Organic composition of capital

Anwar Shaikh

pp. 304-309

in: John Eatwell, Murray Milgate, Peter Newman (eds), Marxian economics, Basingstoke, Palgrave Macmillan, 1990

Abstract

The distinction between labour value transferred and labour value added is crucial to Marx's theory of value. For the capitalist system as a whole, the abstract labour-time previously materialized in machinery and materials (c) merely reappears in the total product. The capital expended for the purchase of c is therefore constant-in-value. On the other hand, whereas the capital expended for the engagement of workers is determined by the labour value of their means of consumption (v), their actual employment results in a quantity of abstract labour-time (l) which is generally different from v. Thus capital expended for the purchase of labour-power is intrinsically variable-in-value. Indeed, the secret of capitalist production is contained precisely in this variability, since surplus value (s = 1 − v) only exists to the extent that l is greater than v. It follows from this that for any given total capital expended (c + v), its composition between c and v is the utmost importance, because only v expands total capital value from c + v to c + l = c + v + s (Marx, 1867, pp. 421, 571).

Cited authors

Marx Karl