Editing Factors of production (section)

=== Neoclassical economics ===
[[Neoclassical economics]], one of the branches of [[mainstream economics]], started with the classical factors of production of land, labor, and capital. However, it developed an alternative theory of value and distribution. Many of its practitioners have added various further factors of production (see below).

Further distinctions from classical and neoclassical [[microeconomics]] include the following:
* [[Capital (economics)|Capital]] — this has many meanings, including the [[financial capital]] raised to operate and expand a business. In much of economics, however, "capital" (without any qualification) means goods that can help produce other goods in the future, the result of [[investment (macroeconomics)|investment]]. It refers to machines, roads, factories, schools, infrastructure, and office buildings which humans have produced to create goods and services.
* [[Fixed capital]] — this includes machinery, factories, equipment, new technology, buildings, computers, and other goods that are designed to increase the productive potential of the economy for future years. Nowadays, many consider computer [[software]] to be a form of fixed capital and it is counted as such in the [[National Income and Product Accounts]] of the United States and other countries. This type of capital does not change due to the production of the good.
* [[Working capital]] — this includes the stocks of finished and semi-finished goods that will be economically consumed in the near future or will be made into a finished consumer good in the near future. These are often called [[inventory]]. The phrase "working capital" has also been used to refer to liquid assets (money) needed for immediate expenses linked to the production process (to pay salaries, invoices, taxes, interests...) Either way, the amount or nature of this type of capital usually changes during the production process.
* [[Financial capital]] — this is simply the amount of money the initiator of the business has invested in it. "Financial capital" often refers to his or her net worth tied up in the business ([[asset]]s minus [[Liability (financial accounting)|liabilities]]) but the phrase often includes money borrowed from others.
* Technological progress — For over a century, economists have known that capital and labor do not account for all economic growth. To include the technological progress into the theory, it was proposed to introduce [[capital service]] and [[labour service]] as production factors in line with capital and labour. This is reflected in ''[[total factor productivity]]'' and the ''[[Solow residual]]'' used in economic models called ''[[production function]]s'' that account for the contributions of capital and labor, yet have some unexplained contributor which is commonly called ''technological progress''. Russian economist [[Vladimir Pokrovskii]] proposed to consider capital service as one of independent production factors in line with labour and capital.<ref name=article>Pokrovski, V.N. (2003).  Energy in the theory of production. Energy 28, 769–788.</ref> Capital service as production factor was interpreted by Ayres and Warr <ref name="Ayres-Warr2009">{{cite book| author = Robert U. Ayres|author2=Benjamin Warr| title = The Economic Growth Engine: How Energy and Work Drive Material Prosperity| year = 2009| publisher = Edward Elgar Publishing| isbn = 978-1-84844-182-8 }}</ref> as useful work of production equipment, which makes it possible to reproduce historical rates of economic growth with considerable precision <ref name=article>Pokrovski, V.N. (2003).  Energy in the theory of production. Energy 28, 769–788.</ref><ref>Pokrovski, V.N. (2007) Productive energy in the US economy, Energy 32 (5) 816–822.</ref><ref name="Ayres-Warr2009"/><ref>{{Cite journal| last = Pokrovskii| first = Vladimir| year = 2021| title = Social resources in the theory of economic growth| url = https://thecomplexsystems.com/| journal = The Complex Systems| issue = 3| pages = 32–43| access-date = 2022-05-24| archive-date = 2022-05-31| archive-url = https://web.archive.org/web/20220531115232/https://thecomplexsystems.com/| url-status = dead}}</ref> and without recourse to exogenous and unexplained technological progress, thereby overcoming the major flaw of the Solow Theory of economic growth.