Factors of production in the economy

Manufacturing is a complex process that depends on numerous factors. For the compilation of simplified models in Economics, however, decided to allocate four main factors, without which production is not possible in principle to modern conditions. It should not be confused with the economic factors of production and so-called harmful and dangerous factors of production Which include: dust, bright light, hazardous gases, etc. From an economic point of view, the factor – is a structural component, determined by the role it plays in the production process.

Analyzing all existing factors of production in the economy, namely: labour, land, capital and entrepreneurial factor, it is impossible not to note that the most important among these is human labor. In the old days, when there were no cars in principle, the work, in fact, was the only factor that labor determined the value of a good. Today, however, the role of man in the production process, due to the automation of production, significantly reduced. On the other hand, these same machines are produced with the direct involvement of a man who, in addition, serves them and organize the registration and the sale of products of production. Thus, the role of labour remains high, and to the age in which all duties will be to handle the machine, we are still far.

Especially that The production equipment in the factors of production in the economy are not included. As the equipment is sold for money, and it can be combined with raw materials, patents, etc. In General everything that is bought for money, and necessary for the implementation of production process is determined by the factor capital. Capital also means investment that should be undertaken in order that people could work on the production and increase added value. The role of capital remains controversial, as supporters of left-wing political ideas insists that capital is not that other, as work taken from the employees through the mechanism of profit.

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Do Not confuse the capital with the same factor as land. The characteristics of demand for factors of production: labor and capital, similar to the market pricing mechanism, not working against the earth. The land is all that belongs to nature. Thus, nature is providing us with a space for the production and mineral resources, also takes an active part in the production cycle. The main feature of this factor is that it exists in a limited size, so with the help of market mechanisms, people must determine what needs you should use natural heritage.

Finally, the entrepreneurial factor is included in the factors of production in the economy of the past, defines the role in the production process of the businessmen, ready to take risks and is able to organize the process.  the Entrepreneurial factor is intended to explain existing in capitalism, profits, i.e. profits that exceed the normal charge for capital. High profit of the enterprise is considered justified, as it is, according to supporters of market capitalism – the merit of the entrepreneur, managed or effectively organize the process, or  went to significant risk. However, this factor today, is not universally accepted by economists.

Some economists, by contrast, tend to further increase the factors of production in the economy to include time, idea, etc. Thus, the question of factors still have very controversial and its interpretation largely depends on political views.