Wednesday, January 28, 2009

factors of production

Are slaves labor or capital?

I was just reading the introduction to Hayek's "The Pure Theory of Capital" — a book I fully expect not to finish — and he ultimately decides to use the term "capital" to mean "the total stock of the non-permanent factors of production". Presumably this includes some of "natural resources", insofar as those are depletable; I typically think of "capital" as something in which one can invest. (What "human capital" and "physical capital" have in common; each represents the devotion of some economic resources in the past to enhance production in the future. Natural resources I suppose represent a decision not to have depleted them faster in the past than we have. Perhaps Hayek's distinction makes sense.)

Of course, I can gear my slaves toward reproduction rather than production of something else, thereby enhancing my future stock of slaves. This isn't so different from human capital in general, though. In many ways, labor simply looks like a particular kind of capital. I wonder how fundamental the "factors of production" are, and how much they rely on ontology to be useful.

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