კონფერენცია

∘ Vladimer Papava ∘ Tamar Tapladze ∘
WHY INFORMATION IS NOT A FACTOR OF PRODUCTION?

Summary

According to the theory of production factors, these factors are labor, land, capital and entrepreneurial ability with each of them corresponding to an appropriate factor payment: wages, rental income, interest income and profits. Fifth factor of production is government’s economic ability. Its corresponding factor payments are indirect business taxes.

Many publications suggest considering information or information technology as a factor of production. The authors, as a rule, studied the salient characteristics of information, its special nature and its impact on production. At the same time, unfortunately, they forget about the most important aspect of the theory of production factors according to which any production factor has to have a theoretically proven appropriate factor payment. It is very important to always remember that according to the theory of production factors, each of the factors has its own specific factor payment.

The problem cannot be resolved if the royalty will be considered as a factor payment for the information in the capacity of the production factor. In fact, two types of information are used in the production – publicly available and commercial. Information from open (publicly available) sources has no payment. At the same time, it is necessary to pay for commercial knowledge. Consequently, it turns out that not all information “participating” in production has a payment. This contradicts the wholeness of the theory of the production factors.

What is the main reason for the mistake of considering information as a production factor?

If we look through traditional economics, it is not difficult to find out that, as usual and without any justification, production factors are identified with production resources when “factors” and “resources” are used as synonyms. In fact, it is theoretically proven that there are essential distinctions between factors and resources when factors (labor, land and capital) are qualitatively different from resources (information, energy and matter).

Therefore, information is a very important production process resource but it is not a production factor.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Vladimer Papava ∘ Tamar Tapladze ∘ WHY INFORMATION IS NOT A FACTOR OF PRODUCTION? Summary According to the theory of production factors, these factors are labor, land, capital and entrepreneurial ability with each of them corresponding to an appropriate factor payment: wages, rental income, interest income and profits. Fifth factor of production is government’s economic ability. Its corresponding factor payments are indirect business taxes. Many publications suggest considering information or information technology as a factor of production. The authors, as a rule, studied the salient characteristics of information, its special nature and its impact on production. At the same time, unfortunately, they forget about the most important aspect of the theory of production factors according to which any production factor has to have a theoretically proven appropriate factor payment. It is very important to always remember that according to the theory of production factors, each of the factors has its own specific factor payment. The problem cannot be resolved if the royalty will be considered as a factor payment for the information in the capacity of the production factor. In fact, two types of information are used in the production – publicly available and commercial. Information from open (publicly available) sources has no payment. At the same time, it is necessary to pay for commercial knowledge. Consequently, it turns out that not all information “participating” in production has a payment. This contradicts the wholeness of the theory of the production factors. What is the main reason for the mistake of considering information as a production factor? If we look through traditional economics, it is not difficult to find out that, as usual and without any justification, production factors are identified with production resources when “factors” and “resources” are used as synonyms. In fact, it is theoretically proven that there are essential distinctions between factors and resources when factors (labor, land and capital) are qualitatively different from resources (information, energy and matter). Therefore, information is a very important production process resource but it is not a production factor.