摘要：The conventional theory of production discusses the choice between different non-entrepreneurial resources (Land, Labor, and Capital). Why these resources choose to be so and not to become entrepreneurial resource is rather untouched in economic theory. Also, should owners of land, labor and capital decide to work for others on rent, wages and interest respectively or should they take entrepreneurial risk to earn profit? This is a choice often made in reality but has never been explicitly explained in economic theory. The conventional theory does not recognize money capital as an explicit factor of production but recognizes interest as a reward of capital. Interest rate is the price of money capital but it is treated as representing the price of physical capital too. This article would present a critical review of the conventional classification of factors of production and reformulate a new classification for the allocation of resources and the distribution of income (Rent, Wages, Interest, Profits) that would be considered more rational even for the conventional theoretical framework to review and develop the theories of production and distribution. Interest rate should enter into the rewards of factors of production only if money or finance is treated as an explicit separate factor of production capable of providing a service. This classification of factors of production that distinguishes financial capital from physical capital and makes financial capital entirely different from physical capital having different types of factor prices, would create entrepreneurial factors of production encouraging “Institution of Participation” or initiating a “Productive Venture”. The main economic purpose that the institution of participation can serve is to distribute entrepreneurial risk so that more and more potential entrepreneurial resources may come forward to avail the entrepreneurial opportunities in the economy. This participation would increase output; A and B together will be larger than the sum of their individual outputs because of division of labor and specialization. This new approach towards money as a factor of production has its implication to enhance entrepreneurial activity and economic development as they are based on the supply and demand for the factors of production. Only entrepreneurial resources can participate with each other, there can be no other form of participation.
关键词：Economic theory of production; Financial capital; Physical capital; Factor price; Entrepreneurial factors of production; Distribution of income; Institution of Participation; Economic development
