This post aims to provide a basic understanding capital as a factor of production. In my two most recent posts I covered the classical definition for the factors of production and then went into a bit more detail on both land and labor. If you are unfamiliar with the concept of factors of production, or would just like to refresh your memory I strongly recommend going back and giving them a read. This is the fourth post in a series on the basics of economics, if you would like to read from the beginning please go here.
In this post I am going to talk a bit about our third and final factor of production: capital. Capital is defined as something that has been produced in order to be used in the production of other goods and services. In ancient times the only factors were labor and land: humans and their predecessors hunted with their bare hands and lived off the land. As they evolved they started constructing simple tools to aid them in their endeavors – primarily stone tools to aid in the hunting and butchering of animals. These tools were most likely the first instances of capital goods as they were produced to be used in the production of other goods (clothing and food).
In modern economies there are precious few (if any) productions that do not feature any capital at all. Factories have machines, offices have computers, and stores have cash machines. Cars, trucks and other means of transportation used in production are capital. Roads, bridges and ports are also capital. And all buildings used in production are capital. And just like all goods and services they can even be immaterial – i.e. have no physical form. For example, computer software only exists in digital space yet are an integral part of plenty of modern day productions.
There is no shortage of board games that feature capital in some way. I’m even going to go out on a limb and state that any board game that has some sort of production also features at least one component or otherwise that represents capital. Catan has wool, Terraforming Mars has steel, and Scythe has oil – to name a few. There are well over 7500 games on BGG that are listed as economic and I reckon only a few of them lack some sort of production.
Usually capital is featured as a resource to be collected and used either on its own or with a collection of other inputs. Sometimes you need five oil to produce a robot, other times you must also collect steel, wires, electronics, a computer chip and speech synthesizer before you can construct the bot. As a designer you often face a trade-off between simplicity and realism. In terms of capital and production, designers often chose to leave out parts of what is needed to actually produce a good. If they don’t then the game runs the risk of being cluttered with rules, components and resources and front load players with information. On the other hand, if it is too unrealistic then the players might question the setting and lose immersion.
Now that we’ve covered all of the three classical factors of production I want to talk about something that I’ve noticed in quite a few games.
There are games where one or more factors of production are not in the game while the others are. For example, in Catan there is no labor cost for any of the buildings or other productions in the game. It is basically assumed that you have an infinite supply of labor, you are instead restricted by the availability of land and capital. In Terra Mystica the opposite is true, you have plenty of land and labor but no capital – unless you count the shovels but they are only used to attain more land and not to produce anything. Leaving out a whole factor of production always bothered me as it implicitly assumes, as written above, that there is a near infinite supply of a given factor.
This is a strongly unrealistic assumption regardless of factor yet a strangely hilarious one. Imagine: in what world would there actually be a near infinite supply of labor? Perhaps some type of matrix-like world where humans are bred as cattle. Or maybe all humans have reached a higher state of consciousness where we are all just balls of energy flying around and multiplying at will. And for land and capital I find it even more unrealistic: can you even imagine a setting where a production takes place in a space where you can take up as much space as you want without consequences? As for capital there would have to be a infinite supply of inputs and raw materials to be used to create the capital goods – are we producing bottled air or something? Therefore, the design challenge to this post is the following:
Challenge: think of a setting or theme where it is realistic for there to be a near infinite supply of either capital, labor or land. Construct a narrative and try to make it as ridiculous as possible. Feel free to leave your thoughts below in the comments!