Land, Labor and Capital
Land, labor and capital were identified as the foundational means of production in classical economics. At the time, agriculture was a critical part of life because of the need for food. Production was limited by the amount ond quality of land, the availability of labor and the availability of capital (money).
Knowledge
Another limiting factor has been knowledge. People have worked on doing things more efficiently throughout history and have accumulated knowledge.
The amount of knowledge has grown over time and new knowledge has been added at an accelerating pace over the years. The pace of knowledge accumulation in recent decades has been huge and the pace continues to accelerate.
Knowledge should be good news, but there is both an upside and a downside to knowledge because it can be used for good or bad. There is little to ensure that knowledge is used in a good way, and issues also about what constitutes a good way.
Processes for Creating Value
There have been innovations over time to create processes that create value from natural resources. The agricultural revolution resulted in improved processes for the production of food, and the industrial revolution resulted in improved processes for the production of goods. The process innovations have been impressive, and productivity improved so that more and more product can be produced for the benefit of consumers.
What is a problem is that while the output of product is impressive, the consumption of resources is large and unsustainable and the various waste flows are also doing damage to society and the environment.
In recent decades, there has been accounting for the direct cost of production and the good value of product, but not so much an accounting for the depletion of natural resources nor environmental or social damage associated with the production and consumption of products.
|
