Production elements or factors of production (in English: Factors of production): The solution to the economic problem requires the satisfaction of human needs, and this satisfaction is not done directly through nature, but by making transformations and changes to it in order to make it suitable for use and satisfaction, that is, we must produce.^[1]

What is meant by production[عدل]

Production means making conversions on the materials used in order to produce the output.

The output here is commodities, which may be consumption or production, depending on the use.

Example
Wheat production requires the following:

1. The presence of arable soil
2. Provide adequate amounts of water.
3. Sow the seeds.
4. Use a range of fertilizers.
5. Using some energies such as oil and electricity to run some machines.
6. Operating some machines, such as axes, tractors, and water-raising machines.
7. The muscular and mental effort of the farmer.
8. A group of children to help the farmer in the field work.

All of the above is transformed through production into an output, which is wheat, and we can call these previous uses the elements of production.

Economic researchers found that it is better to divide the factors of production into three large groups, namely:

• Human resources, meaning workers.
• Natural resources, including primary raw materials extracted from nature.
• Manufactured resources, materials manufactured as an aid to production.

This is the traditional division where the element of labor, nature, and capital, and some economists prefer to divide the elements of production into two elements only, which are labor and capital.

This is on the grounds that nature is almost made (nature was given to man in an improper form, and man must exert effort in order to obtain benefit from nature. Hence we say that nature is almost made).

On the previous division, we notice two things:

• The first: The previous sections include things that are not homogeneous

Like putting water with soil with seeds inside one element (natural resources)

• Second: Work is the positive element in the productive process

1. Since the economy is a science, and science is based only on man, and man is the maker of machines and tools that are (capital).

Here is the traditional division of the factors of production. Productive elements are limited in quantity and quality in exchange for limited human needs.

the work[عدل]

It is the human effort exerted through the production process in order to produce goods and services.

Work is one of the most important elements of production, as there is no production without work, and when we talk about work, we are not talking about an ordinary element, but rather a human element that is given special treatment for the following reasons:

1. Managing the labor component is not related to an ordinary resource, but to a human element, and the human aspect must be taken into account in terms of determining wages and setting controls for the work of juveniles and women.
2. Work is determined by a wage, which determines the standard of living.

work characteristics

1. Work is a conscious activity: the human being is aware of what he is doing, unlike the animal that works by his instinct, for only the human being is aware of nature, assimilating it and transforming it.
2. Work is a voluntary activity: a person performs it out of a chosen will and an appreciation of his position through his wages (economic calculation), and does it match the effort he exerts in it, unlike the involuntary processes of breathing and blood circulation…etc.
3. Work causes pain: where pain is the cost incurred by the worker as a result of his work, as the work includes a kind of coercion over the work, with what it imposes on him in terms of obligations and physical and mental burdens, and subject to a specific and strict system.
4. Work is a source of pleasure and happiness: Despite the pain and oppression caused by work, we see the worker happy with the completion of his work and self-fulfillment.
5. Work has a purpose: which is to create benefits by contributing to the production process. If pain represents the cost of work, then the production of goods and services represents the return from work.

If the work does not ultimately aim at production, then it is not considered work from the economic point of view.

Types of work:

Work is not a homogeneous element, but rather differs from one profession to another, as well as within the same profession. It is divided into:

1. Manual labor: largely dependent on muscular effort.
2. Mental works: based on intellectual knowledge and experience.

In fact, we do not find manual work devoid of the mental side, and there is no mental work devoid of the muscular side. There are other divisions into executive and supervisory work.

Specialization and division of labor

• First: Specialization, which is when a person specializes in one profession to produce a commodity or service, whether he is a carpenter, farmer, maker, or otherwise. He may produce one type of commodity and obtain the rest of his needs through exchange and barter.

The importance of specialization:

1. Increasing economic efficiency by creating new benefits for individuals
2. Increase the capacity for innovation and invention.
3. Increasing the deep experience of individuals.

• Second: the division of labor: it means that the production of a single commodity is divided into a number of stages for each partial stage of a worker, i.e. the division of labor takes place within a single profession with the intent of producing one commodity or one service, and the division of labor has been linked to the introduction of machinery into production processes.

As dividing the production process into partial operations is easy to use the machine to do it instead of being done by the craftsman.

Advantages of division of labor:

1. Increasing skill in doing business, in order to simplify the required work.
2. Organizing work efficiently in terms of timing, succession and supervision.
3. Save time and reduce waste while moving the worker from one process to another.
4. Facilitating the use of the machine as a result of dividing the production process into several partial operations.
5. All of the above leads to increased production efficiency and increased production.

• Exaggerated division of labor has disadvantages, especially from a psychological point of view

1. Boredom from repeating the same action over and over again.
2. The worker loses his sense of pleasure in work as a result of his work because he performs only a partial process, in contrast to the craft worker who produces the whole commodity.

Nature (Earth)[عدل]

Man does not create matter, matter does not create or perish, and man’s role is limited to creating benefits, and therefore he needs nature in order to produce and create benefits.

By nature, he means all the resources and powers that man finds without effort on his part

It includes (land – mines – forests – watersheds – fisheries ……..etc).

Notes on the “land” nature:

The first: It is a gift from God without human effort, and therefore it is an element of generosity and a source of optimism.

The second: It is limited in quantity and the restrictions it imposes on man (choice and sacrifice), and therefore it is a source of pessimism.

Natural resources and economic activity: The economic activity of any group is largely determined by the element of nature, as we find that the location and climate affect the type of economic activity to a large extent:

• The existence of mines where the mining craft is held.
• Having fertile land based farming craft.

The foregoing does not mean that there is geographical inevitability or that man has become a slave to nature. The reality is that the restrictions of location and place have become limited today thanks to international trade, which has contributed a great role in mitigating the severity of the location and its impact on economic activity.

Characteristics of nature

1. Scarcity of resources making their use for one goal and sacrificing other goals (opportunity cost).
2. Resources are subject to ownership “subject to legal rights”, that power that allows choosing a goal and sacrificing the rest of the goals.
3. A gift from God, however, it can only be exploited by man, as mines do not give out what is inside them except after the construction of passages and tunnels. And agricultural land needs a lot of preparation and work before it becomes arable. (Nature is almost made)
4. Indestructible “Matter does not perish” but is subject to waste

Like what happens from pollution of rivers or seas and problems of desertification and drought, and this is what makes nature less suitable for man and his needs, and this is due to the fact that free resources are available to everyone, so they are wasted, so governments have to set restrictions to protect those free resources, even though the resources are not subject to perishable, but it can transform into another form that is less fit for man. idea of ​​right (property)

• The right is a legal authority that enables its owner to dispose of the resource. Without this right, the resource can be subject to wastage and instability.
• Since the resource can be exploited for more than one purpose, therefore there must be a choice in exploiting the resource, and as long as there is a choice, there must be an authority that allows the choice, which is the owner.
• Thus, as long as there are scarce resources, this necessitates the existence of the idea of ​​real rights
• Ownership is an old idea where there was common ownership in the tribe through primitive groups, * Today, there is modern ownership, and it is not necessary that ownership be private, but there is public ownership.

Most countries today take the form of public ownership of many natural resources that are of public benefit or that have a strategic dimension, as in mineral resources in the ground or forests…. etc.

Although air is a free resource and does not raise a problem, we sometimes find it a rare resource because of the pollution and waste that may be caused to the air. Therefore, it must be subject to a kind of public ownership to ensure protection.

capital[عدل]

In the beginning, man used his human effort to obtain his needs directly from nature, but with human development, he discovered that if he used this effort to produce machines and tools that would help him to satisfy himself, he would make better use of his capabilities, such as making an arrow with which to hunt the animal. Here, it is certain for a person that if he uses an effort to indirectly produce (i.e. does not satisfy his needs directly), his production will increase, and this is what is called capital.

Capital: A heterogeneous group of manufactured machines, equipment, and devices that help increase production and create more goods and services.

So, capital is a heterogeneous group of machines and equipment that help in the production process and increase its size. Instead of man producing direct goods and services, he produces intermediate goods and machines.

Capital derives its value through its ability to increase production in the future. Therefore, we can say that capital introduces the idea of ​​time into economic activity just as nature has introduced the idea of ​​place into economic activity as well.

capital characteristics

1. Capital is man-made and is not permanent and depreciated (while nature is originally permanent).
2. A copy of the indirect production. As it means not directing some resources to direct gratification, but to produce machines and tools that help him increase production in the future.
3. Capital is available in developed countries, unlike underdeveloped countries, where the progress of countries is linked to the size of capital available to them, and therefore economic development largely requires more capital, and there are also other matters required by economic development such as the extent of development of the human element as well as administrative and legal systems.
4. Capital always requires protection as it is not permanent (the problem of capital consumption). Capital is man-made and non-permanent (that is, it is consumed), and the success of any economic system depends on its ability to compensate for the consumption of capital of both types, and this compensation represents the biggest industrial problems in the world.

Remember very well that nature cannot be consumed in its direct form, that is, man must intervene to make it suitable for consumption (that is, effort must be made to use both nature and capital), and thus we find that the difference between nature and capital is very subtle. Hence, some economists divided the factors of production into two parts:

• The first is work
• The second is the capital. (considering that nature is almost manufactured).

types of capital

• First: fixed capital (productive assets)

They are machines and equipment, and these can be used many times without losing its basic characteristics, but they are subject to consumption, which is of two types:

1. Physical consumption: that is, it gets damaged or worn out over time, and of course it can be returned to its first condition.

And every machine or tool has a limited life, and therefore any economic system must work to compensate for this consumption.

1. Second: economical consumption

It happens for two reasons:

1. The emergence of new machines that produce better “as a result of technical progress”
2. Changing consumer tastes as the demand for the commodity decreases.

At the time of economic consumption, it is not possible to return the capital as it was, despite the validity of the machines from the physical point of view.

• Second: working capital «current capital».

It means intermediate commodities, which are used once and disappear in the form of the produced commodity such as raw materials, simple materials and fuel.

Sources[عدل]

See also[عدل]

• limit factor
• Follow Cobb-Douglas
• mathematical function
• Volume returns
• production
• Keep producing
• Real wages

• industry portal
• Economy portal

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