Means of production

In economics and sociology, the means of production (also called capital goods[1] or productive property) are the physical and non-financial inputs used in the production of goods and services with economic value. These include raw materials, facilities, machinery and tools used in the production of goods and services.[2][3]

From the perspective of a firm, a firm uses its capital goods, which are also known as tangible assets as they are physical in nature. Unfinished goods are transformed into products and services in the production process. Even if capital goods are not traded on the market as consumer goods, they can be valued as long as capital goods are produced commodities, which are required for production. The total values of capital goods constitute the capital value.[4][5]

The social means of production are capital goods and assets that require organized collective labor effort, as opposed to individual effort, to operate on.[6] The ownership and organization of the social means of production is a key factor in categorizing and defining different types of economic systems.

The means of production includes two broad categories of objects: instruments of labor (tools, factories, infrastructure, etc.) and subjects of labor (natural resources and raw materials). People operate on the subjects of labor using the instruments of labor to create a product; or stated another way, labor acting on the means of production creates a good.[7] In an agrarian society the principal means of production is the soil and the shovel. In an industrial society the means of production become social means of production and include factories and mines. In a knowledge economy, computers and networks are means of production. In a broad sense, the "means of production" also includes the "means of distribution" such as stores, the internet and railroads (Infrastructural capital).[8]

The means of production of the firm may depreciate, which means there is a loss in the economic value of capital goods or tangible assets (e.g machinery, factory equipment) due to wear and tear, and aging. This is known as the depreciation of capital goods.[9]