The Essential Factors of Production

Submitted by Juan Conatz on December 22, 2010

THE principle of all economy consists in obtaining the relative maximum result from the least relative effort.

This economic law should be sufficient in itself to combat and reject the present order of capitalism because, quite contrary to obtaining the maximum result from a minimum effort, the waste is enormous, the utilisation of natural resources and technical facilities and science is negligible. We do not live as we could live -- as we should live!

What are the factors of production?

First: Nature, which furnishes man with raw material and certain natural forces.

Second: Human Labor, manual and intellectual, which elaborates and utilises the raw material.

Third: the Machinery which multiplies the power and the intensity of human labour. (Some economists call this Capital.)

Capitalism does not avail itself even of the possible resources of the first factor (Nature), as is manifest in the great extensions of uncultivated land, idle water power and unutilized raw material. As far as human labour is concerned, intellectual or manual, it is unnecessary to demonstrate that not even 50% of its capacity is utilised by the existing economic regime. There are in the world today tens of millions of workers without jobs. Professional men and scientists are vegetating and wandering about in the midst of privation, without means of realising their studies and their experiments. Only a very minor number of professional men and scientists succeed in selling their services to the potentates of the capitalist regime.

It is also quite evident that the third factor, machinery, is working very much below its capacity. There have been prodigious inventions even greater ones will appear -- but they are employed hardly more than a few hours a day or several days during the week. It has been calculated that industry in the U.S.A. working full force would be able to supply the industrial products required by the whole world. The capitalist economists, the men of State, the conferences of experts all the forces of social and political conservatism have been trying to find a way out of this without success. On the contrary, the situation has become more and more aggravated.

The only thing that can be prophesied without fear of error, is that the industrial paralysation will be still greater in the years to come and the situation of the workers from year to year will become more and more intolerable. For this reason the capitalistic system is no longer workable since it is no longer capable of extracting the maximum yield out of the three factors of production. If for purely economic reasons there is no defence of the present order, what possible justification can be made for it on the basis of human and social principles?

The capitalist enterprise, for example, in the field of agriculture, involves the following factors:

1: Rent of the land.
2: Interest on the capital.
3: Wages.
4: Profits.
5: Government defence of private property.

There is a tax on the loaf of bread which you purchase, part of which the proprietor of the land takes, with another part corresponding to the interest on the capital invested, another part with the wages of the workers, and still another with a profit for the owner and finally, with that of government defence of private property and the rest of the political machinery involved in preserving so-called public order.

We have seen above that only three factors of production are necessary -- land, human labour, and machinery. A socialised economy has consideration for, only these three factors and under a socialised economy,; the same loaf of bread will be taxed only for the part representing the human labour necessary to produce it and the part corresponding to the use of mechanical devices. The rent of the proprietor, the interest of capital, the profit of the owner and the government defence all disappear.

It may be said that money, the great deity of present economy, is a productive factor. No one can prove that profit, as such, is a necessary force of production. No one would say that wheat would not grow in fields well cultivated without land titles and police. Imagine what a new economy would be like, in which all the parasitic factors interposed by the regime of private property were suppressed, in which the producers themselves would be entitled to the benefits (plus those categories of consumers which have a natural right to existence, that is, the child, the aged and the sick).

J. Stuart Mills has written: "I do not consider just a state of society in which there exists a class which does not work, in which exist human beings who, without having acquired any right to leisure by previous work, are excused from taking part in the labour encumbent on the human species." Stuart Mill is right. We believe that such a society has no right to existence and we desire its total transformation. We want a socialised economy in which the land, the factories, the homes, the means of transport cease to be the monopoly of private ownership and become the collective property of the entire community.

This change of regime requires an entirely distinct structure of economic life. Today the direction of industry is in the hands of private enterprise, namely, the capitalists. Technically, they are inferior to the engineers and the workers. The entrepreneurs are in turn dominated by the large financial institutions, and in the last analysis, the bankers are the ones who directly control the economic life of our day. And the bankers are interested exclusively in the quotations on the stock exchange.

The new socialised economy will be in the hands of the workers and the technicians, and will have no other motive, no other finality, than the satisfaction of the needs of the people. The consumer will not simply signify a market, he will not be created to purchase the products but the products will be elaborated to satisfy his wants.

The pecuniary evaluation of things will be removed and with it, the monstrous absorbing and entirely parasitic power of finance, public debts, and other unproductive charges of money. With it will disappear the slavery of wages, interest, rent and profit. We will return at last to an economy of common sense, by which all the wealth will be produced through the medium of the coordination of the three essential factors of economy -- land and its natural forces, human labour, and the machine.

On the maximum consolidation of these factors will depend the standard of life in the future, which means that it will be in our hands and in our will to realise the welfare and the happiness of this world.