Agents in United Kingdom

Directors as Agents

The authority of the board of directors

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The managing director

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Agents of Production

The causes or requisites of production, often called “agents of production,” may be divided into two classes : human action and external nature ; commonly distinguished as “labour,” and ” natural agents.” The first category comprises mental as well as muscular exertion ; the second, force as well as matter. To the second factor is sometimes applied the term land : in a technical sense, denoting not only the “brute earth,” but also all other physical elements with their properties. But this term is more frequently employed in another classification, according to which the agents of production are divided into three classes—land, labour, and capital. Of the two classifications which have been stated the former appears the more fundamental and philosophical.

That “all production is the result of two and only two elementary agents of production, nature and labour,” is particularly well argued by Bohm-Bawerk in his Kapital and Kapilalzinz, pt. ii. P. “There is no room for a third elementary source,” he main tains. This view is countenanced by high authorities, of whom some are cited below. Even J. S. MILL, who is disposed to make capital nearly as important as the other members of the tripartite division, yet admits that “labour and natural agents” are “the primary and universal requisites of production ” (Pol. Econ., bk. i. oh. iv. § 1). Prof. Marshall, dividing the subject more closely, thinks “it is perhaps best to say that there are three factors of production, land, labour, and the sacrifice involved in waiting ” (Principles of Economics, p. 614, note). For further remarks on the third species of agent. See CAPITAL.

In the case where both labour and natural agents are required, the most frequent and important case, the question may be raised whether nature or man contributes more to the result. According to Quesnay (Maxims, Edn. Oncken, p. 881) land is the sole source of riches. According to Adam SMITH, in manufactures “nature does nothing, man does all” (Wealth of Nations, bk. ii. oh. v.) The better view appears to be that the division of industries into those in which labour does most and those in which nature does moat is not significant. It is like attempting “to decide which half of a pair of scissors has most to do in the act of cutting ” (Mill, Pol. Econ., bk. i. ch. i. § 3).

Agents of production may be subdivided into those which are limited, and those which are practically unlimited. This distinction applies principally to natural agents. For labour may in general be regarded as an article of which the supply is limited. The ownership or use of those agents of production which are limited and capable of being appropriated acquires a value in exchange. Hence rent of land and wages of labour take their origin.

To account for the difference in the rents paid for different lands, it has been usual, after RICARDO, to arrange the lands in a sort of scale of fertility: No. 1, No. 2, and so on. Upon this classification it is to be remarked that productivity, the real basis of the differences in question, does not vary according to any one attribute, such as the indestructible powers of the soil, or proximity to the centres of industry ; but upon a number of attributes (compare B. Price, Practical Pol. Econ., chapter on “Rent”). Moreover a scale in which lands, or other natural agents, were arranged according to their productive power, would hold good only so long as the other factor of production, human action, might remain constant. A light sandy soil may be more productive than a heavy clay, so long as the doses of labour applied to each are small. But the order of fertility may be reversed when the cultivation is higher. As Prof. Sidgwick remarks “these material advantages” [afforded by natural agents] “do not remain the same in all stages of industrial development: but vary with the varying amounts of labour applied, and the varying efficiency of instruments and processes ” A similar difficulty attends the attempt to arrange the other agent of production, human labour, in a scale of excellence.[1]

Resources

Notes

1. Robert Harry Inglis, Sir, Dictionary of Political Economy, Vol. 1, 1915

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Further Reading