Louis O. Kelso and Patricia Hetter, originators of the economic theory "Two-factor theory," and authors of the book of the same title, make a valiant attempt to explain the theory to Elsa Knight Thompson. Louis Kelso states that it is a concept of the nature of the production and distribution process in economics. For the purposes of understanding the industrial economics of a free society, one must define the factors of production into two categories: the people or labor factor, including manual or mental labor; and the non-human factor - everything that is ownable, not including money, i.e. land, structures, and machines. Fundamental thrust of the theory is that both factors produce goods and services in the same physical, economic, political, and moral senses. The theory also states that technological change is a process by which man, using his intelligence, harnesses nature and makes nature work for him through his capital instruments, not through himself. Technological change is a process by which more and more of the burden of production is taken over by the non-human factor. Kelso was also renowned for inventing the Employee Stock Ownership Plan.
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