Hans Mayer, Produktionsfaktoren (1925)

Hans Mayer’s encyclopedia entry examines the disputed meaning of “factors of production” through three stages: a diagnosis of conceptual confusion, a selective history of economic doctrines, and a systematic justification of the classification into nature, labour, and capital. Its central claim is methodological: factors should be distinguished according to their explanatory function in economics, not merely their physical contribution to production or their association with particular incomes. Mayer defends the familiar threefold classification by grounding it in scarcity and the dependence of productive returns on available means.

The opening section separates the general technical-economic conditions of production from the institutional conditions governing production and income under private ownership. Confusing these questions encourages writers to treat the state, legal order, or commercial conditions as additional productive factors. The ambiguity of capital—as produced means of production and as wealth invested for income—intensifies the confusion. Mayer insists:

Die reinliche Unterscheidung zwischen den generellen technisch-ökonomischen Voraussetzungen jeder Produktion und den spezielleren Voraussetzungen des gesellschaftlichen Produktionsprozesses und der Einkommensbildung ist jedoch für das Verständnis des gesellschaftlichen Wirtschaftsprozesses unerläßlich.

English translation: The clear distinction between the general technical-economic prerequisites of all production and the more specific prerequisites of the social production process and income formation is, however, indispensable for understanding the social economic process.

This distinction does not deny the importance of institutions. It prevents a theory of productive means from becoming an immediate explanation—or justification—of income claims. Some incomes do not derive from production; even those that do depend additionally on property rights and other social arrangements. Nor are land, labour, and capital autonomous creators of output: they are means employed in carrying out a producer’s plan. Mayer retains the conventional terminology for its convenience, while rejecting its suggestion of independently acting productive agents.

The historical section traces competing classifications without presenting them as a single progressive development. The physiocrats recognized several technical inputs but attributed the net surplus to nature alone. Adam Smith established the influential tripartite scheme by connecting rent, wages, and profit with land, labour, and capital; Say consolidated it. Mill’s secondary factors and List’s emphasis on national productive powers widened attention to institutions. By contrast, Carey assimilated land to capital, while Rodbertus and, in Mayer’s account, Marx privileged labour economically despite acknowledging nature’s contribution. Later classifications introduced organization, intelligence, and technical ideas. These examples reveal how different explanatory purposes generate different enumerations, often leaving production and income formation entangled.

The final section supplies Mayer’s positive criterion. Older theory selected inputs possessing exchange value and treated them as sources of income. Modern theory must instead explain why certain productive conditions acquire value at all. This inquiry precedes, and is necessary for, an adequate theory of distribution:

Demnach besteht die Funktion der Lehre von den Produktionsfaktoren in der modernen Theorie darin, zu zeigen, warum von den zahllosen generellen Bedingungen jeder Produktion bloß einzelne Arten derselben bewertet d. i. Gegenstand der Wirtschaft werden und nach welchen Gesetzen sich deren Bewertung vollzieht.

English translation: Accordingly, the function of the doctrine of factors of production in modern theory consists in showing why, among the countless general conditions of all production, only certain kinds are valued, that is, become objects of economic activity, and according to what laws their valuation takes place.

Mayer’s decisive move distinguishes causal necessity from economic dependence. Production presupposes indefinitely many conditions, including sunlight, natural laws, knowledge, and materials. Economics isolates conditions whose availability can be influenced and whose quantities are insufficient relative to demand for their products. Losing a portion of such means entails an irrecoverable loss of output and utility. Scarcity, controllability, and quantitative dependence—not causal indispensability alone—therefore identify productive factors.

The resulting categories differ internally and from one another. Nature includes land with recurrent productive powers, exhaustible mineral deposits, and scarce usable natural forces. Labour is broadly applicable but heterogeneous; its productive employment also sacrifices leisure, freedom, and immediate well-being. Capital comprises produced means of production. Its derivation from land and labour does not eliminate its independent economic significance:

Auch hier kann nur das wirtschaftliche Moment der Abhängigkeit die Entscheidung geben.

English translation: Here too, only the economic consideration of dependence can decide the issue.

The relevant test is whether missing capital goods could immediately be replaced from labour and natural resources. Since their production takes time, sometimes considerable time, current output depends on the existing capital stock itself. Genetic reducibility does not establish present substitutability.

Mayer concludes by locating purported additional factors within this framework. Skills qualify labour; invention and organizational innovation are forms of labour. Institutions and cultural or technical conditions shape production, but are neither individually disposable productive means nor consumed or committed in production in the same sense. The entry’s significance lies in preserving institutional explanation while assigning factor theory a narrower task: explaining the valuation of scarce productive means without mistaking their contribution for a sufficient explanation of income ownership.