The evolution of the concepts of factors of production briefly. Development of the theory of factors of production

home

Scud

Business in law

16.3. EVOLUTION OF CONCEPTS OF FACTORS OF PRODUCTION IN ECONOMIC THEORY AND THEIR ROLE IN THE DEVELOPMENT OF THE INSTITUTE OF ENTREPRENEURSHIP

Yeremyan Varsine Sasunovna, graduate student of the Department of Economics and Enterprise Management

Place of study: Federal State Autonomous Educational Institution of Higher Professional Education "North Caucasus Federal University", Pyatigorsk

[email protected]

Abstract: The article is devoted to the assessment of the main theories of production factors. In it, the author identifies four stages in the evolution of productive forces. The circumstances influencing the transformation of the content and role of production factors in economic processes at each stage are revealed.

Keywords: production factors, entrepreneurship, transformation, innovation, information resources

THE EVOLUTION OF CONCEPTS OF FACTORS OF PRODUCTION IN ECONOMIC THEORY AND THEIR ROLE IN THE DEVELOPMENT ENTERPRISE INSTITUTE

Yeremyan Varsine S., post-graduate student of chair "Economy and management at enterprise"

Study place: Federal state Autonomous educational institution of higher professional education "North-Caucasian Federal University, Pyatigorsk

[email protected]

Abstract: The article is devoted to the evaluation of major theories of production factors. In it the author identifies four stages of the evolution of the productive forces. Disclosed circumstances affecting the transformation of the content and role of production factors in economic processes at each stage

Keywords: factors of production, entrepreneurship, transformation, innovation, information resources

All economic processes occurring in the country are united by such a concept as “economic system”. It is a set of principles, rules and norms that determine the nature and content of relations that develop in society in the process of production, distribution, exchange and consumption of a product. Modern type economic system formed as a natural result of the process of economic evolution, as a gradual change in the level and nature of the development of productive forces, acting as the leading side of social production.

Productive forces are a set of economic resources necessary for human creative activity - personal and material factors, the coordinated functioning of which is ultimately capable of transforming matter and the forces of nature to satisfy the numerous needs of people. In order to start production, it is necessary to have at least someone who will produce and what they will produce from. Indeed, according to economic

theory, a person is simultaneously both a producer and a consumer of economic goods, i.e. the satisfaction of social needs and desires is the natural ultimate purpose of social production.

Thus, according to the American economist G. Skitovski, the consumer is the main subject of the economy, whose behavior in the market depends on his needs in a certain period of time. In this regard, the main goal of the economy is to produce means to maximally satisfy the desires of each consumer, because only in this case the economic system will be effective. Consequently, it is the needs for industrial entrepreneurs that are the first reason and final goal of production. As a result, it turns out that from the standpoint of production, a person is not only its subject, but also its ultimate goal.

It is believed that the most important functional components of the process of creating the final consumer product are economic factors. According to Marxist theory, their interrelation and the nature of the connection determine the social orientation of production, and the level of development of the productive forces is the most important indicator social progress, a necessary condition economic, social and financial development of the country.

Thus, it can be argued that the evolution of the economic system represents a transformation of the structure and content of factors of production, i.e. consistent disclosure of “new” ones with the dynamic development of traditional ones. “New” we will consider those resources that, in fact, have always participated in the production process, but at a certain period of time were not recognized as economic factors due to their insignificant, at that time, strength and role.

World economic science has many different concepts regarding factors of production, but there is still no comprehensive theory that would most fully reveal the essence and content of these resources. At the same time, it would be a mistake to assert that the current circumstance arose due to insufficient knowledge of them. In our opinion, it rather follows from the very nature of this phenomenon, because each change in the leading factor changed the entire economic theory, while enriching the nature and content of traditional factors of production, imprinting the features inherent in a given era.

An analysis of the historical conditions for the formation and development of economic systems showed that a change in the central factor occurred as a result of the influence of three reasons:

1. the new production factor made it possible to perform more social tasks;

2. the new factor made it possible to reduce the costs of previous factors;

3. a new factor of production ensured greater efficiency of progress when intensification provided greater economic growth than the extensive path of development.

As a result, we come to the conclusion that the formation and transformation of economic resources took place along with the formation and development of economic

Eremyan V. S.

cultural systems, especially business. These processes took place in several stages, in conditions where some factors of production were taken into account and others were not taken into account. Let's look at them in more detail.

The first stage is associated with the “agrarian revolution”. This period is characterized by the transition of human hunter-gatherer society from a primitive appropriating economy to a producing one. agriculture(early agriculture and animal husbandry). The revolutionary transition to agriculture created conditions for the development of society, gave impetus to the creation of permanent settlements and led to the emergence of the first civilizations (by the 3rd millennium BC). The relative independence of man from the environment and the emergence of the first types of tools made it possible to organize such activities, the result of which was not just the satisfaction of primary personal needs, but also the creation and accumulation of surpluses, which subsequently led to the emergence of exchange.

However, the insufficient development of the means of production, the presence of mainly physical labor, the combination of production and consumption in one subject determined the dominance of the labor factor in the processes of value creation. The main economic value was the worker, whose work had a self-organizing economic content, since the owner of production factors and the producer were merged into one person.

That is why, in this era, land and labor played a key role in the resource market.

The fundamental basis of human economic activity is land. These are all types of natural, non-man-made resources that are used in the production process: plots of land, minerals, water and forest resources, that is, this is all that is useful that is given to man by nature. The main distinguishing property of land, as a natural production factor, is its limitation. This means that a person is not able to change its size at will, even despite the growing trend in recent years to create artificial soils, reservoirs, lakes and entire islands. The scarcity of land in the factor market can be represented as a completely inelastic supply (Es = 0). Those. The supply of land resources is absolutely not subject to change under the influence of at least any price jumps, and the supply curve is strictly vertical.

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. Let us give an example from the economic history of the Soviet Union in the 60s of the 20th century, when great importance was given to the development of virgin and fallow lands. At the first stages of the program, record results in agricultural production were achieved, but after a few years serious problems began - the upper fertile layer The soil turned out to be too thin and was seriously damaged as a result of improper use. As a result, the costs stopped paying off, and

the development of virgin lands ceased to bring the expected profit. In this regard, it turns out that, other things being equal, the continuous application of labor to the land will not be accompanied by a proportional increase in returns.

The intermediate link between man and the environment is labor, which adapts natural materials and natural resources of the earth to the needs of man and society. According to K. Marx, the factor of production is not labor itself, but labor power, or, in other words, the ability to work. In his opinion, labor is a complex of human nervous, mental, and physical forces, which together are capable of creating new value. That is why he was a supporter of forcing workers to work harder and increasing their working hours, explaining that only in this case a positive result from the process of producing new value is possible. Other economic factors only transfer to the product the value that they themselves possess.

Thus, labor is a combination of physical and mental abilities people that he uses in organizing the production of goods and services. Labor productivity largely depends on the progress of technology, while the share of labor spent per unit of production is constantly falling, and the means of production are constantly increasing. Scientific

technical progress leads to changes in the length of the working day, in the content and nature of work - it becomes more qualified, the time for professional training increases, the productivity and intensity of labor increases.

It is believed that in the process of labor, a person, realizing his labor power, changes not only the environment, but also his internal nature, i.e. he develops and improves physically and mentally, acquires new knowledge. Indeed, it was labor that created man and continues to develop him.

The second stage in the evolution of production factors is associated with the “industrial and industrial-technological revolutions”, which began in the second half of the 18th century. and continued throughout the 19th century. until the beginning of the twentieth century. This period is associated with the structural transformation of the economy - the transition from a predominantly agricultural (subsistence) economy to industrial production, which is characterized by the massive use of machinery and equipment. The development of industry and means of production was accompanied by a rapid increase in labor productivity based on large machine industry, as well as rapid economic growth, which became the basis for the emergence and establishment of the capitalist system as the dominant world economic system. As a result, this provoked the affirmation of the key role of the “new” factor of production - capital - the totality of the means of labor that are used in the production of goods and services.

It should be noted that at this stage new property relations were formed. On the one hand, the process of accumulation of funds by capitalists allowed them to form the means of production necessary for the production of basic material goods. It is the right of ownership to

Business in law

this capital gave entrepreneurs the opportunity to use the goods and services produced, as well as the profit received from these activities, at their own discretion. On the other hand, the presence of people who do not own the means of production has formed a special class of society - legally free hired workers who freely sell their labor for remuneration, focusing solely on their interests.

Around this time, A. Smith, in his classic work “An Inquiry into the Nature and Causes of the Wealth of Nations,” writes that the main motive for production is private property, and competition acts as a regulator of this activity. At the same time, he calls the entrepreneur a capitalist, i.e. an owner of capital who, in conditions of uncertainty, in order to make a profit and realize his own goals, is ready to take on economic risk. A. Smith views capital as accumulated labor.

Thus, the dominant of capital and machine technologies is the specificity and pattern of industrial society, represented by capitalism of the era of free competition and monopoly capitalism. Therefore, here the owner of capital in the production form becomes the determining economic subject of social production, and machine production, created on the basis of large capital, dominates the worker. And, as a consequence, there is a decrease in the importance of such a production factor as human physical labor.

However, the French economist J-B. Say, in his book A Treatise on Political Economy, identifies three classical factors of production that increase social wealth. He includes labor, land and capital among them and defines entrepreneurial activity as the process of producing some product that has utility for the consumer by connecting and effectively combining these three production factors.

The term “capital” has many meanings: for example, D. Ricardo identified capital with means of production, K. Marx considered it as a self-increasing value, as a social relation; many researchers of that period associated capital with accumulated material wealth, with money.

Now capital is the material and spiritual property created by an entrepreneur that brings him profit. Material property includes buildings and structures, machines and equipment, materials and raw materials, machinery, money and other valuables. Intellectual capital includes patents, trade marks, brand name, industrial designs, new technologies, know-how, discoveries and inventions, etc.

The third stage is associated with the “scientific and technological revolution” (1940-1990). During this period, there was a rapid development of science, and, as a result, a major restructuring of the technical foundations of material production, contributing to increased production efficiency, a qualitative transformation of the productive forces, and a change in the role of man in the production process. The positive thing about scientific and technological revolution became accessible and

the opportunity to use the achievements of science and technology by entrepreneurs, which greatly facilitated the implementation of entrepreneurship and modified the range of applications of business activity.

During this period, the potential of capital resources as a dominant factor in production processes exhausts itself and fades into the background, while entrepreneurship as a type of activity and the entrepreneur as a key figure in economic relations come to the fore.

The concept of entrepreneur was first used by R. Cantillon in the 18th century. In his opinion, an entrepreneur can be considered any individual who has a sense of foresight, since he carries out his activities in conditions of uncertainty, and also, in the hope of receiving income in the future, is ready to take on all the risks of economic activity and the risk of losses. According to R. Cantillon, an entrepreneur does not have to be a manufacturer of anything; he can sell other people’s goods on the market, purchasing them at a certain, established price.

However, the subsequent complication of entrepreneurial activity and the expansion of its functions led to a deepening of the content of the very concept of entrepreneurship and a significant expansion of the functions of the entrepreneur. Particular attention began to be paid to the process of organizing and managing a business, and the role of the entrepreneur was reduced to the role of a manager combining factors of production. In this regard, he was considered the one who organizes, controls, manages the enterprise, purchases raw materials, materials and equipment for the production of goods, who uses his own knowledge and skills in his business activities.

The identification of entrepreneurship as the fourth factor of production occurred after the research of A. Marshall. According to the author, entrepreneurship is a coordinating factor that connects and combines other production resources. A. Marshall emphasizes that entrepreneurs create new products or improve the production process of an old product creatively, but to do this they must have a good understanding of their industries, be natural leaders, be able to anticipate changes in supply and demand and be willing to act in conditions of risk and uncertainty. complete information.

However, the final consolidation of entrepreneurship as a production factor occurred under the influence of the works and ideas of the Austrian economist J. Schumpeter, who developed a completely new idea in relation to production factors: for the implementation of effective entrepreneurial activity and economic development innovations are needed, innovations that are formed as a result of the use of a new combination of factors of production, and not a change in the number of factors involved in production.

In his book “The Theory of Economic Development,” J. Schumpeter first considers the entrepreneur as an innovator. In his opinion, entrepreneurs are all economic entities that perform the function of implementing innovations resulting from combining existing means of production into another, completely new combination.

Eremyan V. S.

EVOLUTION OF THE CONCEPT OF FACTORS OF PRODUCTION IN ECONOMIC THEORY

At the same time, not every individual engaged in entrepreneurial activity can be called an entrepreneur, but only one who is capable of innovation, and as soon as he stops performing the innovative function, and the business he established becomes generally accepted, he will cease to be an entrepreneur. At the same time, he considered not only the owner, but also employees and managers to be entrepreneurs, the main thing is that they carry out innovation.

As a result, higher added value begins to come not from the application of large capital, but from their innovative use and investment. Thus, the three-factor model of production resources (labor, land, capital) is transformed into a four-factor model (labor, land, capital, innovative abilities), which is still used in modern economic theory and theories of factors of production.

The fourth stage in the evolution of factors of production can be associated with “ information revolution”, signifying the transition from an industrial economy to a knowledge-oriented economy. Thanks to the relationship between scientific knowledge and achievements and technical developments established at the present stage of development, the emergence of knowledge-intensive and information technologies, profound changes are taking place in the production sector - production volumes are increasing, the range of products is expanding and becoming more complex, the quality of goods and services is improving, management methods are being improved, and production resources are being used more rationally. At the same time, these processes contribute to a serious restructuring of social relations and the formation of new production connections characteristic of the information economy.

The main driving force and foundation of the information economy is high-quality business information, free access to which becomes a necessary condition for entrepreneurs to make correct and informed decisions. Information support for the functioning of all subjects of the market economy becomes an important condition economic development of entrepreneurs, expands the possibilities of their activities, provides them with leading positions in the domestic and world markets, in the conditions of globalization and increased risk it acts as a competitive advantage.

This is apparently due to the growing uncertainty of the globalizing world economic space, whose agents feel an ever-growing need for timely receipt of reliable knowledge about the changes taking place. As J. F. Weston wrote, a necessary condition for uncertainty is either a short-term stochastic situation or the absence of complete or partial information. In general, the consideration of information as a means of reducing uncertainty is used in various theories and concepts, but in a slightly different context. For example, in his theory of profit, F. Knight associates entrepreneurship with risk, which is practically reduced to zero, provided that the entrepreneur has the information necessary to solve the problems that arise.

I. Kirzner in his works describes an entrepreneur as a subject who is in constant search for new profitable opportunities that have not yet been noticed by others, new unexpected social needs and new methods of production. Thus, the author associates entrepreneurship with constant vigilance, allowing a person to find, grasp and concentrate his attention on the necessary information that arises around him.

Information became an independent production resource in the middle of the 20th century. thanks to the works of D. Bell, according to which theoretical knowledge and its new role as a guiding force social change are axial principle new society. Having gained an advantage over traditional means of production during this revolution, information is considered as the main factor in modern production, since it is it that determines the quality and cost of the goods or services produced. Energy, material, raw materials and labor resources traditional for previous stages of development acquire secondary importance. As a result, there is a reduction in their use in production, which entails their rational use and redistribution to other sectors of the national economy.

To explain how this happens, let us turn to one of the most important factors of production - labor. At the moment, there is a significant reduction in employment in industry and the primary sector of the economy, offset by an increase in employment in the service sector. This means that a person today increasingly acts not as a subject of activity reduced to abstract labor, but as a bearer of unique abilities, the process of using which cannot be called labor in the traditional sense of the term. In other words, in modern production, the contribution to that share of value that is produced by living physical labor, is increasingly decreasing. With the development of this trend, the logic of the system built on the exploitation of this direct labor is destroyed. The employee ceases to be a direct participant in the production process, retaining the role of controller and regulator.

At the same time, the expansion of information activities contributes to the development of the service sector, which ultimately leads to a significant change in the share of economic sectors in the formation of gross domestic product. Thus, a completely new economic system is being formed, in which the interconnection of goods and services created from material and intangible resources is clearly visible.

Thus, with the development of information technology and the increasing use of information in all socio-economic processes and phenomena, a transformation of the structure and nature of economic resources occurs, as well as a change in the priority of the components of the traditional model of production factors. And, as a result, the modern complete model of production should be five-factor with its inherent production resources - land, capital, labor, entrepreneurial abilities and information.

Business in law

In economic theory, it is generally accepted that any production requires the use and interaction of four traditional resources. Moreover, as humanity developed, only one of the production factors played a dominant role corresponding to a given stage in the economic development of society. For example, as noted above in our study, during the period of an agrarian society, land and labor were considered the main factors of production, in a capitalist society - capital, industrial

Entrepreneur. As a result, economic theory, due to the identification of the most significant productive forces that provide greater added value, did not fully reflect the real state of affairs, but described only a limited vision of things.

However, with the formation of the information society and the identification of a new production factor

Information, many questions arise regarding improving the approach to the economic organization of production. We believe that only the unity of factors of production and their effective interaction in their totality is the source and driving force of socio-economic development and progress of society, since each factor does what the other cannot do.

Bibliography:

1. Bayramukova A.S.-Kh. Information in the structure of production factors // Modern Scientific research, 2012. No. 11. URL: http://wvvw.uecs.ru/

2. Bell D. The Coming Post-Industrial Society. Experience of social forecasting / Transl. from English ed. 2nd, rev. and additional - Academia, 1999. - 788 p.

3. Blaug M. 100 great economists before Keynes. / Per. from English edited by A.A.Fofonova. - St. Petersburg: Economic School, 2008. 352 p.

4. Gorfinkel V.Ya., Polyak G.B. Entrepreneurship. Textbook / ed. V.Ya.Gorfinkel, G.B.Polyak. - 5th ed., revised. and additional - M.: UNITY-DANA, 2009 - 687 p.

5. Kirtsner I.M. Competition and entrepreneurship. - M.: UNITY, 2001. 239 p.

6. Kusakina O.N., Abrosimova M.V. Patterns of evolutionary development of entrepreneurship // Tegga

economicus. 2011. No. 4. Volume 9. Part 3. P.128-133.

7. Knight F.H. Profit. Translation by N.K. Khovansky // Milestones of economic thought [Text]: T. 3. Markets of production factors / Ed. V.M. Galperin. - St. Petersburg: Economic School, 1999. 496 p.

8. Olevsky G. Information and communication component of modern entrepreneurship // World Economy and International Relations, 2012. No. 10. P. 30-

9. Pomylev A.A. Information economics: an evolutionary approach to analysis // News of the Russian State Pedagogical University named after. A.I. Herzen. 2007. No. 45. pp. 197-202.

10. Svetunkov M.G. Entrepreneurship and innovation: Monograph. - Ulyanovsk: Ulyanovsk State Technical University, 2010. 128 p.

11. Sey J-B. Treatise on Political Economy. F. Bastiat. Economic sophistry. Economic harmonies. - M.: Delo, 2000. 87 p.

12. Scitovski G. Sovereignty and rationality of consumption. Translation by E. Ryabov // Milestones of Economic Thought [Text]: T. 1. Theory of Consumer Behavior and Demand / Ed. Galperina V.M. - St. Petersburg: Economic School. -1999. 380 pp.

13. Smith A. Research on the nature and causes of the wealth of nations. - M.: Sotsekgiz, 1962. 677 p.

14. Weston J.F. The concept and theory of profit: a new look at the problem. Translation by L.S.Gorshkova. // Milestones of economic thought [Text]: T. 3. Markets of production factors

stva / Ed. V.M. Galperin. - St. Petersburg: Economic School. - 1999. 496 p.

15. Schumpeter J.A. Theory of economic development. - M.: Progress, 1982. 355 p.

16. Edersheim E. Best ideas Peter Drucker / Trans. from English edited by A. A. Chernova. - St. Petersburg: Peter, 2008. 384 p.

17. Econometrics: textbook / A.V. Glodilin, A.N. Gerasimov, E.I. Gromov. M.: KNORUS, 2006. 232 p.

18. Yagolkovsky S.R. Psychology of innovation: approaches, models, processes. - M.: State University Higher School of Economics., 2011.272 p.

19. Shkurat M.V. Classical political economy on the role of the business sector in the economy//Business in Law: International Economic and Legal Journal. -2014. - No. 2.

20. Novoselova N.N., Kutova S.I. Priority directions of agglomeration policy for regional development // Business in law: international economic and legal journal. - 2014. - No. 5.

21. David Burnett. The Supply of Entrepreneurship and Economic Development. - URL: http://technopreneurial.com/arti-cles/history.asp

1. Bairamukova A. C. Agricultural Information in the structure of production factors // Modern scientific researches, 2012. No. 11. URL: http://wvvw.uecs.ru/

2. Bell D. the Coming of post-industrial society. Experience in social forecasting / Lane. from English. ed. 2nd, Rev. and extra - Academia, 1999. - 788 C.

3. Blaug M 100 great economists before Keynes. /Lane. from English. Ed. by A. A. Fofanov. - SPb.: School of Economics, 2008. 352 S.

4. Garfinkel C. Y., Polyak, B. Entrepreneurship. Textbook/Ed. by C. J. Garfinkel, G. B. Pole. - 5th ed., revised and enlarged extra - M.: UNITY-DANA, 2009 - 687 S.

5. Kirzner I. M. Competition and entrepreneurship. - M.: UNITY, 2001. 239 C.

6. Kusakina O. N., Abrosimov, M. C. Patterns of evolutionary development of entrepreneurship // Terra Economicus. 2011. No. 4. Volume 9. Part 3. S. 128-133.

7. Knight, F. H. Profit. .To. Khovansky // Landmarks of economic thought: So 3. The factor markets / Ed. by C. M. Halperin. - SPb.: School of Economics, 1999. 496 C.

8. Olevsky, Information and communication component of the modern business // World economy and international relations, 2012. No. 10. pp. 30-39.

9. Pomylev A. A. Informational economy: an evolutionary approach to the analysis // proceedings of the Russian state pedagogical University n.a. A. I. Herzen. 2007. No. 45. S. 197-202.

10. Svechnikov M, Entrepreneurship and innovation: Monograph. - Ulyanovsk: UlSTU, 2010. 128 C.

11. This W-B. Treatise on political economy. F. Of Bastia. Economic sophisms. Economic harmony. - M.: Delo, 2000. 87 C.

12. Our scitovsky, Sovereignty and rationality of consumption. Translation E. Ryabova // Landmarks of economic thought: So 1. The theory of consumer behavior and demand, Ed. Halperin Century M - SPb.: Economic school. - 1999. 380 C.

13. Smith A. an inquiry into the nature and causes of the wealth of Nations. - M.: Sazaklis, 1962. 677 C.

14. Weston, J. F. The concept and theory of profit: a new look at the problem. Translation HP Gorshkova. // Landmarks of economic thought: So 3. The factor markets / Ed. by C. M. Halperin. - SPb.: Economic school. - 1999. 496 C.

15. Schumpeter J. A. The theory of economic development. -M.: Progress, 1982. 355 C.

16. Edersheim E. Best ideas of Peter Drucker / Lane. from English. Ed. by A. A. Chernov. - SPb.: Peter, 2008. 384 C.

17. Econometrics: a manual / by A. C. Gladilin, A. N. Gerasimov, E. I. Gromov. M: KNORUS, 2006. 232 C.

18. Golkowski S. R. Psychology of innovation: approaches, models, and processes. - M.: higher school of Economics., 2011. 272 C.

Eremyan V. S.

EVOLUTION OF THE CONCEPT OF FACTORS OF PRODUCTION IN ECONOMIC THEORY

19. Shkurat M Century Classical political economy on the role of the business sector in the economy//Business in law: international economic law journal. - 2014. No. 2.

20. Novoselova N. N., Kutovoy, S. I. Priorities agglomeration policy regional development // Business in law: international economic law journal. - 2014. No. 5.

21. David Burnett. The Supply of Entrepreneurship and Economic Development. - URL:

http://technopreneurial.com/articles/history.asp

to the article by V.S. Eremyan “The evolution of the concepts of production factors in economic theory and their role in the development of the institution of entrepreneurship” The presented article is devoted to a current area - the assessment of the main theories of production factors. In the article, the author notes that the evolution of an economic system represents a transformation of the structure and content of factors of production, i.e. consistent disclosure of “new” ones with the dynamic development of traditional ones. Based on this, the author comes to the conclusion that the formation and transformation of economic resources took place with the formation and development of economic systems, especially business.

The article presents different points of view on the content of the stages of formation and development of economic systems, especially business, taking into account factors of production.

Similar points of view are grouped based on a systems approach.

The advantage of the article is the presence original approach to the fact that none of the factors discussed in the article individually is decisive, only a certain combination of them determines the pace and forms the vector of development. And the fact that some factors of production are located at the second level of the matrix, in fact, does not reduce their role and importance in the creative process.

The article is structured and distinguished by logic and coherence of presentation.

As a note, the following can be noted: the article is largely theoretical in nature and requires the development of ideas in the applied field.

In general, the comment made does not reduce the scientific and practical value of the presented work.

Scientific article B.C. Eremyan “The Evolution of the Concepts of Factors of Production in Economic Theory and Their Role in the Development of the Institute of Entrepreneurship” meets all the requirements for works of this kind and has not been previously published. I recommend this article for publication in the open press.

Doctor of Economic Sciences, Professor, Professor of the Department of Economics and Entrepreneurship of North Ossetian University State University them. K.L. Khetagurova

The creation of a variety of goods capable of satisfying numerous human needs presupposes production activity, during which the substance of nature is transformed. What is involved in the production process and contributes to the creation of the final product (service) is called a factor of production or an economic resource.
Factors of production can include land, a tractor, an excavator, nails, ore, thread, cotton, electricity, a factory building, a blast furnace, and much more. The production process is impossible without such an important factor as human labor.
Abstracting from the diversity of the natural form of factors of production, we can group them into larger categories. There are a number scientific classifications, which will be considered further.
The simplest and most obvious is the division of production factors into personal and material factors, accepted in the theory of Marxism. Personal ones, of course, include people with their knowledge, experience, and production skills. It is the person who is the initiator, organizer and active participant in the production process. All the rest, namely material resources, are most often called means of production, since with their help a person produces the goods that interest him. Collectively, people with their knowledge and experience and the means of production they set in motion constitute the productive forces of society.
K. Marx also gives a more detailed classification of factors of production. Thus, the means of production are divided into objects of labor and means of labor. Objects of labor are what human labor is aimed at and what is directly transformed into the final product. Objects of labor include:

Earth;
primary objects of labor that are subjected to industrial processing for the first time, for example, ore in a mine;
raw materials, or secondary objects of labor that were previously subjected to production processing, for example, already mined and enriched ore entering the blast furnace.
The means of labor are a continuation of the natural capabilities of man and act as an intermediary between him and the subject of labor. The means of labor include:
land (for example, its fertile power affects grain. In addition, land gives any production a place and scope);
tools of labor, or the musculoskeletal system of production, directly affecting the object of labor and transforming it (for example, machines, machine tools, tools);
vascular production system, in particular pipelines, tanks, containers, and other containers;
general conditions of production, for example, transport routes, communications, communications.
A slightly different classification of factors of production was proposed by representatives of English classical political economics. A. Smith and D. Ricardo proceeded from the presence of three types of economic resources: labor, land and capital. At the same time, by earth they understood all natural resources: minerals, forests, rivers, seas, etc. Capital was interpreted as material wealth previously produced by man. Capital primarily includes all instruments of production and raw materials.
At first glance, the difference between the classifications proposed by Smith, Ricardo and Marx is purely formal. For Smith and Ricardo, natural resources are isolated from other material factors of production. However, upon deeper analysis, a number of fundamental differences emerge.
The first difference concerns the treatment of capital. Smith and Ricardo practically identify capital with the means of production and find manifestations of capital wherever a person forms reserves, hoping to receive income from them in the future. According to Marx's theory, capital exists only under certain socio-historical relations and cannot be identified with any natural material form (see paragraph 3 of this chapter for more details). The second difference is related to the concept of “labor”. According to K. Marx, labor is not a factor of production, but labor power, or the ability to work.
Labor force is the totality of a person’s nervous, mental, and physical forces. Unlike labor power, labor is a function of labor power realized by the ability to work.
It is noteworthy that in his early works Marx himself did not distinguish between work and the ability to work. However, in the distance
Consequently, the introduction of the category “labor force” played a fundamental role in the development of the theory of surplus value and the justification of capitalist exploitation (see paragraph 2 of this chapter for more details).
The classification of production factors is not important in itself, .1 from the point of view of revealing the role of these factors in the process of production and distribution. Thus, Marx argued that all factors are equally important for the production of a natural product. However, they play completely different roles in the value creation process. Only labor power is capable of creating new value. The means of production can only transfer to the product the value that they themselves possess.
Unlike Marx, Smith and Ricardo did not distinguish between the process of producing goods in their natural form and the process of creating the value of goods.
Regarding the issue of the distribution of society's income, according to the theory of Marxism, labor creates not only the equivalent of its own value, which underlies wages, but also surplus value, through which profit and rent are formed.
The vision of this problem by the classics of English literary economics was different. A. Smith believed that “every person who receives his income from a source belonging to him personally must receive it either from his labor, or from his capital, or from his land.” However, at the same time, he emphasized the dominant nature of labor as the source of the nation’s wealth and the basis of the value of goods: “Labor determines the value not only of that part of the price (of a product) that falls on wages, but also the other parts that fall on rent and profit ". In other words, "the worker does not always own the whole product of his labor. In most cases he must share it with the owner of the capital who employs him." Also, the worker “must give to the landowner a part of what his labor collects or produces.”
IN early XIX V. the theories of Smith and Ricardo were largely vulgarized. The theory of factor productivity of the French economist J.B. Say became especially famous. Say's theory is not limited to identifying three factors of production. He substantiates the thesis that all fakjurs equally participate in the process of formation of value and income in society. Consequently, each factor receives the product of its labor in accordance with its productivity.
English economists J. Mill and McCulloch “expanded” Say’s unified formula. They proposed to extend the concept
“labor” for the functioning of machinery and equipment (the labor of capital), for the biological processes of growth of agricultural plants (the labor of nature). From this premise the logical conclusion is drawn that each factor of production receives income in accordance with its “labor”.
The theory of production factors was further developed in the works of the American scientist J. Clark. Clark supplemented Say's theory with the theory of diminishing returns of factors of production and, on this basis, determined the specific amount of income received by each factor.
According to Clark's theory, each factor has a certain marginal productivity, according to which its market price is determined. By selling the factor of production that belongs to him on the resource market, everyone receives his factor income in accordance with the marginal productivity of the factor: the worker receives wages for his labor, the landowner receives land rent, and the owner of capital receives profit. Thus, in factor productivity theory there is no place for exploitation. Income distribution is carried out through market pricing of factors of production in accordance with the principles of equivalent exchange.
The theory of factors of production developed by Say has become widespread in Western economic thought. In one form or another, it is present in all textbooks “Economy and KS”\ One of the most important modern additions to this theory is that a special, fourth factor of production is highlighted - entrepreneurial abilities and skills.
In particular, the famous American economist J. Galbraith pays great attention to this factor. Strictly speaking, entrepreneurship can be interpreted as one of the types of work activity in general. However, the allocation of entrepreneurial abilities into an independent category is due to the important and dominant role that entrepreneurship plays in economic life today.
Moreover, now they are increasingly talking about the need to highlight several more factors that have become of great importance. This is primarily an information factor, without which modern production is unthinkable, and, of course, environmental factor, the importance of which is dictated by the increased reverse influence of production on nature.
It should be noted that not a single economic concept includes money as such, stocks, or bonds as economic resources. Indeed, neither money nor securities are directly involved in the creation of any product or service. At the same time, both in journalism and in everyday life, the identification of money and securities with capital has become commonplace. Capital is no less traditionally
associated with economic resources. Thus, the attitude towards money and shares as factors of production, which they are not, is consolidated in the mass consciousness.

EVOLUTION OF PRODUCTION FACTOR CONCEPTS

The creation of a variety of goods capable of satisfying numerous human needs involves production activity, during which the substance of nature is transformed. What is involved in the production process and contributes to the creation of the final product (service) is called a factor of production or an economic resource.

The factor of production can be land, tractor, excavator, nails, ore, thread, cotton, electricity, factory building, blast furnace and much more. The production process is impossible without such an important factor as human labor.

Abstracting from the diversity of the natural form of factors of production, we can group them into larger categories. There are a number of scientific classifications, which will be discussed further.

The simplest and most obvious is the division of production factors into personal and material factors, accepted in the theory of Marxism. Personal ones, of course, include people with their knowledge, experience, production skills. It is the person who is the initiator, organizer and active participant in the production process. All others, namely material resources, are most often called means of production, since with their help a person produces the goods that interest him. Collectively, people with their knowledge and experience and the means of production they set in motion constitute the productive forces of society.

K. Marx also gives a more detailed classification of factors of production. Thus, the means of production are divided into objects of labor and means of labor. Objects of labor - this is what human labor is aimed at, what is directly transformed into the final product. Objects of labor include: land;

primary objects of labor that are subjected to production processing for the first time, for example, ore in a mine;

raw materials, or secondary objects of labor that were previously subjected to industrial processing, for example, already mined and enriched ore entering a blast furnace.

Labor tools are a continuation of man’s natural capabilities and act as an intermediary between him and the subject of labor. The means of labor include:

land (for example, its fertile power affects grain. In addition, land gives any production a place and scope);

tools of labor, or the musculoskeletal system of production, directly affecting the object of labor and transforming it (for example, machines, machine tools, tools);

vascular production system, in particular pipelines, tanks, containers, and other containers;

general production conditions, for example transport routes, communications, communications.

Representatives of English classical political economy proposed a slightly different classification of factors of production. A. Smith and D. Ricardo proceeded from the presence of three types of economic resources: labor, land and capital. At the same time, by earth they understood all natural resources: minerals, forests, rivers, seas, etc. Capital was interpreted as material wealth previously produced by man. Capital primarily includes all instruments of production and raw materials.

At first glance, the difference between the classifications proposed by Smith, Ricardo and Marx is purely formal. For Smith and Ricardo, natural resources are isolated from other material factors of production. However, upon deeper analysis, a number of fundamental differences emerge.

The first difference concerns the treatment of capital. Smith and Ricardo practically identify capital with the means of production and find manifestations of capital wherever a person forms reserves, hoping to receive income from them in the future. According to Marx's theory, capital exists only under certain socio-historical relations and cannot be identified with any natural material form (see 18.3 for more details). The second difference is related to the concept of “labor”. According to

K. Marx, it is not labor that is a factor of production, but labor power, or the ability to work.

Work force is the totality of a person’s nervous, mental, and physical forces. Unlike labor power, labor is a function of labor power realized by the ability to work.

It is noteworthy that in his early works Marx himself did not distinguish between work and the ability to work. However, later the introduction of the category “labor force” played a fundamental role in the development of the theory of surplus value and the justification of capitalist exploitation (see 18.2 for more details).

The classification of factors of production is important not in itself, but from the point of view of revealing the role of these factors in the process of production and distribution. Thus, Marx argued that all factors are equally important for the production of a natural product. However, they play very different roles in the value creation process. Only labor power is capable of creating new value. The means of production can only transfer to the product the value that they themselves possess.

Unlike Marx, Smith and Ricardo did not distinguish between the process of producing goods in their natural form and the process of creating the value of goods.

Regarding the issue of the distribution of society's income, according to the theory of Marxism, labor creates not only an equivalent of its own value, which underlies wages, but also surplus value, through which profit and rent are formed.

The classics of English political economy had a different vision of this problem. A. Smith believed that “every person who receives his income from a source belonging to him personally must receive it either from his labor, or from his capital, or from his land.” However, at the same time, he emphasized the dominant nature of labor as the source of the nation’s wealth and the basis of the value of goods: “Labor determines the value not only of that part of the price (of a product) that falls on wages, but also those parts that fall on rent and profit.” In other words, “the worker does not always own the entire product of his labor. In most cases he must share it with the owner of the capital who employs him.” Also, the worker “must give to the landowner a part of what his labor collects or produces.”

At the beginning of the 19th century. the theories of Smith and Ricardo were largely vulgarized. Particularly famous was the theory of productivity of production factors by the French economist J.B. Seya. Say's theory is not limited to identifying three factors of production. He substantiates the thesis that all factors are equally involved in the process of formation of value and income in society. Consequently, each factor receives the product of its labor in accordance with its productivity.

English economists J. Mill and McCulloch “expanded” Say’s triune formula. They proposed to extend the concept of “labor” to the functioning of machinery and equipment (the labor of capital) and to the biological processes of growth of agricultural plants (the labor of nature). From this premise the logical conclusion is drawn that each factor of production receives income in accordance with its “labor”.

The theory of production factors was further developed in the works of the American scientist J. Clark. Clark supplemented Say's theory with the theory of diminishing returns of factors of production and, on this basis, determined the specific amount of income received by each factor.

According to Clark's theory, each factor has a certain marginal productivity, according to which its market price is determined. By selling the factor of production that belongs to him on the resource market, everyone receives his factor income in accordance with the marginal productivity of the factor: the worker receives wages for his labor, the landowner receives land rent, and the owner of capital receives profit. Thus, in factor productivity theory there is no place for exploitation. Income distribution is carried out through market pricing of factors of production in accordance with the principles of equivalent exchange.

The theory of factors of production developed by Say has become widespread in Western economic thought. In one form or another, it is present in all Economics textbooks. One of the most important modern additions to this theory is that a special, fourth factor of production is identified - entrepreneurial abilities and skills.

Much attention is paid to this factor, in particular, by the famous American economist J.K. Galbraith. Strictly speaking, entrepreneurship can be interpreted as one of the types of work activity in general. However, the allocation of entrepreneurial abilities into an independent category is due to the important and dominant role that entrepreneurship plays in economic life today.

Moreover, now they are increasingly talking about the need to highlight several more factors that have become of great importance. This is, first of all, an information factor, without which modern production is unthinkable, and, of course, an environmental factor, the importance of which is dictated by the increased reverse influence of production on nature.

It should be noted that not a single economic concept includes money as such, stocks, or bonds as economic resources. Indeed, neither money nor securities are directly involved in the creation of any product or service. At the same time, both in journalism and in everyday life, the identification of money and securities with capital has become commonplace. Capital is no less traditionally associated with economic resources. Thus, the attitude towards money and shares as factors of production, which they are not, is consolidated in the mass consciousness.

Smith L. Research on the nature and causes of the wealth of nations // Anthology of economic classics. T. 1. M.: Ekonov, 1993. P. 122.
Right there. pp. 120-121.

The material basis of any production is the resources that society currently has.

Under production resources commonly understood a set of values that can be directed to the production of material and intangible goods.

Resources represent production potential, i.e. may be involved in it. In reality, the resources involved in the production process are factors of production. It follows that the concept of “resources of production” is broader than the concept of “factors of production”.

There are other definitions of production factors in the economic literature:

Factors of production are a particularly important element or object that has a decisive impact on the possibility and effectiveness of production;

Factors of production are everything that, participating in the production process, produces goods and services.

There are different approaches to determining factors of production and their classification. It should be noted that the existing differences in the interpretation of individual factors of production by different scientific schools predetermined differences in the interpretation of the entire set of factors of production.

Classical theory identifies three factors of production: labor, land, capital.

Marxist theory distinguishes two groups of factors: real factors (objects of labor and means of labor, which are collectively means of production) and private factor (labor force).

Marginalist theory identifies four groups of factors: land, labor, capital, entrepreneurial activity.

The classification of production factors under consideration is not frozen, given once and for all. In the economic theory of post-industrial society, information and environmental factors are also distinguished as production factors. At the same time, the environmental factor is playing an increasingly important role, since it acts either as an impetus for economic growth or as a limiter on its capabilities due to harmfulness, gas contamination, pollution, etc.

As you can see, these classifications of production factors differ in a number of positions: by their role in production, entrepreneurial activity, land and natural conditions; on the social orientation and results of the functioning of production, its factors. If Marxist theory is more characterized by a class approach, then the main directions of modern economic thought are characterized by a technical, economic, historical approach.

It seems appropriate to highlight in more detail the differences in the interpretation of individual factors of production by different scientific directions.

Labor – This is the process of a person spending his physical, mental and nervous energy (intellectual and physical activity) aimed at producing goods and providing services. Labor represents the consumption of labor power - the ability to work. The totality of an individual’s abilities: education, vocational training, skills, health – form human capital, investments in which are considered the most effective. The higher the human capital, the higher the income from this capital, i.e. the more skilled the labor.

In Marxist theory, labor during the working day is conventionally divided into necessary and surplus. This division is associated with the concept of economic coercion to work, characteristic of the capitalist economic system. Economic coercion is associated, in turn, with the category of wage labor, for the emergence of which two conditions are necessary: the personal freedom of a person and his lack of means of production necessary for the implementation of own business. Under these conditions, a person’s labor power becomes a commodity, and he is forced to hire out to earn a living. Necessary is the labor that a worker expends in order to produce the products necessary to ensure the life of himself and his family. The product produced at this time is called necessary and is paid for by the employer. Surplus labor is labor expended during the working day in excess of what is necessary. The product produced by surplus labor is called surplus and is not paid for.

Unlike other factors of production, labor has characteristics, the main one of which is that labor is inseparable from a person, his labor force, and therefore has a social and political aspect. This circumstance determines the different approaches of economists to its study. Thus, Western economists consider labor to be a commodity, in contrast to the Marxist theory, which states that a commodity is not a person’s labor, but his labor power, that is, a person’s ability to work. In various classifications of factors of production, labor has a different place among other factors of production. Thus, in the classical theory, labor is in first place among other factors, and in the marginalist theory it is in second place (first place is given to the “land” factor).

Earth is a natural factor and acts as a general means of production. The term "land" is used in a broad sense. It covers everything useful that is given by nature: natural resources, forests, arable land, water resources, mineral deposits. Land is a resource used for the production of agricultural products, for the construction of houses, cities, plants, factories, railways, and mining. From the point of view of agricultural production, land can be divided into natural, i.e. given by nature itself, and created artificially due to irrigation, land reclamation, fertilization, etc. This circumstance affects income from land - land rent. In the classical theory, the factor “land” is in second place after “labor,” while the marginalist theory assigns this factor first place among other factors of production.

The next factor of production is capital. The “capital” factor refers to the material and financial resources used in the production process.

Different economic schools interpret capital differently. The following concepts can be noted:

A material or naturalistic concept (A. Smith, D. Riccardo, A. Marshall, P. Samuelson), which defines capital as a means of production or finished goods intended for sale;

Monetary or monetarist concept (D. Keynes and others), which interprets capital as money that earns interest and is also used for purchasing necessary components production process.

A more complete definition of capital is contained in Marxist theory. K. Marx explores, on the one hand, the essence of capital, and on the other, the specific forms of its manifestation. These forms are: means of production, labor, money, goods. However, neither the means of production nor money, in his opinion, are capital in themselves. They turn into capital only when they are used to appropriate someone else's unpaid labor.

The Marxist understanding of the essence of the category “capital” is characterized by the following provisions:

Capital is not a thing, but a certain social relation that is represented in a thing and gives this thing a specific social character;

Capital can be understood as the constant movement of its elements. Only when in motion does money turn into capital;

Capital is a value that produces surplus value, or self-increasing value.

Another factor of production highlighted by the marginalist trend is entrepreneurial activity.Entrepreneurial activity- a specific factor of production, first identified in the 70s of the 19th century by A. Marshall as “organization” and later called “entrepreneurship” by J. Schumpeter.

Entrepreneurial activity is an initiative, independent activity of citizens and their associations aimed at generating profit (or business income), carried out on their own behalf, at their own peril and risk, under their own property responsibility or on behalf and under the responsibility of a legal entity.

This activity presupposes entrepreneurial ability as a special type of human capital, which consists in organizing the combination of production factors to create goods and services that generate income and satisfy personal and social needs; in its scale and results it is equal to the costs of highly skilled labor.

Without the use of factors of production and the resulting income, the activities of enterprises and organizations are impossible. The use of each type of factor of production brings a certain type of income, the so-called factor income . So, using the factor "Earth" generates income in the form annuities , factor a "work" - income in the form wages , factor a "capital" - income in the form percent, and factor "entrepreneurial activity" - income in the form arrived. The measure of profitability of each factor in specific economic conditions is one of central problems modern economic science, which is actually the science of the profitability of factors of production. But since in market conditions each factor is represented by its owner, production turns into the result of production relations between the owners of the factors of production. Therefore, economic science does not clarify the factors of production themselves, but the economic relations associated with their movement.

Production function, its properties. Law of Diminishing Marginal Productivity

An important role in the implementation of the problem of economic choice is played by the use of the production function. The production function describes the technological relationship between the volume of output and the incurred costs of production factors, as well as the relationship between costs. Production function shows the maximum amount of output that can be produced with a given amount of resource use.

Production is possible only when all factors of production are introduced into the production process. IN real life The manufacturer strives to find the optimal combination of production factors in order to obtain the highest output. The relationship between any set of factors of production and the maximum possible volume of products produced with this volume of factors characterizes the production function. If we assume that output Q is produced using only two factors of production - labor L and capital K, then the production function can be described as follows:

Q= f(L,K),

where Q is the maximum output;

L- labor costs;

K – capital costs;

f is the form of the production function.

If the independent variables are cost values, then the production function is called an output function, but if the output value is fixed, then the production function is a cost function. Most often, for integrated analysis and forecasting, the production function is used in the form of a power-law relationship between the volume of production Q and production factors in the form of labor L and capital K. (The Cobb-Douglas function, which was first constructed in 1928 for the US manufacturing industry for the period 1899- 1922 and bears the name of its authors C. Cobb and P. Douglas):

, Where

Maximum volume of production for given factors of production;

– constant coefficient (proportionality or scale);

Exponents characterizing the return and use of each of the two main factors (coefficients of elasticity of production volume for labor and capital).

If , then the volume of output increases exactly as much as the costs of labor, capital and materials increase, there are constant returns to scale, and the Cobb-Douglas function in this case is homogeneous.

If , then the enterprise will receive economies of scale, indicating that the efficiency of production factors increases in the conditions of technical progress.

If , there will be diminishing returns to scale of production.

In this case, you need to pay attention to the following points:

There is a limit to the increase in production volume that can be achieved by increasing the costs of one resource, all other things being equal;

There is a certain interchangeability of factors of production without reducing production (for example, you can replace one excavator with 15 workers with shovels, or vice versa).

The production function has the following properties.

1. Property of complementarity. Complementarity means that the factors of production are complementary. To produce any product, a certain set of factors is used, the absence of at least one of them makes production impossible. This means that the production function becomes zero when one of the factors equal to zero:

f (O, K) = f (L, K) = O.

In addition, there is an interchangeability of factors in a certain proportion, which is determined not only by the specific needs and design features products, but also by limited resources, on the one hand, and the efficiency of their use, on the other. Interchangeability does not mean the possibility of completely eliminating any factor from the production process, since in any case, land is needed on which the production process, equipment and labor of workers will be organized.

2. Additivity property. Additivity reflects the fact that the combination of two groups of factors ( , ) And (L 2, K 2) gives at least the same volume of production as when using these two groups of factors separately:

3. Property of divisibility. Divisibility means that any production process can be carried out on a reduced scale. For example, if the number of workers and the volume of capital are halved, output will be reduced by no more than half:

This property is typical for the production function at the industry or national economy level, but is not applicable in small enterprises, where production activity at decreasing scales it is either impossible or ineffective.

The production function is associated with a number important characteristics production. First of all, these include indicators of productivity (productivity) of resources, characterizing the volume of product produced per unit of expended resource of each type. Average product i-that resource is called the ratio of the volume of production q to the volume of use of this resource x i.:

The marginal product is equal to the partial derivative of the production function with respect to the volume of expenditure of the corresponding resource:

.(3)

Both average and marginal product are not constant values; they change with changes in the costs of all resources. The general pattern to which various industries are subject is called law of diminishing marginal product: with an increase in the volume of costs of any resource at a constant level of costs of other resources, the marginal product of this resource decreases.

What is the reason for the decrease in marginal product? Let's imagine an enterprise that is well equipped with various equipment, has sufficient area to carry out the production process, is provided with raw materials and various materials, but has a small number of workers. Compared to other resources, labor is a kind of bottleneck, and, presumably, the additional worker will be used very rationally. Accordingly, the increase in production can be significant. If, while maintaining the previous levels of all other resources, the number of workers is large, the work of the additional worker will no longer be so well provided with tools, mechanisms, he may have little space to work, etc. Under these conditions, attracting an additional worker will not cause much increase in production output. The more workers there are, the smaller the increase in output due to the attraction of an additional worker.

The marginal product of any resource changes in the same way. The decrease in marginal product is illustrated in Fig. 3, which shows the graph of the production function under the assumption that only one factor is variable. Dependence of product volume q from resource costs x i(V in this example factor “labor” L) is expressed by a concave (convex upward) function.

q- volume of product

L – labor costs

Rice. 3. Declining marginal product

Some authors formulate law of diminishing marginal product otherwise: if the volume of resource consumption exceeds a certain level, then with a further increase in the consumption of this resource, its marginal product decreases. In this case, an increase in the marginal product is allowed for small volumes of resource consumption.

In addition, the technical characteristics of many types of resources are such that with excessive volumes of their use, the output of the product does not increase, but decreases, i.e., the marginal product turns out to be negative. Taking these effects into account, the production function graph takes the form of a curve in Fig. 4, in which three sections are distinguished:

1 - the marginal product increases, the function is convex;

2 - the marginal product decreases, the function is concave;

3 - the marginal product is negative, the function is decreasing.

Rice. 4. Three sections of the production function curve

The points falling in section 3 correspond to technically inefficient production options and are therefore not of interest. The corresponding range of resource cost values is called non-economic. TO economic field refer to the area of change in resource costs where, with increasing resource costs, product output increases. In Fig. 4 these are plots 1 And 2 .

Sections

The evolution of the concepts of factors of production briefly. Development of the theory of factors of production

More on topic 1. Evolution of concepts of factors of production:

EVOLUTION OF PRODUCTION FACTOR CONCEPTS