



The factors of production are

(1) primary commodities or natural resources, including land, raw materials, water, and energy;

(2) labour, and

(3) capital goods.

Thus inflationary pressures can result from (1) surges in the prices of primary commodities or energy, especially when the prices of these factor inputs are set on world markets or are influenced by supply shocks;



(2) workers pushing for wage rises, and



(3) business firms increasing their pricing mark-ups.

The price of commodities produced in an economy depends on the costs of factors of production, in particular the wage bill, and then the mark-up over the costs of factor inputs (Musella and Pressman 1999: 1100).The factors of production areThus inflationary pressures can result from

... it is necessary to divide the economy into a “productive” portion that creates income and surplus, and an “extractive” rentier portion siphoning off this surplus as rents ...

At, an oldie: Stagflation in the 1970s: A Post Keynesian Analysis There's a lot I like in it. But I don't stop reading when I get to something I like. I stop reading when there's a problem.There's a problem. LK writes:No.Well, yes and no. Everything he's got there is right. It is something left out that I have trouble with.Where's finance?LK lists the factors of production, straight out of Adam Smith: land, labor, and capital. But LK says it better: He says. That excludes money.That's good, because I count money as factor number four.I like what LK says, that "The price of commodities produced in an economy depends on the costs of factors of production".I like it that Adam Smith's discussion of land, labor, and capital has the title Of the Component Parts of the Price of Commodities I like the idea that the cost of a product is, at minimum, equal to the total of the costs that went into making the product.And if, as LK says, the price of commodities produced in an economy depends on the costs of factors of production, then I like to turn that around and say that the factors of production are cost categories. The factors categorize the costs involved in the production of output. And if that is the case, then certainly money is a factor of production.If you can't accept that, then say money is a factor of facilitation. And when you say "factors" think of both the factors of production and the factor of facilitation. That's fine with me. What's important is to make sure we include all of the categories of cost that add to the cost of output. Certainly, money is one of those categories. Money, or finance, or rent, or call it what you will.As Bezemer and Hudson sayIt surely is important to be aware of the "rentier portion" of the economy. It surely is important to consider the cost imposed by that sector on the rest of the economy. So when I see LK limit himself to three factors, and exclude the "rentier portion" from his list of factors, I have to stop reading, and write.