Sorry I took so long to get to this, but your points are important.
Land, Labor and Capital are indeed factors of survival. If we don't produce, we die.
We remain alive by producing, so it seems reasonable to isolate the factors that lead to the production that allows us to survive.
The early Classical Analysts (in their imagination) removed Man and his products from the earth. What was left was Natural Resources, which they named Land. This means that air, oceans, forests, and other species, are all Land.
They then brought Man back. To survive he had to produce. Clearly there were three Factors into which everything fitted. But, everything fitted into one or the other Factor but never into more than one.
Whether or not other species can be analyzed in similar fashion is beside the point. This a science of Man's production, not of stoats and weasels.
With regard to consumption, you will be amused to know that I am in direct confrontation with many Georgists on this point. I am happy to leave consumption out of "The Science of the Nature, Production, and Distribution of Wealth".
The precise Classical description of Wealth was "a material product of human exertion produced for the satisfaction of human desires and having exchange value".
"Material" removes a song. "Satisfaction of human desires" removes crushed grass you produce as you walk across a meadow. "Having exchange value" removes the inconsequentials such as sand castles on the beach.
As we know, Man doesn't like exertion whether mental or physical. He get's tired and exhausted. He will exert only when it results in something that is valuable and desirable to him - or to someone else. In other words for production to happen there must be a consumer.
So, as we begin our analysis of production, we can ignore the consumer - for a consumer is a given, as you indicate. We can give our attention entirely to how Wealth is produced and distributed to the Factors that created it.
Exertion is the outward manifestation of everything that is the human being. Whether he loves or hates, is happy or miserable, whether he is curious, innovative, or entrepreneurial, it will affect his exertion.
This makes it difficult to suggest "innovation" is a separate Factor. "Labor is the name given to human exertion without innovation." doesn't seem a good idea. We might suggest that intelligence is a separate Factor. Then Labor is human exertion without intelligence or innovation.
Gets complicated and confusing!
Seems better to keep everything human within one classification.
We don't need to distinguish ourselves from other species. The science is about Man - not other species - though we can relate other species to us. Man hunts them, kills them, milks them, captures and rides them. That they may be like us in some way is beside the point.
If you consider Homo Neanderthalensis is Man, then he will be in the study - though as we are discussing production, I don't think that he has produced much lately.
If we stay with present day Homo Sapiens, then his abilities and advantages are within the parameter "Labor". We need not list them separately.
The Wealth that Labor gets for his exertion is called Wages. This is the sole reason for production. Without Wages there would be no Production.
The cost of products that are not consumed but kept in the production process is called Interest.
The advantage that Land gives to production is called Rent.
So we have seven carefully defined concepts on which the whole edifice of Political Economy rests. If the "edifice" of neo-Classical economics appears to be shaky, it is because it rests on a very wobbly foundation of basic terminology.
Even anti-taxer Milton Friedman said that the land-value tax was the "least bad" tax. I don't believe in any taxes. I do believe in the collection of Economic Rent, which is the value that attaches to land.
However, I shocked my fellow Georgists by telling them "Rather than not collect Rent, it would be better to collect it and throw it in the sea."
I was making the point that the economic effects are vastly more important than the revenue collection. But that takes us on to another post.
Harry
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Keith wrote:
Harry,
At 15:23 31/05/2003 -0700, you wrote:Keith,
Not quite right.
Land, Labor, and Capital are indeed the Factors of production.
Wealth is their product completed and in the hands of the consumer.
I never suggested that Wealth was somehow equivalent to the other three. What I probably said was that everything on earth - indeed in the universe falls into one or the other of these four defined concepts.
But, not into more one than one. Their mutual exclusivity is their great strength and makes them eminently usable.
Where would we put 'innovation'? I would suggest with curiosity. You know there is only one place for them to go.
I suggest that Land, Labour and Capital are not so much Factors of Production as Factors of Survival and applies to all species. (Capital in an animal species is its own individual physical body -- which it then passes on to the next generation)
Man is different because he stimulates activity additional to what is necessary for mere survival by discovering and/or making artefacts that other people find attractive (or actually need if someone has migrated into a habitat that is short of basic resources).
In my view we shouldn't talk about Factors of Production in isolation from consumption. After all, it is the consumer that drives the economy, not the producer. We should therefore talk in terms of Factors of Economics. In that case Innovation should be there, too. So we have Land, Labour, Capital and Innovation. Now, and only now, does this distinguish us from other species justifies the use of the word Economics as opposed to Biology or Ecology. In particular, the fourfold description distinguishes us from Homo Neanderthalensis who lived very happily and stably for about 500,000 years with one innovation -- a slightly sharpened piece of stone that he could use as a weapon or a hammer (and which was just one step up from the chimp's use of any handy piece of stone). The point is that Homo Sapiens not only produced a far better stone tool than Homo N -- the so-called 'axehead' -- but he kept on producing innovations from then onwards!
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I look forward to further writings on your version of Georgism. Bear in mind, however, that, try as I have done over the years I've been reading your postings on FW, I still don't understand what are the unique virtues of Georgism apart from being persuaded by its (very) important suggestion that land should be taxed. I think land should be taxed for two reasons:
1. It encourages those who have too much to off-load some of it;
2. It enables criminals and other tax evaders to be brought into the taxation net.
Keith Hudson
**************************************************** Harry Pollard Henry George School of Social Science of Los Angeles Box 655 Tujunga CA 91042 Tel: (818) 352-4141 -- Fax: (818) 353-2242 http://home.attbi.com/~haledward ****************************************************
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