These
were codified originally in the analyses of Adam Smith, 1776, David Ricardo, 1817,
and the later contributions of John Stuart Mill as part of one of the first coherent
theories of production in political economy.
In
the classical analysis, capital was generally viewed as being physical items such
as tools and machinery. With the emergence of the knowledge economy, more modern
analysis often distinguishes this physical capital from other forms of capital
such as "human capital" (economics jargon for education or training).
Also,
some economists mention enterprise, entrepreneurship, individual capital or just
"leadership" as a fourth factor. However, this seems to be a form of
labor or "human capital." When differentiated, the payment for this
factor of production is called profit.
The
classical theory, further developed, remains useful to the present day as a basis
of microeconomics.
Developments
and Alternative views
Marxist
and socialist economists also employ the concept of factors of production. But
they tend to treat labour very differently from the other factors, seeing it as
the conscious and active input which converts physical raw materials and other
inputs into use-values wanted by consumers and businesses. Their analysis does
not substantially alter the idea of factors of production, although it puts special
emphasis on means of production, defined as the factors minus labor, which it
sought to differentiate from human factors. Further, Marxian political economy
differentiates between the transhistorical concepts of the "factors of production"
and the role that these play under capitalism: in that socio-economic system,
labor becomes " variable capital" seen as the source of surplus-value
or profits, while the non-human means of production become " constant capital"
which does not contribute to surplus-value except indirectly, by making labor
more productive.
Others
focus on the central role of human capital, in particular the social capital (community
trust) and instructional capital (actual worker's skills and instructions) that
became increasingly important through the 20th century.
Most
modern analyses usually cite four to seven types of capital, as in Natural Capitalism
or the theories of intellectual capital. Brands have also been considered "brand
capital", a special form of intangible firm-specific social capital distinct
from that inherited from the larger society, in the analysis of Baruch Lev.
Classical
view as the base of microeconomic theory
Although
it did not deal substantially with complex issues of a sophisticated modern economy,
the classical theory remains useful to the present day as the basis of microeconomics,
however many distinctions one cares to make or macro-theory or political economy
one chooses to apply to trade them off or set their valuations in society at large.
Land
has become natural capital, imitative aspects of Labor have become instructional
capital, creative or inspirational aspects or "Enterprise" have become
individual capital (in some analyses), and social capital has become increasingly
important. The classical relationship of financial capital and infrastructural
capital is still recognized as central, but there is a wider debate on means of
production and various means of protection, or "property rights", to
secure their reliable use.
When
disputes arise regarding these fine distinctions, most economists will fall back
to the three classical factors. While no major theory has yet substantially altered
the foundation assumptions of either "left" (Marxist) or "right"
(neoclassical) theory, Georgism is one syncretic system of thought incorporating
both a nominally socialist moral basis (everyone has an equal right of access
to nature) while strictly maintaining a solid "libertarian" philosophy
on the absolute right of private ownership of the products of all human labor.
See
also
microeconomics
production theory basics
production, costs, and pricing
labor theory
of value
cost of production theory of value
optimum factor allocation
Economics,
Banking & Finance