Note 131 — Chapter II · : ADAM SMITH

The theory that there are three factors of production, which has since become a commonplace of economics, is not to be found in Smith. Indirectly, however, it was he who originated the idea by distinguishing in his treatment of distribution between the various sources of revenue. The distinction once made, it was quite natural to consider each source as a factor of production; and this is just what J. B. Say did in his Treatise (2nd ed., chaps. iv and v). Cf. Cannan’s History of the Theories of Production and Distribution, p. 40 (1894).