Original production factors - definition and demarcation

Original and derivative factors in economics

• Before man was able to produce anything, the only prerequisites for this were the soil and his own labor. That is why work and land are considered to be original, i.e. original factors of production within economics.
• The term "soil" includes all natural resources, in the broadest sense also wind and sun. At the beginning of human history, our ancestors harnessed nature's resources by gathering edible plants and hunting wild animals. Later, the economic importance of the soil increased, as arable land, production site or for the extraction of mineral resources. Therefore, in the classic sense, the naturally existing production factors are limited to the term "soil".
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• The production factor "work" includes all physical and mental activities that contribute to the provision of goods or services.
• By using natural resources and labor, our ancestors did not provide only produce products for their own use, but also tools that do their work relieved. Objects for use in production were also acquired through exchange or later through trade. These objects are capital, which, like labor and land, contribute to the production process, but could only arise through the use of the two original factors. That is why capital is called a derivative, i.e. derived, production factor.
• Over time, the importance of capital as a factor of production has increased. In addition to physical capital, which includes machines, buildings and materials, it also includes financial capital. This arises from the sale of the manufactured products and is in turn available for investments in physical capital and in the labor factor. Saved, i.e. not invested, financial capital generates interest.


What are production factors?

The term production factors comes from economics. There are both ...

• The quality of work today depends to a large extent on the knowledge and skills of the people who work. Since this requires investments in the form of education, knowledge can also be viewed as a form of capital. Sometimes it is even referred to as the fourth production factor.

The delimitation of the factors of production in business administration

• In contrast to economics, business administration looks at the factors of production from the perspective of an individual company.
• As in many areas of economics, there are different approaches to the breakdown of the factors of production. The best known is the division according to Erich Gutenberg, which also differentiates between original and derivative production factors.
• According to this approach, the original production factors include all the basic prerequisites that must be given for production. This includes materials and resources, human work in production and the management of the company. The operating resources include not only buildings, machines and tools, but also immaterial factors such as licenses or information.
• In this context, the derivative production factors are the organization, planning and control of company activities. These factors are more of a supportive nature and are important for the success of the Company, however, do not form the basic prerequisites for production at all can take place.