Making material goods, a person acts on natural objects, gives them the desired shape, after which they become suitable for satisfying needs. In this process, people are assisted by a wide variety of elements and conditions that have a decisive impact on the final result. These conditions are referred to as factors of production.
The concept of factors of production
The main reasons for production activities and the conditions in which the creation of an economic product takes place are called factors of production. They are, in a sense, the driving forces of production, an integral part of the production potential.
In the simplest case, the factors of production are understood as the triad "labor, land, capital", which embodies the labor and natural resources involved in creating a product. Recently, entrepreneurship has been named as one of the significant factors. However, this list will not be exhaustive either.
In Marxism, the conditions of production include labor, the object and means of labor, considering personal and material factors. The whole set of a person's abilities to work is personal. As material, Marxist methodology classifies the means of production, brought together in a complex system, in which a special place is given to the organization of production and technology. The latter is understood as the interaction between all factors of production.
The main factors of production in marginalist theory are:
- Natural resources;
- work;
- capital;
- entrepreneurship;
- scientific and technical factor.
Natural factor
The natural factor embodies the natural conditions in which production processes take place. Substance, minerals, earth, water, air, flora and fauna are widely used as sources of raw materials and energy. As a factor of production, the natural environment allows the use of natural resources in the manufacture of a product, which serve as raw materials. All the variety of material products are made on the basis of such raw materials.
The energy basis of production is the Earth and the Sun. At the same time, the planet becomes a production site, where the means of production are placed, where workers work.
Land has become one of the most unique resources nowadays, because its supply is limited. This type of material production conditions is an area where there are natural resources and minerals. The usefulness of a land resource is assessed by its ability to be suitable for agricultural work and biological reproduction.
The natural factor acts as a passive component in the triad. However, in the course of transformations, objects of nature pass into the main means of production and gradually acquire an active role. In some factor economic models, the natural factor is taken into account in an implicit form, which by no means diminishes the degree of its influence on production processes.
Labor factor
Labor is presented in a number of factors of production as an element that is designed to initiate the production process. This category is represented by the labor of workers who are directly involved in the creation of goods. At the same time, the concept of "labor" embodies a varied number of types of activity that directs production and accompanies it at all stages. Labor consists in the direct participation of a person in the transformation of resources (energy, matter, information). People contribute to the production process with physical and mental effort. All its participants bring their labor into the production process, each form of labor ultimately affects the result.
In macroeconomic models that use the resource approach, when considering the main factors of production, it is often not labor as such that is singled out, but labor resources, that is, the able-bodied population or the total number of those employed in production activities. It is important to understand that the labor factor manifests itself, among other things, in the quality of labor, in its efficiency, in labor efficiency.
Labor is the most important economic category, since its costs determine the effectiveness of an established organization of production. Through labor activity, a person actively influences the subject of labor. The intensity of the labor process affects the labor intensity and the amount of time spent on the manufacture of the product. This data makes it possible to identify the problems faced by the production.
The labor force determines other economic categories - the unemployment rate and employment. The structure of the labor force includes all people who, in one way or another, take part in production in accordance with their labor skills. Human activity has a peculiarity: the labor force is formed over the years, it requires continuous renewal. For a successful career, an employee must maintain useful skills and always be in the right physical shape.
Capital as a factor of production
Capital is understood as means of production that are involved and directly involved in the manufacture of an economic product. Capital can appear in production activities in a wide variety of forms; there may be different ways of accounting for it. If human labor creates only a condition for production, then capital becomes the goal, purpose and mode of existence of production activity. Therefore, the importance of capital is often placed above labor.
This factor is expressed in both physical and money capital. Physical capital is the main means of production. Working capital also becomes the most important material resource and source of activity for the production of an economic product. In the long term, the factor also includes investment.
In short, capital refers to any type of property used to make a profit. For this very purpose, since the emergence of an industrial society, investments (capital investments) directed to production have been widely used in it. In its material form, the invested funds turn into fixed assets and become factors in the production process.
According to a number of economists, after labor, capital ranks second among other conditions for the success of economic activity. Recently, human capital has been increasingly singled out, including in it the knowledge, abilities, skills, professional experience that the employee possesses. Other researchers do not consider it expedient to introduce such a category, since its content is largely covered by the labor factor.
Entrepreneurship as a factor of production
Entrepreneurial activity and initiative have a beneficial effect on the results of production activities. The difficulty lies in quantitatively establishing the effect of the influence of this factor. It is extremely difficult to measure this influence. Therefore, this factor is judged, as a rule, exclusively in terms of quality. The importance of entrepreneurial activity is that it increases and enhances the return to the labor factor.
Entrepreneurial ability is the ability to combine all factors of production in order to create a product with maximum efficiency. Being an entrepreneur means:
- be able to make decisions;
- take reasonable risks;
- be able to organize workers to complete tasks.
Main factors of production and types of income
Each of the dominant production factors creates a certain type of income:
- wages correspond to labor;
- land - rent;
- capital - interest;
- business - profit.
Scientific and technical level of production
With the development of science, the scientific and technical level of production began to be included in the number of production factors. It expresses the degree of technological equipment of production, its technical perfection. The influence of this factor extends to the growth of labor productivity and the efficiency of capital use. Scientific and technological advances contribute to increased demand for products and increased sales.
Innovation activity is often considered in this category. A technological innovation introduced into production very often becomes the factor that allows you to qualitatively improve the production process and makes it possible to bring fundamentally new products to the market.
In the conditions of the formation of a post-industrial society, information becomes an essential factor of production. It is one of the most important resources that is reflected in economic processes. Information resources are used in any part of the system of productive forces, becoming an integral element of living labor.
