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EspañolRETURNS (ECONOMICS)
'Returns', in economics and political economy, are the distributions or payments awarded to the various suppliers of the factors of production. In classical economics the factors of production are labour, land, and capital.
Wages are the return to labour. The return to an individual's involvement (mental or physical) in the creation of goods or services. As we own our bodies and our minds
wages are payments to the 'individual' suppliers of labour even if the
supplier is the self.
In classical economics (which assumed that land was "owned" by a noble)
rent was the return to an "owner" of land. In later
economic theory this term is more refined as
economic rent which includes returns to other political
contrivances as well. Some economists considered rent as unearned and always based on political
contrivance.
In Classical Economics profit is the return to the owner(s) of capital stocks (machinery, tools, structures). Unlike labor, capital can be owned in shares and profit need not be individualized (though it often is). What is called "dividends" in current financial parlance would be considered as profits by classical economists and so too would "capital gains". The classical economists referred to a fee paid for the use of money as "interest" but did not consider such interest a factor of production. Smith seems to assert that "interest" is paid from profits. Ricardo does likewise.
In Neoclassical economics profit is total investment performance and includes economic rent.
The total investment return, also called investment performance, includes direct incomes (dividends, interests...) and capital gains (less capital losses) due to changes in the asset market value.
★ Return on investment
★ Internal rate of return
| Contents |
| Wages |
| Rent |
| Profit |
| Total investment return |
| See also |
Wages
Wages are the return to labour. The return to an individual's involvement (mental or physical) in the creation of goods or services. As we own our bodies and our minds
wages are payments to the 'individual' suppliers of labour even if the
supplier is the self.
Rent
In classical economics (which assumed that land was "owned" by a noble)
rent was the return to an "owner" of land. In later
economic theory this term is more refined as
economic rent which includes returns to other political
contrivances as well. Some economists considered rent as unearned and always based on political
contrivance.
Profit
In Classical Economics profit is the return to the owner(s) of capital stocks (machinery, tools, structures). Unlike labor, capital can be owned in shares and profit need not be individualized (though it often is). What is called "dividends" in current financial parlance would be considered as profits by classical economists and so too would "capital gains". The classical economists referred to a fee paid for the use of money as "interest" but did not consider such interest a factor of production. Smith seems to assert that "interest" is paid from profits. Ricardo does likewise.
In Neoclassical economics profit is total investment performance and includes economic rent.
Total investment return
The total investment return, also called investment performance, includes direct incomes (dividends, interests...) and capital gains (less capital losses) due to changes in the asset market value.
See also
★ Return on investment
★ Internal rate of return
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