Study Guide to Man, Economy, and State with Power and Market

Chapter 1: Fundamentals of Human Action 5
order. (These terms are interchangeable, depending on the context.)
If a ham sandwich is the consumers’ good, then the loaf of
bread, labor of the housewife (in making the sandwich), and the
unsliced ham would all be first-order producers’ goods. Goods
which are involved in the production of these goods (perhaps the
labor of the store clerk in selling the loaf of bread) would be second-order
producers’ goods, and so forth.
The two original factors of production are labor and land.
(Land is a technical term that includes not only land in the popular
sense, but all natural resources, such as deposits of copper.)
In addition to these factors we also have capital goods, which are
factors of production that are themselves produced by human
beings (with labor, land, and possibly other capital goods).
Notice that all capital goods can ultimately be traced back to the
input of the original factors, land and labor.
The value of producers’ goods derives from the value that
acting man places on the final, consumers’ goods that they produce.
In our example above, the loaf of bread is valuable because
it contributes to the production of the ham sandwich.
4. Further Implications: Time
The time elapsing from the beginning of an action until the
end is achieved is the period of production. The period of production
is the working time plus the maturing time. Note that the
period of production for a given consumer good does not
include the time used in the construction of all capital goods
used in the process. Although the economist must distinguish
between original and produced factors, acting man does not
care about the past; he takes the supplies of labor, land, and
presently available (i.e., previously produced) capital goods as a
given when he forms his plans.