Information as a factor of production
As a factor of production, information is unlike any of the other factors in many important aspects. These differences cause the need for decision-makers to re-evaluate the way in which productive factors are combined to produce goods and services. Information is expansible, compressible, substitutional, transportable, diffusive, and shareable.
Information is Expansible. Most information tends to expand with use. Thus, as information is used — even more is generated. The only limits on the use of information would be the capacity of users to analyze, store and retrieve it. The non-scarce nature of information must bring about a rethinking of the calculus of utility maximization or cost minimization.
Information is Compressible.It is possible to concentrate, integrate, or summarize vast amounts of information for easier handling. Through the selection and compression of information into knowledge and wisdom, some of it is necessarily lost.
Information is Substitutional.The evolution of mental processes which leads managers to think of information as a factor of production must also cause them to grasp the idea that information can be substituted for land, labour, capital, entrepreneurial ability and management. When other resources are used more efficiently (i.e. less of the resource is used due to the use of new information), the net result is a substitution of information for the more efficiently used resource in the productive process.
Information is Transportable.Using telecommunications technology, information can be transported at the speed of light! Thus, it provides a lightning response time for decisions. While some cost is involved in the "transportation" of information, its speed and lack of physical bulk should keep this cost relatively low.
Information is Diffusive.Information tends to leak. Because information lends itself to diffusion; secrecy, property rights, and confidentiality, are called into question. Yet, because information is easily "transported," potentially authorized users can have ready access to it. At the same time, processes can be established to deny, or limit, its pilferage. That is, ways should be found to secure it in much the same manner as the other factors of production without overly restricting the legitimate "transportation" of information.
Information is Shareable.That is, I may give information to you without losing it myself. If information is shared — we both have it! My stock is not diminished because yours is increased. In fact, the same information can be sold or exchanged again.
Language notes:
endangered species – зникаючі види
output – обсягвиробництва, готовапродукція, виробництво
marginal product of labour – граничний продукт праці
piece rate – відрядна розцінка, розцінка від виробітку
the salient characteristics - основні характеристики
ready access – вільний доступ
pilferage – розкрадання
overly restrict – надмірно обмежувати