Are all costs finally labor costs?

I am not an economist so the following write up may be grossly wrong.

I suddenly felt that all costs can be finally broken down into labor cost somewhere.

Every economic activity needs raw material and/or some information processing.

Information processing cost inclusive of intellectual property cost is direct labor cost.


Nature gives raw material for free – say hematite, coal and lime stone.

To extract steel out of these materials, we needed to construct a plant, raw material of which is also freely lying out there.

We may also need energy, for which *from nature’s angle* material is freely available.

Cost comes into play when someone spends time in making steel – which is again labor cost.

Marketing, selling, storage, delivery and usage of this steel – all can follow the same logic – boiling down to labor cost.


Interest burden is also based on “If I were doing something else with this money, I’d get so much return” kind of thinking. This is nothing but labor cost.

Because over time, result of labor tend to give exponential outcome, interest cost is also cumulative.

Inflation cost is also pretty similar in nature.

Risk and insurance costs sound genuine – but risk is also related to labor like interest.


Cost of corruption is also a labor cost – though incurred in an illegal way.

Am I generalizing it too much?


2 comments on “Are all costs finally labor costs?

  1. Ramachandra Bhat says:

    There are few “capitals” and many “labors” unfortunately 😉

  2. Yash says:

    Everyone and his brother today works on moving the information around (unlike may be 200 years ago when they laboriously moved the stuff around). Every cost is eventually the information cost.

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