Modren clasiffication of factors of production
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Definition
A factor of production may be defined as "that good or service which is required for production." A factor of production is indispensable for production because without it no production is possible. It is customary to attribute the process of production to four factors, land, labour, capital and organisation.
Land
Land not only consists of mere surface of land but also includes all the natural sources such as oceans, mountains, forests etc. Marshall defines land as " By land is meant materials and forces which nature gives freely for man's aid, in land, water, in air, light and heat." Thus land is a significant part of production which facilitates in the production of goods and services in one way or the other.
Labour
Labour refers to the act of working for some monetary benefits against physical and mental activity. It does not comprise of any leisure activity. It includes the services of a factory worker, any professional workers such as engineers, doctors, teachers, lawyer etc. If a person paints or sings in order to please someone or himself without any target or for monetary benefits he won't be called a labour. But if he intends to sell the painting or sing against any monetary reward then it involves labour. Thus labour forms an essential aspect of production.
Capital
Capital means all human-made materials such as tools, equipments, infrastructure, machinery, seeds, plants, modes of transportation such as rail, road and air etc. In general it encompasses all affluences eliminating land as land is utilised for supplementary production of affluence. Now-a-days, capital not only includes physical capital but also involves human capital which is defined as "process of increasing knowledge, the skills and capacities of all people of the country." Human capital is more vital than the physical capital since without human's interference the materialistic capital cannot be utilised effectively. Prof. Galbraith defines as "We now get the larger part of our industrial growth not from more capital investment but from investment in men and improvements brought about by improved men."
A factor of production may be defined as "that good or service which is required for production." A factor of production is indispensable for production because without it no production is possible. It is customary to attribute the process of production to four factors, land, labour, capital and organisation.
Land
Land not only consists of mere surface of land but also includes all the natural sources such as oceans, mountains, forests etc. Marshall defines land as " By land is meant materials and forces which nature gives freely for man's aid, in land, water, in air, light and heat." Thus land is a significant part of production which facilitates in the production of goods and services in one way or the other.
Labour
Labour refers to the act of working for some monetary benefits against physical and mental activity. It does not comprise of any leisure activity. It includes the services of a factory worker, any professional workers such as engineers, doctors, teachers, lawyer etc. If a person paints or sings in order to please someone or himself without any target or for monetary benefits he won't be called a labour. But if he intends to sell the painting or sing against any monetary reward then it involves labour. Thus labour forms an essential aspect of production.
Capital
Capital means all human-made materials such as tools, equipments, infrastructure, machinery, seeds, plants, modes of transportation such as rail, road and air etc. In general it encompasses all affluences eliminating land as land is utilised for supplementary production of affluence. Now-a-days, capital not only includes physical capital but also involves human capital which is defined as "process of increasing knowledge, the skills and capacities of all people of the country." Human capital is more vital than the physical capital since without human's interference the materialistic capital cannot be utilised effectively. Prof. Galbraith defines as "We now get the larger part of our industrial growth not from more capital investment but from investment in men and improvements brought about by improved men."
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