There are four factors of production: labour, capital, land and entrepreneurship. Entrepreneurship could be seen as management skills or innovation, which I think is part of labour, as CEOs and even many entrepreneurs are employed by capitals. Therefore, there are only three major factors of production, labour, capital and land. Of course, to complete production, any of the three factors cannot be discarded. However, in terms of cost saving or profit maximisation, labour is the most important determinants.
Either capital or land has very limited leverage abilities that neither is able to generate profits more than its individual value. However, labour is much different. Labour is the key factor to leverage the values of capitals and land. There was a meeting between the UK government and the financial institutions and during the meeting, the CEO of BlackRock raised its concerns about Brexit, however, his concern was not about leaving the EU single market, but focused on the possible change in the migration policy that could affect its employees.
Labour force is the key factor to make capital and land truly gain values. Karl Marx also suggested in his famous book, “Kapital”, that labour production was the method to give goods and services values. This may be too extreme; however, labour provides the majority of a product’s value and helps firms to gain more profits. Moreover, in the future, since information transfer becomes faster, individuals are able to find cooperation partners to start their businesses and production. Under such circumstance, labour, or the population quality, becomes the key factor that determines one economy’s performance.
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