Skip to main content


I reserve the right to be wrong.

So, economics is concerned with people's material production and exchange with each other. 'What the floop does that mean, Matt?' I hear you ask!

You create in the course of your life. Creation, which economists call production, takes in manufacture, harvesting crops, writing novels, and so on...

You sell (exchange for money) these things you have produced. As they were produced, they are called products. Products can be physical, tangible, hold-in-your-hand goods, or non-physical, intangible services. Both are produced. Both are products.

Phones, cars and clothes are goods. Haircuts, massages and investment advice are services. A book is a tangible good, but the novel inside is an intangible service. Same with a CD/DVD/Blu-Ray. Overall, they are all still products.

'But Matt, how do economists explain the making of products?'


Products are produced. We arrive at them through production. But that production needs inputs in order to output the products. These inputs are called the factors of production, and they are the land we live and work on, the labour of people, and the tools and other artificial goods we use, such as a lathe in a machine shop.

You can also see all of these factors as forms of capital;


Instead of Land, just see everything provided by nature in one neat category. thus including animals, plants, ores, clean air, drinking water, biodiversity, et cetera.


The bodies and minds of people; so their mechanical abilities plus their learned skills , such as advanced mathematics, or carpentry, or smithing, et cetera.


As Capital in the Land, Labour, Capital troika. Stuff that has been made for use in the production process, such as computers, industrial machinery, vehicles, hard hats, et cetera.

Production, taking in these three factors, churns out almost everything we exchange with each other. You are always free to find some gap in the economy; some demand for a product that doesn't yet exist, and stick your oar in to produce and provide that product. Production has existed since time immemorial, but has become an ever more capital-intensive process. What do I mean by that? I mean that the importance of capital/physical capital in every unit of production is increasing relative to the other two factors.

This happens because employers always seek to make their enterprises less labour-intensive. The downside of this is that many workers become less necessary and lose their jobs. On the other hand, those who don't, or who learn the new skills to fit with the increase in capital intensity win big, because their job security, absent a glut of people with the same qualifications, actually increases, and working hours can go down even as net wages go up, as happened in the late 19th century.

Economic growth is partly a by-product of increased productivity resulting from this increasing capital intensity. In fact another word for a society that puts ever more capital into the production process could be Capitalism. But that's for another day.

Money is notably absent from here, but that's because money doesn't produce anything. It is only exchanged for a product after the production process, or paid to a person as wages in exchange for their effort in the production process, thus invalidating money as a factor of production.

On the next Ecomony Blogtime;

Matt describes Exchange, or Trade, without which there is no economy!

Popular posts from this blog

So I was reading a piece on The Outline about identity politics when the author, Sean McElwee, brought up a survey he had penned and collated to establish how positions on economic and racial issues align;
Could Democrats win over racially conservative whites with economic populism? It’s unlikely, because people who oppose racial justice also tend to oppose liberal economic policies.  To test this, I created scales of economic and racial liberalism, using two questions that have been on the American National Election Studies surveys since 1972. One question asks respondents to place themselves on a one-to-seven point scale on government aid to black Americans, the other on a one-to-seven scale on guaranteeing jobs and income for all Americans. In 1972, only 54 percent of white Americans who took the racially liberal position (supporting aid to black Americans) also took the economically liberal position (guaranteeing jobs and income).  By 2016, 74 percent did. And in 1972, 77 perce…

What Lingos Are Most Similar to English, Though?

Will Automation Make All of the Jobs Disappear?

... No.

There is no reason to suggest that automation will dramatically increase unemployment in the short term, or at all in the long term.

Seriously, it will not.

Do read the links in the order in which they appear please. Finding the right comments in the third link might be quite interesting. They are all by a user called BestTrousers and start with "RI" meaning R1.

The main argument used by HealthcareEconomist3 is to give a survey of several works, while BestTrousers goes for comparative advantage.