a brief discussion on neo- classical production function

the neo- classical school on the situation of the individual and claims that individuals (consumers and producers) meet each in the market. on the supply side, there exists possibility of substitution between factors of production and, on the demand side, substitution by consumers between final goods. in the neo- classical production function capital and labor are taken as the determniants of the level of production and income distribution between wage earners and profit (interest) receivers. the traditional concept is that it consists of produced means of production. but such a concept is not seen in the neo-classical production function. because in the neo- classical production function capital is taken as given. and therefore, no mention is made to the productive sector producing goods. certainly, if capital is not assumed as given, the analysis of the neo-classical school on production function would face serious problems of time lag and non- linear relation of wage- profit (interest). on the other hands, taking capital as a sum of value would necessitate o find a unit of estimation independent of relative prices and income distribution between wage earners and profit (interest) recelvers. it is, however, impossible to concelve physical capital independent of wages and profit (interest).