Labour

Labour also referred to as "human capital", is one of the four factors of production along with land, capital and enterprise. It is the human effort used in production and the payment for labor is wages. Labour can also be described as the human characteristics of physical effort and skill, which are offered for sale in a market at an agreed price as a factors input to businesses. It is the human effort required to produce goods and services. The labour market refers to labor that is exchanged at an agreed price in the form of wages and salaries between buyers - the firms and sellers - the labour. The labour market is a resource market often open to the influences of supply and demand. The market demand (buyers) for labour is generated by employers (production sector). Demand of labor tends to be influenced by the need for labour in the production process and the expectations of producers for the future, and the state of the economy. The market supply (sellers) for labour is provided by employees.

While Marx and socialist economists also consider the concept of factors of production, they have a different perception of the concept of labor, and consider it as a cognizant and active input that changes physical raw materials and other inputs into use-values that are wanted by consumers and firms. Their analysis does not substantially change the idea of factors of production, although it gives special importance on means of production, defined as the factors minus labour, which it wanted to differentiate from human factors. Political economy also distinguishes between the concepts of the "factors of production" and the role that these play under capitalism: in that socio-economic system, labour becomes "variable capital" seen as the source of surplus-value or profits, while the non-human means of production become "constant capital" which does not contribute to surplus-value except indirectly, by making labour more productive.