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
Keith Hudson, 6 Upper Camden Place, Bath, England
