The functioning of the economy, the entire process of production of goods and services is based on the use of factors of production and the receipt of appropriate income from their use.
The factors of production are specifically important elements or objects that have a decisive impact on the possibility and effectiveness of economic activity. Otherwise, factors of production can be defined as resources that participate in the production of goods and services.
In the very general view The factors of production are labor, land, capital and entrepreneurship. Behind the production resources involved in economic activity are always their owners (owner of land, owner of capital, labor, knowledge, etc.) and none of them will transfer the right to use this or that resource to other persons free of charge. Therefore, the movement of the basic elements of production, their appropriation, disposal and use affects deeper social and economic relations than just the use of these factors.
Brief description of factors of production
Work is a set of physical and mental abilities that people use in the process of creating economic benefits. It is due to the intellectual and physical activity of a person, the totality of the abilities of the individual, general and professional education, skills, and accumulated experience. The magnitude of the labor factor directly depends on the quantity and quality of the working-age population. Labor is also characterized by intensity and productivity. Intensity refers to the intensity of labor, which is determined by the degree of expenditure of labor per unit of time. Productivity is the productivity of labor, which is measured by the number of products produced per unit of time.
Earth- a natural factor of production, natural wealth and the fundamental principle of economic activity. Here, natural conditions or the so-called natural conditions are distinguished from the material factor into a special category. "gifts of nature".
In the broadest sense of the word, the term "land" covers all utilities that are given by nature in a certain amount and over the supply of which a person has no power, whether it be the land itself, water resources or minerals. However, unlike other factors of production, land has one important property- limitation. A person is not able to change its size at will. With regard to this factor, we can speak of the law of diminishing returns. This refers to the return in quantitative terms or diminishing returns. A person can influence the fertility of the earth, but this influence is not unlimited. Ceteris paribus, the continuous application of labor and capital to the land, to the extraction of minerals will not be accompanied by a proportional increase in returns. That is why since the end of the twentieth century. in the list of global problems of our time there are several related to the earth, i.e. natural wealth - ecological, raw materials, food. In a narrow sense, the land as a factor of production is understood as the place where this or that enterprise is located. In this case, for the use of land, as a rule, a certain amount is paid, called rent.
Capital- a broad concept and includes man-made means of production. As a rule, capital is divided into fixed capital (buildings, machines, equipment, etc., used for a number of years and paid off in parts) and circulating capital (raw materials, materials, energy resources, etc., consumed in one production cycle and paid back after the sale of products). The opinions of scientists in different historical epochs on this issue differed. So, the English economist of the nineteenth century. D. Ricardo identifies capital with the means of production. We also adhere to this point of view. Another economist, a Scot by origin and, to some extent, a teacher of Ricardo, A. Smith considered capital as accumulated labor. K. Marx understood capital as a self-increasing value as a special kind of social relation. Capital can also be defined as investment resources used in the production of goods and services and their delivery to the consumer. Views on capital are diverse, but they all agree on one thing: capital is associated with the ability of certain values to generate income. Outside of movement, both the means of production and money are dead bodies. The return on capital is commonly referred to as interest.
Entrepreneurial activity should be considered as a specific factor of production, bringing together all other factors and ensuring their interaction through the knowledge, initiative, ingenuity and risk of the entrepreneur in the organization of production. This is a special kind of human capital. Entrepreneurial activity in terms of its scale and results is equated to the cost of highly skilled labor.
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In order to start the process of production of this or that good, it is necessary to have an idea of who will produce, as well as from what they will produce. These are the factors of production.
There are the following types of factors of production
Fig2.Factors of production
First and overriding factor production - work- mental and physical abilities of people used in production.
This is an expedient economic activity of people aimed at satisfying needs, generating income. Let us emphasize that in a market economy, income generation acts as an immediate goal, and satisfaction of people's needs - as the final and mediated first.
In the process of labor, a person spends mental and physical energy. In various types of labor, either the mental (intellectual) principle or the physical one can prevail. Labor can be simple or complex, skilled. The results of labor also vary greatly: a tangible or intangible product (for example, information), a service.
The second factor of production is Earth ( Natural resources) . This term should be understood in its broad sense. Earth- all natural resources: minerals, land, water, forests, etc.
Firstly, land is generally any place where a person is: he lives, works, rests, has fun, etc. Secondly, industrial and other enterprises are also located on land as on territory. Thirdly, the land, which has the biological properties of fertility, serves as an object of agriculture and forestry. Fourthly, it is also a source of minerals, water and other resources. Speaking of land as a factor of production, economic theory takes into account all these functions of natural factors in the economy.
The third factor of production is capital. There are many definitions of capital. Their essence depends on the goals, logic, aspects chosen for the study of the economy by one or another economic theory. In the concept of factors of production, capital is understood as material (real) capital - all means of production of long-term or short-term use. This includes raw materials, machinery, equipment, production facilities, etc.
A separate category of money capital is singled out - financial resources intended for transformation into material capital, as well as directed to the purchase of other factors of production. It should be borne in mind that money itself is not a factor of production, although it plays a huge role in the activities of any entrepreneur. Simply because of the monetary nature of the market economy, the acquisition of real factors of production is mediated by money.
These three factors of production are called classical and are indisputably recognized by most economists. However, in modern economic theory often there are several additional factors.
Economists have long noticed that individual enterprises and even entire countries that have approximately the same classical factors of production (equal volumes of labor, capital, land) often achieve completely different economic results. Moreover, it happens that countries that are richer in all kinds of resources are poor, while those poor in them are prospering. For factors of production to be used and combined the best way, a special kind of factor is needed - entrepreneurial ability. An entrepreneur is a person who organizes, plans economic activities, makes decisions, etc. Without an entrepreneur, it is impossible to combine the factors of production. He has special abilities, character, knowledge, as a result of which he can combine production factors in a new way, contribute to the development of individual enterprises and the country's economy as a whole. The entrepreneurial talent is as rare as other talents.
Finally, as a factor of production, many economists distinguish and technical progress. In the conditions of a modern economy, not only the size of capital is important, but also its technological level. Industrial installations may, for example, have the same cost, but one of them may be newer and the other outdated. Obviously, if the other factors of production are the same - the enterprises employ an equal number of people, they are managed by equally talented managers, etc., then the best economic results of a company using the latest equipment should be explained precisely by those realized in new technology technical progress.
Most recently, primarily due to the widespread use of computers, a special role in production begins to play information(various databases, electronic archives, etc.). Therefore, the question is raised about separating it into a separate factor, although often information is also considered just a special kind of technical progress factor.
All additional factors of production are united by the fact that they manifest themselves through a more efficient use of classical factors. These are the factors of production in general.
Resources are limited physically and the possibilities of their use.
Thus, there is a contradiction between unlimited needs and limited opportunities to satisfy them. If we cannot have everything we want, we must make a choice.
Classifies the resources necessary for production into large groups called factors of production (Fig. 1).
The first and most important factor of production is work. This is an expedient economic activity of people aimed at satisfying needs, generating income. In a market economy, income generation is the immediate goal, but what about satisfying people's needs? as final and mediated by the first.
In the process of labor, a person spends mental and physical energy. In various types of labor, either the mental (intellectual) principle or the physical one can prevail. Labor can be simple or complex, skilled The results of labor also vary greatly: tangible or intangible product (for example, information), service.
The second factor of production is land (natural resources). This term should be understood in its broad sense. Firstly, land is generally any place where a person is: he lives, works, rests, has fun, etc. Secondly, industrial and other enterprises are also located on land as on territory. Thirdly, the land, which has the biological properties of fertility, serves as an object of agriculture and forestry. Fourthly, it is also a source of minerals, water and other resources. Speaking of land as a factor of production, economic theory takes into account all these functions of natural factors in the economy.
The third factor of production is capital. There are many definitions of capital. Their essence depends on the goals, logic, aspects chosen for the study of the economy by one or another economic theory. In the concept of factors of production, capital is understood as material (real) capital - all means of production of long-term or short-term use. This includes raw materials, machinery, equipment, production facilities, etc.
A separate category of money capital is singled out - financial resources intended for transformation into material capital, as well as directed to the purchase of other factors of production. It should be borne in mind that money itself is not a factor of production, although it plays a huge role in the activities of any entrepreneur. Simply because of the monetary nature of the market economy, the acquisition of real factors of production is mediated by money.
These three factors of production are called classic and are unquestionably accepted by most economists. However, in modern economic theory, several more additional factors.
Economists have long noticed that individual enterprises and even entire countries that have approximately the same classical factors of production (equal volumes of labor, capital, land) often achieve completely different economic results. Moreover, it happens that countries that are richer in all kinds of resources are poor, while those poor in them are prospering. In order for the factors of production to be used and combined in the best possible way, a factor of a special kind is needed - entrepreneurial ability.
We are talking about the fact that in a market economy there is a special kind of activity carried out by an entrepreneur, i.e. a person who organizes, plans economic activities, makes decisions, etc. Moreover, it is not at all necessary to combine the owner and entrepreneur in one person. It is enough that the owner delegates to the entrepreneur those components of the bundle of ownership rights to the enterprise that are necessary for its management. Without the entrepreneur, the combination of factors of production is impossible. He has special abilities, character, knowledge, as a result of which he can combine production factors in a new way, contribute to the development of individual enterprises and the country's economy as a whole.
Finally, many economists single out technological progress as a factor of production. In the conditions of a modern economy, not only the size of capital is important, but also its technological level. Industrial installations may, for example, have the same cost, but one of them may be newer and the other outdated. Obviously, if the other factors of production are the same - the enterprises employ an equal number of people, they are managed by equally talented managers, etc., then the best economic results of a company using the latest equipment should be explained precisely by the technical progress implemented in the new technology.
Most recently, primarily due to the widespread use of computers, a special role in production begins to play information(various databases, electronic archives, etc.). Therefore, the question is raised about separating it into a separate factor, although often information is also considered just a special kind of technical progress factor.
All additional factors of production are united by the fact that they manifest themselves through a more efficient use of classical factors. The same number of workers, machines and land creates different volumes of production (moreover, different quality) depending on what entrepreneurial, scientific, technical and information resources ensure their use.
The rental price of a factor of production is the price of hiring or leasing a factor of production per unit of time. It includes wage workers, rent, interest, etc.
Factor markets
The markets for factors of production are spheres of commodity circulation of such major groups resources of economic activity, such as land, natural minerals and artificial raw materials, labor resources of various specialties and qualifications, capital and technical resources. The movement of factors of production is mediated by the money and securities markets and is regulated by the relevant economic policy of the state. The market for factors of production has its own characteristics. On the whole, the same laws of supply and demand and the same mechanism of competitive price equilibrium operate here. However, the factors of production themselves as commodity groups, their appropriation, distribution and use affect deeper socio-economic relations. 
Therefore, the markets for factors of production are a special kind of markets in the system of a market economy. In contrast to the markets for final goods and services, where firms are sellers and consumers of goods and services are buyers, in the markets for factors of production, firms are buyers of labor, natural resources, land, capital in its various forms - monetary, productive, in the form of loans. or fictitious capital (capital presented in the form of securities). Firms use different kinds costs ( factors of production) for the production of goods and services. Some of them are raw materials and materials, the second are goods produced by other firms, and the third are different types labor of various classifications, the fourth are capital goods (produced means of production, for example, a machine or a building), the fifth are various forms entrepreneurial activity, the sixth - information.
There are many various ways combination of factors of production for the production of a given volume of output. To maximize profits, a firm must choose a production technology that minimizes the cost of producing its chosen volume of output. To do this, the company must have an idea, firstly, about production function of the given enterprise, and secondly, about the prices developing in the market of factors of production. When purchasing factors of production on the market, the enterprise faces the problem of pricing them. Prices in this case are determined by the interaction of changes in supply and demand for a particular factor, because they also act as goods. However, this demand is derivative. It depends on the demand for products manufactured using this resource, and the dependence here is directly proportional. Prices for resources, such as labor, capital, are the main factor determining monetary income, and at the same time they perform the function of distributing resources among various industries and firms.
Features of entrepreneurship
The combination of the owner and the entrepreneur in one person began to collapse with the advent of credit and was most clearly revealed with the development joint-stock companies. In the conditions of a corporate economy, property as a legal factor loses its administrative functions. The role of property becomes more and more passive. The owner owns only a piece of paper. The manager is responsible for performance. He is driven by the will to win, the desire to fight, the special creative nature of his work.
Naturally, all this applies to countries with established market economies. During the transition period to the market, other laws apply.
The difference in the classification of factors of production between Marxist and Western economic theory is due to the class approach to the analysis of natural production. The above classification is flexible. The level and efficiency of production is increasingly influenced by modern science, information and economic factors. The growing importance environmental factor production, which acts either as an impetus for economic growth, or as a limitation of its capabilities due to the harmfulness of technology.
In specific industries, its elements are used in various combinations and in various proportions. Such interchangeability and quantitative variability are typical for modern production and are associated with limited resources on the one hand and the efficiency of their use on the other. 
AT real life the entrepreneur seeks to find such a combination of production components that provides the greatest output at the lowest cost. The multiplicity of combinations is due to scientific and technological progress and the state of the market for production factors. Production is moving. Large and small revolutions in engineering, technology, and labor organization are constantly being made in it. The firm is located in constant search most rational decisions. What gives a greater effect - "investment in the human factor, or in the growth of means of production" (capital)? How will an increase in factor A and a decrease in factor B affect the company's costs and income? At the same time, it is necessary to take into account the constant changes in the prices of production resources.
Main Factors of Production
The functioning of enterprises and households is based on the use of factors of production and the receipt of appropriate income from their use. Factors of production are understood as particularly important elements or objects that have a decisive impact on the possibility and effectiveness of economic activity.
In previous lectures, the laws of supply and demand were considered, regardless of which product groups are included in the market turnover and competitive pricing. Meanwhile, the market turnover of factors of production has its own characteristics, although in general the same mechanism of competitive price equilibrium operates here. Behind the production resources involved in economic activity are always their owners (land, capital, labor, knowledge, etc.) and none of them will transfer the right to use this or that resource to other persons free of charge. Therefore, the movement of the basic elements of production, their appropriation, disposal and use affects deeper social and economic relations. 
The last decades have been characterized by an increase in resource costs and, as a result, a decrease in profitability from their use. Rising prices for land, energy, raw materials, wages. All this leads to a change in the behavior of people and firms in the world economy, encourages them to find substitutes for resources that are becoming more expensive and ways to reduce production costs.
Demand for factors of production is presented only by entrepreneurs, i.e. that part of society that is able to organize and carry out the production of products and services necessary for final consumption.
Production is the process of making material or spiritual goods. In order to start production, it is necessary to have at least one who will produce and what will be produced from.
Marxist theory singles out human labor power, the object of labor and the means of labor as factors of production, subdividing them into two large groups: personal factor of production and material factor. The personal factor is a labor force, as a combination of physical and spiritual abilities of a person to work. The means of production act as a material factor. The organization of production presupposes the coordinated functioning of these factors. Marxist theory proceeds from the fact that the interrelationship of factors of production, the nature of their combination determine the social orientation of production, the class composition of society, and the relations between classes.
Marginalist (neoclassical, Western) theory traditionally distinguishes four groups of factors of production: land, labor, capital, entrepreneurial activity.
LAND is considered as a natural factor, as natural wealth and the fundamental basis of economic activity. Here natural conditions stand out from the material factor into a special fund. The term "land" is used in a broad sense of the word. It covers all the utilities that are given by nature in a certain amount and over the supply of which man has no power, whether it be the land itself, water resources or minerals. Unlike other factors of production, LAND has one important property - limitedness. A person is not able to change its size at will. With regard to this factor, we can speak of the law of diminishing returns. This refers to the return in quantitative terms or diminishing returns. A person can influence the fertility of the earth, but this influence is not unlimited. Ceteris paribus, the continuous application of labor and capital to the land, to the extraction of minerals will not be accompanied by a proportional increase in returns.
LABOR is represented by the intellectual and physical activity of a person, the totality of the abilities of the individual, due to the general and vocational education, skills and experience. In economic theory, labor as a factor of production refers to any mental and physical efforts made by people in the process of economic activity in order to produce a useful result.
"Any work - notes A. Marshall - aims to produce some result." The time during which a person works is called working time. Its duration is changeable and has physical and spiritual limits. Man cannot work twenty-four hours a day. He needs time to restore his ability to work and satisfy his spiritual needs. Scientific and technological progress leads to changes in the length of the working day, in the content and nature of work. Labor becomes more skilled, time for professional training of personnel increases, productivity and labor intensity increase. The intensity of labor is understood as its tension, the increase in the expenditure of physical and mental energy per unit of time. Labor productivity shows how much production is produced per unit of time. A variety of factors influence the increase in labor productivity.
CAPITAL is another factor of production and is considered as a set of means of labor that are used in the production of goods and services. The term "capital" has many meanings. In some cases, capital is identified with the means of production (D. Ricardo), in others - with accumulated material goods, with money, with accumulated social intelligence. A. Smith considered capital as accumulated labor, K. Marx - as a self-increasing value, as public attitude. Capital can also be defined as investment resources used in the production of goods and services and their delivery to the consumer. Views on capital are diverse, but they all agree on one thing: capital is associated with the ability of certain values to generate income. Outside of movement, both the means of production and money are dead bodies.
Entrepreneurial activity is considered as a specific factor of production, bringing together all other factors and ensuring their interaction through the knowledge, initiative, ingenuity and risk of the entrepreneur in the organization of production. This is a special kind of human capital. Entrepreneurial activity in terms of its scale and results is equated to the cost of highly skilled labor.
An entrepreneur is an essential attribute of a market economy. The concept of "entrepreneur" is often associated with the concept of "owner". According to Cantilom (18th century), an entrepreneur is a person with uncertain, non-fixed income (peasant, artisan, merchant, etc.). He receives other people's goods at a known price, and will sell at a price not yet known to him. A. Smith characterized an entrepreneur as an owner who takes economic risks for the sake of implementing a commercial idea and making a profit. The entrepreneur acts as an intermediary, combining the factors of production at his own discretion.
The rental price of a factor of production is the price of hiring or leasing a factor of production per unit of time. It includes the wages of workers, rent, interest, etc. Rental prices form the current income of the owners of factors of production. Under perfect competition in product and factor markets, the rental price of a factor is equal to the value of the marginal product of this factor, i.e.: r = VMPK - MRPK. CAPITAL PRICE OF A FACTOR OF PRODUCTION is the price at which a particular factor of production is bought and sold. For example, the price of a company's production building is 10 million rubles. This is its capital value. Funds for the purchase of this building are required today. When deciding to purchase a factor of production, the consumer measures the additional income derived from the use of a new unit of the factor with its rental price. The firm will buy the services of a factor of production as long as the rental price of this factor is less than the additional income that this factor provides. 
Buying a factor at its capital price, the future owner thus acquires the services of the factor for the entire period of its use. Funds for the acquisition of a factor of production are required to be spent at the moment, and the owner will receive income from its use over a long period of use of the factor in the form of a stream of future income distributed over time. Here the problem arises of matching the current costs associated with the acquisition of capital factors with the flow of future income. Reconciliation of current expenses with future income streams is made by means of discounting. Suppose that an entrepreneur, when purchasing, for example, a machine tool, estimates the expected income from its use.
Expected future income is summed up from the annual income from the use of the machine. Therefore, it is necessary to determine how much money must be paid for the machine at the present time in order to extract the desired income after a certain period of its use. The discounted or present value depends on: the interest rate; a specific amount of annual expected income. Let's look at these dependencies conditional examples. Let's say interest rate is 5%, then the discounted value of 1 thousand rubles. with a contribution for one year is equal to: PV = 1000 / (1 + 0.05) = 952.4 p. Now let's increase the interest rate to 10%. In this case, the discounted value of 1 thousand rubles. for one year will be: PV \u003d 1000 / (1 + 0.1) \u003d 909.1 p. From the above examples it follows that the higher the interest rate, the lower the present value will be. Let's move on to the second position.
What are the factors of production.
Factors of production - resources necessary for the production of goods and services. Traditionally divided into components:
labor resources, or labor;
investment resources, or capital;
natural resources, or land;
entrepreneurial talent, or entrepreneurial ability;
information; technology is a specific form of information;
Labor is a purposeful human activity to create economic benefits, a manifestation of the totality of a person’s mental and physical abilities. 
Capital includes the totality of goods created by a person's past labor. The erroneous opinion that stocks, bonds, money, bank deposits are not related to this factor of production.
Land as a factor of production covers all agricultural land and urban land that is allocated for housing or industrial development, as well as the totality of natural conditions necessary for the production of goods and services.
Entrepreneurial talent involves the special abilities of a person, consisting in his ability to:
organize the production and release of goods and services by combining all the necessary factors of production;
make key decisions on production management and business conduct;
risk money, time, labor, business reputation, since activity in the market is associated with great uncertainty, and the result is not guaranteed;
to be an innovator, that is, to introduce new technologies, new products, methods of organizing production.
One of the key economic resources for present stage development of society is information.
Having reliable information is necessary condition to solve the problems facing the economic subject. However, even full information is not a guarantee of success. The ability to use the information received to make the best decision under the circumstances characterizes such a resource as knowledge. The carriers of this resource are qualified personnel in the field of management, sales and customer service, Maintenance goods. It is this resource that gives the greatest return in business. “What distinguishes a strong company from a weak one is, first of all, the level of qualification of its specialists and management staff, their knowledge, motivations and aspirations”
In a market economy, all of the above economic resources are freely bought and sold and bring their owners a special (factorial) income:
rent (land.);
interest (capital);
salary (labor);
profit (entrepreneurial ability).
German economist and philosopher of the 19th century Karl Marx singled out the personal and material factors of production, while the person himself acts as a personal factor, as the carrier of labor, and the material factor of production means the means of production, which in turn consist of means of labor and objects of labor.
The means of labor is "... a thing or a complex of things that a person places between himself and the object of labor and which serve for him as a conductor of his influences on this object" . Means of labor, and above all tools of labor, include machines, machine tools, tools with which a person influences nature, as well as industrial buildings, land, canals, roads, etc. The use and creation of means of labor - characteristic labor activity person. The means of labor in a broader sense include all the material conditions of labor, without which it cannot be performed. The general condition of labor is the land, the conditions of labor are also industrial buildings, roads, etc. The results of social knowledge of nature are embodied in the means of labor and the processes of their production application, in engineering and technology. The level of development of technology (and technology) serves as the main indicator of the degree to which society has mastered the forces of nature. "Technology reveals the active relationship of man to nature, the direct process of production of his life"
Objects of labor - a substance of nature, which a person acts in the process of labor in order to adapt it for personal or industrial consumption. The object of labor, which has already undergone the impact of human labor, but intended for further processing, is called Raw Material. Some finished products may also enter the production process as an object of labor (for example, grapes in the wine industry, animal oil in the confectionery industry). “If we consider the whole process from the point of view of its result - the product, then both the means of labor and the object of labor both act as means of production, and labor itself - as productive labor”
According to K. Marx, the totality of factors of production act as productive forces that are inextricably linked with production relations. Some characterize the material content of the process of social production, while others characterize its historically defined form. Evolving, each stage of development productive forces characterized by the type of production relations constitutes a unique mode of production.
Non-Marxist economic theorists do not agree with K. Marx's position that new value is created only by hired workers, but they believe that all factors of production take an equal part in its creation. Thus, Alfred Marshall wrote: “Capital in general and labor in general interact in the production of the national dividend and derive their income from it, respectively, in proportion to their (marginal) productivity. Their mutual dependence is the closest; capital without labor is dead; the worker, without the aid of his own or some other capital, will not live long. When labor is vigorous, capital reaps rich fruits and grows rapidly; thanks to capital and knowledge, the ordinary worker of the Western world is fed, clothed, and even housed in many respects better than the princes of former times. Cooperation between capital and labor is as indispensable as cooperation between the spinner and the weaver; a slight priority on the side of the spinner, but this does not give him any advantage. The prosperity of each of them is closely connected with the strength and energy of the other, although each of them can gain for himself temporarily, or even permanently, at the expense of the other, a slightly larger share of the national dividend.
The main factors of production are labor, land and capital
In the most general sense, resources (from French ressource - an auxiliary tool) are cash, values, reserves, opportunities, sources of funds, income. Usually, economic resources are emphasized - everything that is necessary for the production process.
It should be noted that along with the concept of "resources of production" in the economic literature, the concept of "factors of production" is often used as a synonym. Factor (from Latin “factor” - making, producing) - the reason, the driving force of any process, phenomenon, which determines its character or its individual features.
In fact, there is something in common between them - that both resources and factors are the same natural and social forces through which production is carried out. The difference between them lies in the fact that the resources include those natural and social forces that can be involved in production, and the factors include the resources actually involved in this process. Based on this, the concept of "resources" is broader than "factors of production".
Today, in Western economic theory, it is customary to divide the factors of production into three groups.
Land as a factor of production is a natural resource and includes all the benefits provided by nature (land, water, minerals, etc.) used in the production process.
Capital is everything that can generate income, or resources created by people for the production of goods and services. Such an approach to this category synthesizes the views of Western economists on capital (for example, A. Smith interpreted capital as part of the stock used in material production, D. Ricardo as a means of production, J. Robinson considered money to be capital). In Marxist political economy, capital was understood differently - first of all, as a value that brings surplus value ("self-increasing value"), as a defining economic relation, and the relation of exploitation.
Labor is a purposeful activity of people, requiring the application of mental and physical efforts, during which they transform natural objects to meet their needs. Strictly speaking, the labor factor also includes entrepreneurial abilities, which are sometimes considered as a separate factor of production. The fact is that land, labor and capital cannot create anything by themselves until they are united in a certain proportion by the entrepreneur, the organizer of production. It is for this reason that the activities of entrepreneurs, their abilities (entrepreneurship) are often considered as an independent factor of production.
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