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Heterodox Economics 2

Alternative Analysis to the Mainstream "Blackboard Economics</I> Based on the Concept of "Creative Mental Labor</I>

Hasan Gürak

Heterodox Economics 2 consists of articles which are complementary to the subjects presented in the book titled Heterodox Economics, published in 2012. The aim is to present alternative economic approaches based on the concept of Creative Mental Labor that are intended to make a contribution to the emergence of a new economics. The analysis throughout the book is based upon the principle that the original source of all the value added to products (considering nature as a given), is the mental and physical inputs of labor that continuously create new technologies while at the same time making use of the available technologies.


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1- Production Factors, Productive Forces & Income Distribution


19 1- PRODUCTION FACTORS, PRODUCTIVE FORCES & INCOME DISTRIBUTION The composition of this book has been for the author a long strug- gle of escape… –a struggle of escape from habitual modes of thought and expression. The ideas, which are here expressed so la- boriously are extremely simple and should be obvious. The diffi- culty lies, not in the new ideas, but in escaping from the old ones… J.M. Keynes, 1973, General Theory… Preface Introduction Every introductory textbook on economics refers to some key and fundamental concepts like “factors of production (FoP), and income distribution”, among others. The orthodox theories inform us that there are two factors of production; labor (L), and capital (K), but often fail to specify what they really are or what they really imply. But, once upon a time, in the earlier texts of Classical eco- nomics, there used to be a third factor of production, nature (N) widely known as land. Some contemporary textbooks claim that there is even a fourth factor, the entrepreneur (E). In the post-1950 era, the number of the factors of produc- tion appears to have increased. There is nowadays another factor influencing production “re-discovered” by Solow; namely technology (Te). In addition, since 1960s, there is yet another factor which has an effect on production; “hu- man capital” (H). The definitions of concepts like capital, labor, human capital, productive factors, and production factors are dubious and, require revaluation and re- examination. Accordingly, widely used analyses of economic relations are also dubious and,...

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