Every econ textbook I’ve read, as well as any lecture from any professor, has used the standard “Land, Labor, and Capital” arrangement of the factors of production. But it seems to me that time (which I have heard categorized alternately as either a part of labor or land) ought to be considered a fourth, separate factor. It is certainly something which ought to be considered (though only Austrians ever do consider it). It isn’t land, because it does’t take physical space, and is not transformed from a resource to a good through labor. It seems to be linked with labor, but cannot be labor itself, because one could perform the same amount of labor over very different spans of time. And it’s obviously not capital. Yet it is still a factor of production.
Time is the third factor of production in the Austrian view. Capitalists advance money for a future good - their reward is interest. Under Austrian analysis, capital reduces to time, labour and land.
-Jon
Wait, isn’t it capital that earns the interest rather than time.
A separate question: do Austrians disregard the funny factor of production: “entrepreneurship”?
No, and you will find an exposition of this in MES. Capital has no independent earning power. What capitalists do is advance money in the present, to land and labour, for the future good they will produce. Given the fact of time preference, a future good’s value is discounted by TP, so that its present value is lower than its future value. That discount, the interest rate, is what the capitalist earns as a reward for their patience, and for their service of advancing present goods. Capital goods themselves reduce to labour, land and time, which once rewarded absorb all income.
Entrepreneurship comes into play due to uncertainty, outside the evenly rotating economy (ERE). I’m not sure if it is a factor of production strictly speaking. What the entrepreneur does is try to anticipate where consumer demand will lie in changing market conditions. If they succeed, they earn pure profits. If not, they suffer losses.
-Jon