The Subscript “k”; The Application of Factors of Production

The materials and services, which are integrated as factors of production into a completed unit for sale, are applied to the integration at rates by compensated humans.  These rates of compensations to humans constitute outlays in the production process – designated as wages, salaries, fees, rent, interest, and dividends – and thus they constitute income for these recipients’ purposes of consuming or saving.

Lonergan’s first “equation” – and, as he explains, it is not an equation because there is no unit of measure common to both sides of the equals sign – is

q= ΣΣqijk

Rather than use the equals sign we might use the phrase “is composed of.”

Item qi is composed of ΣΣqijk factors of production

Also. The rates of application – repeat “rates” – of factors of production have the price determining the wage.  Workers are paid.  Thus when we look at the composition of product, we must also see in it incomes being paid and received at rates.  This is all elementary within the dynamic process of production and exchange. The whole process is intrinsically a process of value.