ABSTRACT

Traditional economic analysis identifies three factors of production–land, labour and capital–and seeks an analytical framework that will show the contribution of all three to the production process and also the share each obtains of the output. Classical economists in the tradition of Adam Smith, Malthus, Ricardo and Mill, regarded problems of economic development as of major importance. The classical economists elaborated a theory of international trade based on the doctrine of comparative advantage. However important capital investment may be as a necessary condition for development, the evidence suggests that its role may have been exaggerated. In the German tradition of economic thinking the triad of land, labour and capital was regarded as inadequate and the role of the entrepreneur was recognized. Embedded in the history of economics is the problem of what it is that confers value upon goods, and at one time it was widely held that the labour input was the sole determinant of value.