The main factors of production and their interrelationship

To ensure and implement the production process directly , certain conditions are required - factors of production. Sometimes they are also called resources. Resources include all the elements that are necessary for the production (creation) of economic goods. Depending on the type of production, this or that set of factors is used. But some factors of production are the same and the same type they are still classed as the main factors of production. Otherwise, all factors are divided into certain classes and classifications, associations and groups.

The classification process is based on different approaches. For example, Marxist theory divided economic resources and factors of production into two main and large groups - material and personal. Under personal factors, as a rule, labor power is understood from the position of the intellectual and physical abilities of a person to work in the aggregate. And by material factors we mean the totality of objects and means of labor and natural conditions. But for modern science this division of factors of production is not suitable. Therefore, in the second half of the XIX century, this theory significantly expanded the concept of the factor of production and their classification, consisting of three factors, but at the beginning of the last century, the fourth was added to the first three. And this classification is still being used with minor modifications and upgrades, and this scheme is also called classical.

So, the main factors of production according to the latest classification are divided into labor, land, capital, and entrepreneurial abilities. Let's consider the main factors of production separately and give a characterization.

Labor in terms of production - is a person's physical or intellectual activity, which is aimed at creating some economic benefits. Recently, this factor has been transformed into the concept of "human capital" which implies the consideration of the work of an educated and skilled worker as one of the main factors of production.

As for the land, it refers to the concept of the main factors of production, because it includes not only the land itself, but also water resources, forests, minerals and natural resources that are necessary for the production process. And in this case, in the aggregate of all factors, the earth is one of the fundamental resources of production.

Capital (meaning physical) is an economic resource determined by a combination of technical, monetary and material resources that are necessary for the production of various economic benefits. It is divided into two types: monetary and natural-material. Monetary capital, in fact, is not an economic resource, it is, as it were, an intermediary factor that is necessary to attract (acquire) human and physical capital.

Entrepreneurial abilities are the main factors of production which, in fact, are the properties of labor but not its executive component, but managerial and organizational. Despite the similarity in nature of this factor with performing labor, this factor allows you to create your own form of income - entrepreneurial income. The minimum limit of such income is profit. In other factors, there are no own types of income. Here, this factor can be attributed to science as a specific form of human activity.

Information also applies to this group or type of factors. Since it allows you to collect and process various knowledge, their systematization for further use in the production and economic sphere of human activities. All the above-mentioned factors are not often called as permanent factors of production.