I'm taking a basic course in economics and I'm trying to understand what the term "resources" really mean in this context.
Reading this article, I found out that in classical economics, resources are usually divided in 3 categories: Land, Labour and Capital.
Anyway, while watching some videos, often I see enterpreneurs as another possibile type of resource.
Now, is this an addition of modern/present economics?

**I've seen that often "modern" and "classical" economics are interchangable attributes referring to the same thing: the view of economics started with the works of Adam Smith


2 Answers 2


What I think you want to consider to be grouped with land, labour and capital is another factor to be considered with labor- technology (A.K.A "Knowledge*).

The term "technology" here means an augmenting factor which is external to the present amount of labour. This can mean improved machinery to produce goods and services or alternatively, this can be viewed as a improvement in human capital which is what training employees can be viewed as in terms of technology.

For more information about the effect of technology/improved human capital in economics, I would recommend checking out the Solow Model and the Skill premium Model

Hope this is helpful!


The broad definition I use is this:

A resource is anything that's used to produce goods.

(I treat the terms resource, factor of production, means of production, and input as interchangeable.)

I neatly divide all resources into three categories:

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So, labor refers to human beings (or more correctly, the services thereof). Examples: (the services of) a farmer, a lawyer, or a janitor.

Natural resources are any non-human resources that are not produced by human beings. Examples: A piece of land, an oil field, a coal mine, a lake.

Capital or capital goods are any non-human resources that are produced by human beings. Examples: A factory building, a copy of Microsoft Word installed on an office computer, a shipping container, a restaurant kitchen knife.


  1. Classically, Land took the place of Natural resources, but these days it is probably better to speak of the broader term Natural resources.

  2. The above is an example of a model.

The real world is extremely complex and so to understand it better, economists make simplifications that they call models.

A successful model succeeds in helping us understand and explain the world better. Hopefully, the above model is at least somewhat successful.

We should however be keenly aware that the above model is not perfect and certainly not realistic. Instead, it is merely an aid to our understanding of the world.

For example, in the real world, "resources" cannot be so easily divided into the above three categories. Example: Is a flock of sheep categorized under Capital or Natural resources? It turns out that by convention, we categorize a flock of sheep under Capital, the justification being that a flock of sheep must be bred by human beings. One could however quibble with this justification.

And, as you mention, some economists might insist that we include as a fourth and distinct resource Entrepreneurship. There is merit to this view, but for simplicity, in my above model, I simply subsume this under Labour.


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