production, in economics, all those activities that have to do with the creation of commodities, by imparting to raw materials utility, added value, or the ability to satisfy human wants. The farmer who grows wheat, the miller who grinds the wheat into flour, and the baker who transforms flour into bread are examples of producers who, each in his own way, impart utility to a natural or partially processed material. Production was the major thrust of industry until at least the beginning of the 20th cent., when sales and marketing began to be considered equally important in the transference of commodities from producers to consumers. Today, the prevailing mode of production is called mass production, with cottage industry accounting for only a minor portion of the market in most areas of the world.

Many historians place the beginnings of mass production around 1800, with Eli Whitney's firearms factory approximating the labor process of modern industrial production. The mass production method, generally involving the piecing together of standardized, interchangeable parts by a number of workers, reached its apex in the automobile manufacturing of the early 20th cent. Increasing automation, with attendant increases in the division of labor, allowed manufacturers to hire unskilled or semiskilled labor, which would repeatedly perform small tasks in the ultimate production of a commodity. Hence, mass production often took the form of an assembly line, in which a continuous flow of products moves steadily forward toward completion.

For most kinds of production in modern society, large amounts of capital in the form of machinery are required. Equally essential are land and its natural resources, from which the raw materials are obtained, and labor, which, with the aid of capital, extracts and transforms the raw materials. To these three primary factors of production is sometimes added a fourth: the entrepreneur who organizes the forces of production and assumes the risks. Since under capitalism production is for a market, an important function of the entrepreneur is to anticipate as accurately as possible the economic demands for goods and to produce the kind and quantity of goods that will meet that demand. In order to meet the great expenses of mass production, particularly the capital necessary in most industries, groups of speculators often take on the risks of production, and the individual entrepreneur has become less significant.

Another late 20th-century trend has been toward greater computerization of the production process; increasingly, computers are not only being integrated into the machinery of production but are replacing much of the human labor as well. Computerization has made assembly lines faster and more accurate and has given them more flexibility. Through computerized instructions, the design and manufacture of many mass-produced products can easily be modified to suit the needs of the individual customer.

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.

See more Encyclopedia articles on: Economics: Terms and Concepts

Play Hangman

Play Poptropica

Play Same Game

Try Our Math Flashcards