4 p. Now let's increase the interest rate to 10%. In this case, the discounted value is 1 thousand rubles. for one year will be: PV = 1000/(1+0.1) = 909.1 p. From the examples given, the higher the interest rate, the lower the discounted value will be. Let's move on to the second position.

What are factors of production?

Factors of production are resources needed to produce goods and services. Traditionally divided into components:

labor resources, or labor;
investment resources, or capital;
natural resources, or land;
entrepreneurial talent, or entrepreneurial abilities;
information; a specific form of information is technology;

Labor is a purposeful human activity to create economic benefits, a manifestation of the totality of a person’s mental and physical abilities.
Capital includes the totality of goods created by a person’s past labor. Misconception that stocks, bonds, money, bank deposits do not belong to this factor of production.

Land as a factor of production covers all agricultural land and urban land that is allocated for residential or industrial development, as well as the total natural conditions necessary for the production of goods and services.

Entrepreneurial talent presupposes a person’s special abilities, which consist in his ability to:

organize the production and release of goods and services by combining all the necessary factors of production;
make major decisions on production management and business management;
risk money, time, labor, business reputation, since activity in the market is associated with great uncertainty, and the result is not guaranteed;
to be an innovator, that is, to introduce new technologies, new products, methods of organizing production.

One of the key economic resources in modern stage development of society is information.

Possession of reliable information is a necessary condition for solving the problems facing an economic entity. However, even complete information is not a guarantee of success. The ability to use the information received to make the best decision under the current circumstances characterizes such a resource as knowledge. The carriers of this resource are qualified personnel in the field of management, sales and customer service, and product maintenance. It is this resource that gives the greatest return in business. “What distinguishes a strong company from a weak one is, first of all, the level of qualifications of its specialists and management staff, their knowledge, motivation and aspirations”

In a market economy, all of the above economic resources are freely bought and sold and bring their owners special (factor) income:

rent (land);
interest (capital);
wages (labor);
profit (entrepreneurial ability).

A means of labor is “... a thing or a complex of things that a person places between himself and the object of labor and which serves for him as a conductor of his influence on this object.” Means of labor, and above all tools of labor, include machines, machine tools, tools with which a person influences nature, as well as industrial buildings, land, canals, roads, etc. The use and creation of means of labor is a characteristic feature of human labor activity . In a broader sense, the means of labor include all the material conditions of labor, without which it cannot be carried out. The general labor condition is the land, the working conditions are also industrial buildings, roads, etc. The results of social knowledge of nature are embodied in the means of labor and the processes of their production use, in engineering and technology. The level of development of technology (and technology) serves as the main indicator of the degree to which society has mastered the forces of nature. “Technology reveals man’s active relationship to nature, the direct process of production of his life”

Objects of labor are a substance of nature that a person influences during the labor process in order to adapt it for personal or industrial consumption. An object of labor that has already undergone the influence of human labor, but intended for further processing, is called Raw Material. Some finished products may also enter the production process as an object of labor (for example, grapes in the wine industry, animal oil in the confectionery industry). “If we consider the entire process from the point of view of its result - the product, then both the means of labor and the object of labor both act as means of production, and the labor itself - as productive labor”

According to K. Marx, the totality of production factors act as productive forces that are inextricably linked with production relations. Some characterize the material content of the social production process, while others characterize its historically determined form. Evolving, each stage of development of productive forces, characterized by the type of production relations, constitutes a unique mode of production.

Non-Marxist economic theorists do not agree with K. Marx’s position that new value is created only by hired workers, but believe that all factors of production take an equal part in its creation. Thus, Alfred Marshall wrote: “capital in general and labor in general interact in the production of the national dividend and receive their income from it according to the measure of their (marginal) productivity. Their mutual dependence is the closest; capital is dead without labor; a worker without the help of his own or someone else's capital will not live long. When labor is energetic, capital reaps rich fruits and grows rapidly; Thanks to capital and knowledge, the ordinary worker of the Western world is fed, clothed and even housed in many respects better than the princes of former times. Cooperation between capital and labor is as necessary as that between spinner and weaver; slight priority on the spinner's side, but this does not give him any advantage. The prosperity of each of them is closely connected with the strength and energy of the other, although each of them can gain temporarily, or even permanently, at the expense of the other, a few a large share national dividend."

The main factors of production are labor, land and capital

In the most general sense, resources (from the French ressource - auxiliary means) are funds, values, reserves, opportunities, sources of funds and income. Usually, economic resources are highlighted - everything that is necessary for the production process.

It should be noted that along with the concept of “resources of production” in the economic literature the concept of “factors of production” is often used as a synonym. Factor (from Latin “factor” - doing, producing) - reason, driving force any process or phenomenon that determines its character or its individual features.

In fact, what they have in common is that both resources and factors are the same natural and social forces with the help of which production is carried out. The difference between them is that resources include those natural and social forces that can be involved in production, and factors include resources actually involved in this process. Based on this, the concept of “resources” is broader than “factors of production”.
Today in Western economic theory it is customary to divide factors of production into three groups.

Land as a factor of production is a natural resource and includes all the benefits provided by nature (land, water, minerals, etc.) used in the production process.
Capital is everything that can generate income, or resources created by people to produce goods and services. This approach to this category synthesizes the points of view of Western economists on capital (for example, A. Smith interpreted capital as part of the stock used in material production, D. Ricardo - as a means of production, J. Robinson considered money as capital). In Marxist political economy capital was understood differently - first of all, as a value that brings surplus value (“self-increasing value”), as a determining economic relation, and a relation of exploitation.
Labor is a purposeful activity of people that requires the application of mental and physical effort, during which they transform objects of nature to satisfy their needs. Strictly speaking, the “labor” factor also includes entrepreneurial abilities, which are sometimes considered as a separate factor of production. The fact is that land, labor and capital by themselves cannot create anything until they are united in a certain proportion by an entrepreneur, an organizer of production. It is for this reason that the activities of entrepreneurs and their abilities (entrepreneurship) are often considered as an independent factor of production.

Capital - as a determining factor in the production of a market economy. The term “capital” has many meanings: it can be interpreted as a certain stock of material goods, and as something that includes not only material objects, but also intangible elements, such as human abilities and education.

Defining capital as a factor of production, economists identify capital with the means of production. A similar approach comes from the classics of political economy: A. Smith characterized capital only as an accumulated stock of things and money. D. Ricardo interpreted it as a means of production.

Stick and stone in hands primitive man seemed to him to be the same element of capital as machines and factories. Capital consists of durable goods created by the economic system for the production of other goods. These are production resources created by people (machines, buildings, computers, pipelines, railways etc.) designed to increase labor productivity. Another aspect of the category of capital is related to its monetary form.

For example, J. Robinson in his work “Capital Investments in the Modern Economy” writes that capital, when it is embodied in not yet invested finances, is a sum of money. Capital is understood as money (in a short period) for which physical elements of production are purchased.

In economic analysis, the concepts of “investment” and “investment resources” are often used along with the term “capital”. The term "capital" is used to denote capital in embodied form, i.e. embodied in the means of production. Investment is capital that has not yet been materialized, but is invested in the means of production. In modern Western economics, capital is interpreted as durable goods created by people to produce other goods and services.

This definition of capital serves as the basis for the various concepts of capital used in everyday language and economic literature. Economic theory distinguishes: physical (technical) capital - a set material resources, which are used in various phases of production and increase the productivity of human labor (machines, buildings, computers, etc.); financial (monetary) capital - the totality of funds and the monetary expression of the value of securities; legal capital - a set of rights to dispose of certain values, and these rights give their owners income without investing the corresponding labor; human capital is those investments that increase the physical or mental ability person.

During the production process, different elements of physical capital behave differently.

One part functions for a long time (buildings, machines), the other is used once (raw materials, materials). The first part of capital is fixed capital - capital that participates in the production process over several production cycles and transfers its value to the goods created in parts.

Fixed capital includes three main elements: 1. fixed assets; 2. intangible assets; 3. long-term financial investments. Fixed assets are part of the property of an enterprise that acts as means of labor in the production of products, performance of work or provision of services, or used for the management needs of the enterprise. These include: buildings; structures; working and power machines and equipment; vehicles, computer technology; land plots owned by enterprises; on-farm roads and other fixed assets. Intangible assets are part of an enterprise's property that does not have a tangible form and generates income for the enterprise. These include: patents, licenses, trademarks and trademarks, rights to, business reputation of the company and other intangible assets. Long-term financial investments include: ¦ deposits in authorized capitals other enterprises, ¦ costs for the acquisition of shares and bonds of other enterprises, long-term loans issued against debt obligations, the cost of property leased under financial leasing rights (with the right to repurchase after the end of the lease term). The second part of the capital is working capital.

This is the property of the enterprise that acts as objects of labor and brings income to the enterprise. These include: raw materials, basic and auxiliary materials, fuel; unfinished production; Future expenses; finished products in stock; goods shipped to consumers; cash (in the cash register and in the accounts of the enterprise); funds in settlements (accounts receivable). Money spent on working capital is fully returned to the entrepreneur after the sale of products.

Fixed capital costs cannot be recovered so quickly. Fixed capital, embodied in means of labor, is subject to wear and tear as it is used.

Economists distinguish between physical and moral wear and tear. Physical wear and tear occurs, firstly, under the influence of the production process itself and, secondly, under the influence of natural forces (corrosion of metal, destruction of concrete, loss of elasticity or flexibility of plastic, etc.). How more time exploitation of fixed capital, the greater the physical wear and tear. The concept of depreciation is associated with physical wear and tear.

Depreciation is an economic category and expresses economic relations regarding that part of the value of fixed capital that is transferred to goods and returned after the sale of goods in cash to the entrepreneur. It accumulates in a special account called a sinking fund. Obsolescence (obsolescence) is a decline useful properties fixed capital in the eyes of users compared to what is offered in return.

There are two types of obsolescence. The first type is associated with the production of cheaper machines, equipment, Vehicle etc. The second type is associated with the production of more advanced machines. In this case, entrepreneurs also suffer losses by continuing to use obsolete technology or equipment. For capital, as a factor of production, income is interest. Interest income is the return on capital invested in a business.

This income is based on the costs of alternative uses of capital (depositing money in a bank, in shares, etc.). The amount of interest income is determined by the interest rate, i.e. the price a bank or other borrower must pay a lender for the use of money over a period of time. Those. The interest rate is the ratio of the return on capital lent to the amount of capital lent, expressed as a percentage. According to neoclassical theory, the equilibrium rate of interest (rate of interest) is determined in the capital market by comparing the utility (marginal return MRP) of capital and the costs (abstinence, MRC expectations) of not using capital at present.

The lower the interest rate, the higher the demand for capital. In addition to the considered neoclassical interpretation of interest, which in economics is called the “real theory of interest,” there is another - Keynesian. In contrast to this view, he gave a different definition of interest, the essence of which is that the rate of interest is the reward for parting with money as liquidity for a certain period.

From his point of view, the rate of interest is nothing more than the reciprocal of the ratio of the amount of money to what can be obtained by parting with the opportunity to dispose of this money for a specified period of time. Implementation of any investment projects involves a time gap between costs and revenues.

The time value of money arises because there are alternative income opportunities; it depends on the moment when they are expected to be received. Financial theory states that future money is always cheaper than today's money, and not just because of inflation. The money we have today can be put to work and generate income, and thus, if we receive it in a year, we have lost this opportunity. Consequently, the complexity of investment analysis lies in the need to compare two flows - costs and future income.

Since the utility of income received in the future is considered less than today's, interest can be earned on current income in the future.

Thus, “capital” in economic theory is defined both as a stock of material goods and a stock of intangible objects. Adherents of classical theory associate this concept with a factor of production, other economists - with its monetary form, but all theorists attribute to capital the main function - the ability to generate income.

Capital that is not materialized but invested in the means of production is understood as investment. Capital is divided into physical, financial, legal and human. Capital that operates over a long period of time (buildings, machines) is called fixed capital, while capital used once (raw materials, supplies) is called circulating capital. For capital, as a factor of production, income is the interest received from investing capital in a business. 1.2

End of work -

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