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In political philosophy, the means of production refers to the generally necessary assets and resources that enable a society to engage in production. [1] While the exact resources encompassed in the term may vary, it is widely agreed to include the classical factors of production (land, labour, and capital) as well as the general infrastructure and capital goods necessary to reproduce stable levels of productivity. [2] It can also be used as an abbreviation of the "means of production and distribution" which additionally includes the logistical distribution and delivery of products, generally through distributors; or as an abbreviation of the "means of production, distribution, and exchange" which further includes the exchange of distributed products, generally to consumers. [3]
The concept of "means of production" is used by researchers in various fields of study — including politics, economics, and sociology — to discuss, broadly, the relationship between anything that can have productive use, its ownership, and the constituent social parts needed to produce it.
From the perspective of a firm, a firm uses its capital goods, [4] which are also known as tangible assets as they are physical in nature. Unfinished goods are transformed into products and services in the production process. Even if capital goods are not traded on the market as consumer goods, they can be valued as long as capital goods are produced commodities, which are required for production. The total values of capital goods constitute the capital value. [5] [6]
The social means of production are capital goods and assets that require organized collective labor effort, as opposed to individual effort, to operate on. [7] The ownership and organization of the social means of production is a key factor in categorizing and defining different types of economic systems.
The means of production includes two broad categories of objects: instruments of labor (tools, factories, infrastructure, etc.) and subjects of labor (natural resources and raw materials). People operate on the subjects of labor using the instruments of labor to create a product; or stated another way, labor acting on the means of production creates a good. [8] In an agrarian society the principal means of production is the soil and the shovel. In an industrial society the means of production become social means of production and include factories and mines.
In a knowledge economy, learning, research, development, innovation, ideas and creativity are the means of [knowledge] production; communication such as books, articles, videos disseminated both physically and digitally over the Internet are a means of [knowledge] distribution. In a broad sense, the "means of production" also includes the "means of distribution" such as stores, the internet and railroads (Infrastructural capital). [9]
The means of production of the firm may depreciate, which means there is a loss in the economic value of capital goods or tangible assets (e.g. machinery, factory equipment) due to wear and tear, and aging. This is known as the depreciation of capital goods. [10]
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The analysis of the technological sophistication of the means of production and how they are owned is a central component in the Marxist theoretical framework of historical materialism and in Marx's critique of political economy, and later in Marxian economics.
In Marx's work and subsequent developments in Marxist theory, the process of socioeconomic evolution is based on the premise of technological improvements in the means of production. As the level of technology improves with respect to productive capabilities, existing forms of social relations become superfluous and unnecessary as the advancement of technology integrated within the means of production contradicts the established organization of society and its economy.
The increasing efficiency of the means of production via the creation and adaptation of new technologies over time has a tendency to rearrange local and global market structures, leading to the disruption of existing profit pools, creating the possibility of massive economic impact. Disruptive technologies can lead to the devaluation of various forms of labor power, up to the point of making human labor power economically noncompetitive in certain applications, potentially widening income inequality. [11]
According to Marx, escalating tension between the upper and lower class is a major consequence of technology decreasing the value of labor force and the contradictory effect an evolving means of production has on established social and economic systems. Marx believed increasing inequality between the upper and lower classes acts as a major catalyst of class conflicts, which develop to a point where the existing mode of production inevitably becomes unsustainable, either collapsing or being overthrown in a social revolution, at which point the contradictory relationship between technological advancement and the value of labor force is resolved by the emergence of a new mode of production based on a different set of social relations including, most notably, different patterns of ownership for the means of production. [12]
Ownership of the means of production and control over the surplus product generated by their operation is the fundamental factor in delineating different modes of production. Capitalism is defined as private ownership and control over the means of production, where the surplus product becomes a source of unearned income for its owners. Under this system, profit-seeking individuals or organizations undertake a majority of economic activities. However, capitalism does not indicate all material means of production are privately owned as partial economies are publicly owned. [13]
By contrast, socialism is defined as social ownership of the means of production so that the surplus product accrues to society at large. [14]
Marx's theory of class defines classes in their relation to their ownership and control of the means of production. In a capitalist society, the bourgeoisie, or the capitalist class, is the class that owns the means of production and derives a passive income from their operation. Examples of the capitalist class include business owners, shareholders and the minority of people who own factories, machinery and lands. Countries considered as the capitalist countries include Australia, Canada and other nations which hold a free market economy. In modern society, small business owners, minority shareholders and other smaller capitalists are considered as Petite bourgeoisie according to Marx's theory, which is distinct from bourgeoisie and proletariat as they can buy the labour of others but also work along with employees.
In contrast, the proletariat, or working class, comprises the majority of the population that lacks access to the means of production and are therefore induced to sell their labour power for a wage or salary to gain access to necessities, goods and services. [15]
According to Marx, wages and salaries are considered as the price of labour power, related to working hours or outputs produced by the labour force. At the company level, an employee does not control and own the means of production in a capitalist mode of production. Instead, an employee is performing specific duties under a contract of employment, working for wages or salaries. [16] As for firms and profit-seeking organizations, from a personnel economics perspective, to maximize efficiency and productivity there must be an equilibrium between labour markets and product markets. In human resource practices, compensation structure tends to shift towards pay-for-performance bonus or incentive pay rather than base salary to attract the right workers, even if conflicts of interest exist in an employer-worker relationship. [17]
To the question of why classes exist in human societies in the first place, Karl Marx offered a historical and scientific explanation that it was the cultural practice of ownership of the means of production that gives rise to them. This explanation differs dramatically from other explanations based on "differences in ability" between individuals or on religious or political affiliations giving rise to castes. This explanation is consistent with the bulk of Marxist theory in which Politics and Religion are seen as mere outgrowths (superstructures) of the basic underlying economic reality of a people. [18]
Factors of production are defined by German philosopher Karl Marx in his book Das Kapital as labor, subjects of labor, and instruments of labor: the term is equivalent to means of production plus labor. The factors of production are often listed in economic writings derived from the classical school as "land, labour and capital". Marx sometimes used the term "productive forces" equivalently with "factors of production"; in Kapital, he uses "factors of production", in his famous Preface to his Critique of Political Economy: A Contribution to the Critique of Political Economy , he uses "productive forces" (that may depend on the translation).
Production relations (German: Produktionsverhältnis) are the relations humans enter into with each other in using the means of production to produce. Examples of such relations are employer/employee, buyer/seller, the technical division of labour in a factory, and property relations.
Mode of production (German: Produktionsweise) means the dominant way in which production is organised in society. For instance, "capitalism" is the name for the capitalist mode of production in which the means of production are owned privately by a small class (the bourgeoisie) who profits off the labor of the working class (the proletariat). Communism is a mode of production in which the means of production are not owned by anyone, but shared in common, without class-based exploitation. Besides capitalism and communism, there is another mode of production which is called a Mixed Economic System. In a mixed economy, private ownership of capital goods are protected and a certain level of the market economy is allowed. However, the government has the right to intervene in the market and economic activities for social objectives. Different from the pure capitalism, the government regulation exists to control particular means of production over the private business sector. Different from communism, the majority of means of production are privately owned rather than shared in common. [19]
[...] Hindess and Hirst (1977, page 65) [...] define means of production as 'all the conditions necessary to the operation of a particular labour process which are combined in the units of production in which that process takes place' [...].
It takes the means of production to comprise anything that is or can be put to productive use... the means of production consist of anything that enables or could enable the extraction of surplus value (exploitation). Similarly, for Proudhon, goods not meant for immediate consumption, whose accumulation might introduce social inequality
The conception of capital within orthodox economics. Within orthodox economics, the term 'capital' generally refers to the means of production.
Here we encounter a further characteristic of the modern wage proletarian. He works not with the individual but with social means of production, means of production so extensive that they can be operated only by a society of workers, not by the individual worker.
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: CS1 maint: location missing publisher (link)For Marx, class was defined by an individual's relationship to the means of production...Class is determined by the extent to which people own most, some, or little of the means of production, or by their relationship to the means of production. It generally conflicts over control or access to the means of production that drives history.
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: CS1 maint: location missing publisher (link)Private property is a legal designation for the ownership of property by non-governmental legal entities. Private property is distinguishable from public property, which is owned by a state entity, and from collective or cooperative property, which is owned by one or more non-governmental entities.
Karl Marx's theory of alienation describes the estrangement of people from aspects of their human nature as a consequence of the division of labor and living in a society of stratified social classes. The alienation from the self is a consequence of being a mechanistic part of a social class, the condition of which estranges a person from their humanity.
An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains. The aim of capital accumulation is to create new fixed and working capitals, broaden and modernize the existing ones, grow the material basis of social-cultural activities, as well as constituting the necessary resource for reserve and insurance. The process of capital accumulation forms the basis of capitalism, and is one of the defining characteristics of a capitalist economic system.
Productive forces, productive powers, or forces of production is a central idea in Marxism and historical materialism.
In Marxian economics, economic reproduction refers to recurrent processes. Michel Aglietta views economic reproduction as the process whereby the initial conditions necessary for economic activity to occur are constantly re-created. Marx viewed reproduction as the process by which society re-created itself, both materially and socially.
Surplus labour is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker. The "surplus" in this context means the additional labour a worker has to do in their job, beyond earning their keep. According to Marxian economics, surplus labour is usually uncompensated (unpaid) labour.
Productive and unproductive labour are concepts that were used in classical political economy mainly in the 18th and 19th centuries, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis. The concepts strongly influenced the construction of national accounts in the Soviet Union and other Soviet-type societies.
Marxian class theory asserts that an individual's position within a class hierarchy is determined by their role in the production process, and argues that political and ideological consciousness is determined by class position. A class is those who share common economic interests, are conscious of those interests, and engage in collective action which advances those interests. Within Marxian class theory, the structure of the production process forms the basis of class construction.
In Marxist theory and Marxian economics, the immiseration thesis, also referred to as emiseration thesis, is derived from Karl Marx's analysis of economic development in capitalism, implying that the nature of capitalist production stabilizes real wages, reducing wage growth relative to total value creation in the economy. Even if real wages rise, therefore, the overall labor share of income decreases, leading to the increasing power of capital in society.
In the Marxist theory of historical materialism, a mode of production is a specific combination of the:
Exploitation is a concept defined as, in its broadest sense, one agent taking unfair advantage of another agent. When applying this to labour it denotes an unjust social relationship based on an asymmetry of power or unequal exchange of value between workers and their employers. When speaking about exploitation, there is a direct affiliation with consumption in social theory and traditionally this would label exploitation as unfairly taking advantage of another person because of their vulnerable position, giving the exploiter the power.
In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.
Classical Marxism is the body of economic, philosophical, and sociological theories expounded by Karl Marx and Friedrich Engels in their works, as contrasted with orthodox Marxism, Marxism–Leninism, and autonomist Marxism which emerged after their deaths. The core concepts of classical Marxism include alienation, base and superstructure, class consciousness, class struggle, exploitation, historical materialism, ideology, revolution; and the forces, means, modes, and relations of production. Marx's political praxis, including his attempt to organize a professional revolutionary body in the First International, often served as an area of debate for subsequent theorists.
In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power. The concept originated in Ricardian socialism, with the term "surplus value" itself being coined by William Thompson in 1824; however, it was not consistently distinguished from the related concepts of surplus labor and surplus product. The concept was subsequently developed and popularized by Karl Marx. Marx's formulation is the standard sense and the primary basis for further developments, though how much of Marx's concept is original and distinct from the Ricardian concept is disputed. Marx's term is the German word "Mehrwert", which simply means value added, and is cognate to English "more worth".
The socialist mode of production, or simply (Marxist) socialism or communism as Karl Marx and Friedrich Engels used the terms communism and socialism interchangeably, is a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory. The Marxist definition of socialism is that of production for use-value, therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. According to Marx, distribution of products is based on the principle of "to each according to his needs"; Soviet models often distributed products based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management. Surplus value goes to the working class and hence society as a whole.
Capital: A Critique of Political Economy, also known as Capital, is a foundational theoretical text in materialist philosophy and critique of political economy written by Karl Marx, published as three volumes in 1867, 1885, and 1894. The culmination of his life's work, the text contains Marx's analysis of capitalism, to which he sought to apply his theory of historical materialism "to lay bare the economic law of motion of modern society", following from classical political economists such as Adam Smith and David Ricardo. The text's second and third volumes were completed from Marx's notes after his death and published by his colleague Friedrich Engels. Das Kapital is the most cited book in the social sciences published before 1950.
Social ownership is a type of property where an asset is recognized to be in the possession of society as a whole rather than individual members or groups within it. Social ownership of the means of production is the defining characteristic of a socialist economy, and can take the form of community ownership, state ownership, common ownership, employee ownership, cooperative ownership, and citizen ownership of equity. Within the context of socialist economics it refers particularly to the appropriation of the surplus product, produced by the means of production, or the wealth that comes from it, to society at large or the workers themselves. Traditionally, social ownership implied that capital and factor markets would cease to exist under the assumption that market exchanges within the production process would be made redundant if capital goods were owned and integrated by a single entity or network of entities representing society. However, the articulation of models of market socialism where factor markets are utilized for allocating capital goods between socially owned enterprises broadened the definition to include autonomous entities within a market economy.
Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian economists tend to accept the concept of the economy prima facie. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other; in many cases Marxian analysis is used to complement, or to supplement, other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage, rather than being synonymous: They share a semantic field, while also allowing both connotative and denotative differences.
Historical materialism is Karl Marx's theory of history. Marx locates historical change in the rise of class societies and the way humans labor together to make their livelihoods.