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Definitions and Basics
Factors of production, at Answers.com
The requirements for production, usually represented as capital, labour, and land. Capital covers all man-made aids to future production; fixed capital stays put, and includes the physical plant, buildings, tools and machinery, while circulating capital includes raw materials and components.
Labour includes all human resources. It may be unskilled, semi-skilled, or skilled….
Population, from the Concise Encyclopedia of Economics
Lower birthrates and longer life lead to “population aging” (i.e., more elderly people and fewer children). Population aging is most rapid, and has gone farthest, in the developed world….
Natural Resources, from the Concise Encyclopedia of Economics
The earth’s natural resources are finite, which means that if we use them continuously, we will eventually exhaust them. This basic observation is undeniable. But another way of looking at the issue is far more relevant for assessing social welfare. Our exhaustible and unreproducible natural resources, if measured in terms of their prospective contribution to human welfare, can actually increase year after year, perhaps never coming anywhere near exhaustion. How can this be? The answer lies in the fact that the effective stocks of natural resources are continually expanded by the same technological developments that have fueled the extraordinary growth in living standards since the industrial revolution….
Human Capital, from the Concise Encyclopedia of Economics
To most people capital means a bank account, a hundred shares of IBM stock, assembly lines, or steel plants in the Chicago area. These are all forms of capital in the sense that they are assets that yield income and other useful outputs over long periods of time.
But these tangible forms of capital are not the only ones. Schooling, a computer training course, expenditures of medical care, and lectures on the virtues of punctuality and honesty also are capital. That is because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime. Therefore, economists regard expenditures on education, training, medical care, and so on as investments in humancapital….
Investment, from the Concise Encyclopedia of Economics
What is investment? By investment, economists mean the production of goods that will be used to produce other goods. This definition differs from the popular usage, wherein decisions to purchase stocks or bonds are thought of as investment….
Research and Development, from the Concise Encyclopedia of Economics
Research and development (R&D) is the creation of knowledge to be used in products or processes….
In the News and Examples
Think Globally, Act Irrationally: Recycling, by Mike Munger. Econlib, July 2, 2007. Also:
Munger on Recycling, EconTalk podcast.
“These two bottles. Suppose you value earth stewardship, and want to use the fewest resources. What if you want to minimize the negative impact on the environment? With that as your goal… should these bottles be made of recycled glass? Should anything be recycled? How would we know?”…
There is a simple test for determining whether something is a resource (something valuable) or just garbage (something you want to dispose of at the lowest possible cost, including costs to the environment)….
Immigration, from the
Concise Encyclopedia of Economics
Immigration is again a major component of demographic change in the United States. Since 1940 the number of legal immigrants has increased at a rate of 1 million per decade….
Gender Gap, from the Concise Encyclopedia of Economics
When economists speak of the “gender gap” these days, they usually are referring to systematic differences in the outcomes that men and women achieve in the labor market. These differences are seen in the percentages of men and women in the labor force, the types of occupations they choose, and their relative incomes or hourly wages. These economic gender gaps, which were salient issues during the women’s movement in the 1960s and 1970s, have been of interest to economists at least since the 1890s….
Grab Bag: Munger and Roberts on Recycling, Peak Oil and Steroids, podcast on EconTalk. Sep. 24, 2007.
Mike Munger, of Duke University, and EconTalk host Russ Roberts clean up some loose ends from their previous conversation on recycling, move on to talk about the idea of buying local to reduce one’s carbon footprint and then talk about the idea of peak oil. They close the conversation with the Rick Ankiel story and the implications for the Barry Bonds saga.
A Little History: Primary Sources and References
Capital and Interest: A Critical History of Economical Theory, by Eugen von Böhm-Bawerk
It is generally possible for any one who owns capital to obtain from it a permanent net income, called Interest.
This income is distinguished by certain notable characteristics. It owes its existence to no personal activity of the capitalist, and flows in to him even where he has not moved a finger in its making. Consequently it seems in a peculiar sense to spring from capital, or, to use a very old metaphor, to be begotten of it. It may be obtained from any capital, no matter what be the kind of goods of which the capital consists: from goods that are barren as well as from those that are naturally fruitful; from perishable as well as from durable goods; from goods that can be replaced and from goods that cannot be replaced; from money as well as from commodities. And, finally, it flows in to the capitalist without ever exhausting the capital from which it comes, and therefore without any necessary limit to its continuance. It is, if one may use such an expression about mundane things, capable of an everlasting life….
Labor, from Lalor’s Cyclopedia of Political Economy
LABOR is the voluntary exertion of human beings put forth to attain some desired object. We say human beings, for the toil of beasts is but the agency of an instrument, reckoned a part of capital….
Frank Knight, biography from the Concise Encyclopedia of Economics
Knight’s final contribution was his work on capital theory in the thirties. Knight criticized Eugen Böhm-Bawerk’s view that capital could be measured as a period of production, and is widely thought to have won the debate over the Austrian concept of capital.
The Positive Theory of Capital, by Eugen von Böhm-Bawerk
There is scarcely a system or a text-book of Political Economy which does not, at some point or other, bring in discussions of matters belonging to the physical sciences. Usually these are introduced in the chapter on Production. There we are taught that to create new goods does not mean to create new material, since matter is constant and cannot be increased. We learn what nature contributes to the work of production in the shape of materials and powers; what is done by the mechanical, what by the chemical, and what by the organic powers of nature; what importance climate, heat, moisture have on the development of production; on what physical and technical foundations the working of machinery rests; and many things of this sort….