Returns (economics)
From Wikipedia, the free encyclopedia
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.
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[edit] 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.
[edit] 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. Rent is always unearned and always based on political contrivance.
[edit] Interest
Interest is the return to the owner(s) of capital. Unlike labor, capital can be owned in shares and interest need not be individualized (though it often is). What is called "dividends" in later day financial parlance is, in fact, interest in the economics sense of the term. And in financial parlance much of what is called "interest" is actually economic rent.
