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.
The names we use are merely labels for the serious stuff - the defined concepts. As I must have said, I wince when someone asks the definition of a word. A word can have a dozen meanings from a dozen people.
It is important that we use the same terms for the same defined concepts, not only for communication with others, but for easier reasoning. We use words for thinking. If our vocabulary is of poor quality, our thinking is likely to be of poor quality.
Yet, the labels are much less important than the defined concepts to which they are attached. The early Classical Analysts, in their imaginations, removed Man and his products from the earth. What was left they called Natural Resources. Then they brought Man back and to survive he had to use his physical and mental exertion on Natural resources to produce food, clothing, and shelter. These last were neither Natural Resources, nor were they Man.
So these products got the name Wealth.
The defined concept of Natural Resources got the name "Land", while human exertion, both mental and physical, was given the label "Labor". Of course, you have to get used to the idea that the Pacific Ocean, solar radiation, and the electromagnetic spectrum are "Land".
Although this can pose a small difficulty, an advantage is that the technical term Land is for most everyday purposes the same as the ordinary use of land - so conversation can be made - even though one is precise - the other a bit woolly.
The old definition of Capital was "Wealth used to produce more Wealth".
Capital brings in the concept of time. There is an interval between the beginning of production and the Wealth that results. The product still in the course of production is called Capital. In fact we may call any product in the production process - Capital.
I think that perhaps a major contribution of Henry George to this study was the care he used on his defined concepts. He cleaned up the inconsistencies shown by other writers from Adam Smith on and gave us a beginning to proper analysis.
So, not willing to leaves things alone, I've changed them. In a day or so, I'll send you a post that will be going to a slew of Georgists, telling them how they can improve on George's original Classical terms. That should rile them up.
But George said "in nothing trust to me" and "think for yourself".
If anyone else wants the post, I'll be happy to send it to them.
The important thing is that these terms apply to both the small group and the large corporation. The analysis is the same.
Harry -------------------------------------------------------
Keith wrote:
Harry and Brad,
At 11:39 21/05/2003 -0700, Harry wrote:
(BMcC)
<<<<
You still have not responded to my hypothesis that your ideas, as expressed on this list, are really about small group psychology and not about economics, where by "economics" I am referring to the dynamics of 6+ billion persons somehow coordinating their productive activities to reproduce their individual and species life on this planet.
>>>>
Yes, I agree that Harry's economic systgem is about small group psychology. But there's nothing wrong with that. The 6+ billion people are just an amplified version of what goes on in small groups.
But what bothers me about Harry's system is the apparent equivalence of the four concepts, Land, Labor, Capital, and Wealth, that he says is all that is needed to encompass Classical Political Economy.
Firstly, these are not equivalent. Only three of them are factors of production. Wealth is a consequence of production. It's a factor of consumption if you like. It certainly exists but Wealth is just one of several alternative things than can be done with the profits from production. For the moment, we don't need the term when we are talking of production.
Secondly, as Harry tacitly has acknowledged several times, but still doesn't include overtly in his factors of production, there is the fact of Innovation, the product of man's curiosity. It is this factor which makes us different from all other species and which justifies the use of the term Political Economy for our species alone. The whole development of mankind has been caused by the series of innovations which man has been able to apply to what were otherwise quite conventional means of survival.
An animal survives if it is able to extract enough energy from the environment to compensate it for the energy expended. An animal species as a whole survives if the totality of their activities produces a sufficient profit of energy to enable the next generation (of the same or a slightly greater numner) to be procreated and brought safely to adulthood. Thus animals apparently need only two factors of production -- Land (space in which to be active), and Labour (the activities themselves). However, less obviously, they also need Capital. This is the fact of their own bodies and the DNA software (and perhaps freewill) which operates it. This is what is handed on from one generation to the next.
Less obviously still, life as a while also needs Innovation. In all species, except man, these are the products solely of accidents within genes, usually taking place during the copying process from one generation to the next but also, occasionally, from "hits" from cosmic radiation or other high bursts of energy. A successful innovation causes the appearance of a new species and a new method of production (extracting energy from the environment in order to survive and procreate).
In the case of man, our brains are sufficiently versatile for us to be able to systematise new methods of production with the same bunch of genes with which we started.
It is these factors -- Land, Labour, Capital and Innovation -- which, I suggest, are the basis of Political Economy. Apart from Joseph Schumpeter, no economist has paid sufficient attention to the last factor. We really need a new economics text book which starts with these -- and starts with them by discussing the general principles of survival in other animal species before moving on to man's enormous ability to innovate in a systematic way and the complications that arise therefrom. Most, if not all, economic text books are products of their own times, trapped in what is only a temporary condition of our various institutions. Surely, we know enough now about the economics of the survival of a great number of species besides ourselves, and we should be able to describe Political Economy within a broader framework.
I'm being whimsical now, but wouldn't it be splendid if this FW list could produce such a work? If Political Economy is soundly based it ought to be able to suggest guidelines for the successful achievement of future jobs (and thus social status) for all. These guidelines are certainly lacking at the present time and, by simply extrapolating present trends of technological innovation, the future looks pretty dire.
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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