Composition of capital

The composition of capital is a terminus technicus coined by Karl Marx . By this term, Marx understands how the investment of a capital sum is composed according to

the part that is expended by the wage laborers to buy labor

and the part used to buy means of production from other capitalists .

This composition of capital is important for Marx, since, in his opinion, surplus value as the basis of profit can only result from the exploitation of wage workers. This is due to the weak position of wage workers, who have to live off something, and on the one hand they can be forced to receive a wage that (as a rule) is just enough to live and work, and who can also be forced to work longer When it is necessary, only the prosperity granted to them would have to be produced. This extra work ensures a surplus product that is valued and represents the surplus value that the capitalists collect.

In principle, capitalists and workers also exchange their goods for the same value for the same value. The worker receives the "value" of his labor power, which corresponds to what he needs to maintain his labor power. In addition, the goods produced are then also sold by the capitalists at their value. But since the total production is greater than what the workers have to be granted as wages, an increase in value has taken place in the production process. This difference between the value of labor power and the value of total production remains as surplus value with the capitalists, who sell total production at its value.

On the other hand, buying and selling means of production between capitalists cannot, according to Marx, lead to an enrichment of the capitalists as a whole, only one may enrich himself at the expense of the other. On average, however, the capitalists only exchange the same values with one another. A machine, for example, can create or help create utility , but no value . This is because the machine and its products are already owned by a capitalist with a certain value. The capitalist can neither exchange a higher value for this value from another capitalist, nor will he accept a lower value for it for the benefit of the other capitalist. (What applies to machines should also apply to human slaves owned by capitalists, as it happened historically at times. Marx does not expressly state this, however.) This can be explained by the idea that the different capitalists cannot be replaced by other capitalists be overreached, or would soon have to leave the market.

Against this background, the development of the composition of capital is important. If, for example, there is a persistent shift in the composition of capital at the expense of the part of capital that is expended on the purchase of labor, then this must undermine the basis of surplus value and profit, because surplus value can only be obtained from wage labor.

On closer examination of the composition of capital and its development over time, Marx encounters a number of problems which he tries to conceptually address.

The material side

On the one hand, from a purely material point of view, there is a mass of means of production that the individual worker uses or uses. In detail, Marx defines a specific composition of capital as the technical composition of capital in Volume I of Das Kapital ( MEW 23, p. 640), namely "the ratio between the mass of the means of production used on the one hand and the amount of labor required for their use on the other."

Marx sees here the composition of capital “on the side of matter”, according to which every capital is divided into means of production and living labor.

Marx assumes that the technical composition of capital in the development of the capitalist economy increases continuously in the course of technical progress ; H. the quotient of the mass of the means of production and the amount of labor employed assumes a continuously increasing value. A single worker uses an ever greater mass of means of production at his workplace, he uses ever larger or more complex machines, he consumes an ever greater mass of raw materials, auxiliary materials, etc.

But how can this “technical composition of capital”, the material mass of means of production per worker, be measured? How can sheets of paper, consumption of ink, wear and tear of a copier in an office worker be aggregated into one size?

On the problem of capital aggregation, cf. also the more detailed presentation under capital controversy .

If all these means of production are valued at their prices, one obtains this sought-after one-dimensional quantity of capital, which can be related to the number of workers and thus forms the value composition of capital .

The value side

But this composition of values depends not only on how many means of production the individual worker consumes on average, but also on the price movements of the means of production. If crude oil becomes more expensive, for example, the value composition of capital increases, although crude oil consumption may not have increased at all. Conversely, perhaps if oil prices drop.

In order to exclude such price movements from the investigation, the value of the means of production per worker could be calculated by leaving the prices of the means of production unchanged from a certain base year. This is how the Federal Statistical Office works today when calculating the capital intensity , calculated at constant prices for a base year.

The organic composition of capital

Among organic composition of capital understood Karl Marx in Volume I of Capital ( MEW 23, p 640) a particular composition of capital, namely the composition of capital, insofar as it is determined by the technical composition of capital and reflects the change.

Marx thus addresses the problem that in the course of technical progress the working time required for the manufacture of the means of production is getting shorter and shorter, so that (according to the theory of labor ) the values of constant capital are falling continuously. This progress-related moral wear and tear and other reductions in value or general changes in value can be calculated out by calculating the constant capital in constant values of a certain base year (which is not explained by Marx).

One method of today's statistics, for example in national accounts , consists in calculating fixed assets at constant prices for a certain base year. Fixed assets in relation to the number of workers ( employees ) would then be (a kind of) organic composition of capital (in economics, “ capital intensity ”).

Usually, the organic composition of capital is expressed as the ratio between constant capital and variable capital . Other proportional equations derived therefrom can also be found in the literature, but in the end they always indicate the ratio of constant to variable capital. For example, the American economist Paul Sweezy used the ratio for the organic composition of capital. ${\ displaystyle {c \ over v}}$ ${\ displaystyle {c \ over c + v}}$

When we speak of a low organic composition of capital , we mean, contrary to intuition, a high proportion of variable capital - representing value-creating work - in the product of labor. A low organic composition of capital therefore indicates a high degree of added value; conversely, a high organic composition means a low degree of added value.

overview

In Volume I of Das Kapital ( MEW 23, p. 640), Marx distinguishes three types of composition of capital in the twenty-third chapter "The general law of capitalist accumulation" :

technical composition of capital
Value composition of capital
organic composition of capital (this is incorrect!)

When Marx speaks "briefly" of the "composition of capital", he always means, as he explains, the organic composition of capital .

literature

Mathias Wiards: On the justifiability of increasing organic composition of capital In: Contributions to Marx-Engels-Research New Series 1999, pp. 154-180

Individual evidence

↑ See John R. Bell: Capitalism and the Dialectic - The Uno-Sekine Approach to Marxian Political Economy. Pluto Press London New York 2009, p. 45.
↑ Sweezy, Paul. Theory of Capitalist Development. An analytical study of the principles of the Marshes Social Economy . Cologne: Bund-Verlag, 1959. P. 50f.
^ Karl Marx: The capital . Anaconda, Cologne, ISBN 978-3-86647-325-6 , p. 572 : "Whenever the composition of capital is briefly mentioned, its organic composition is always to be understood."

[1] See John R. Bell: Capitalism and the Dialectic - The Uno-Sekine Approach to Marxian Political Economy. Pluto Press London New York 2009, p. 45.

[2] Sweezy, Paul. Theory of Capitalist Development. An analytical study of the principles of the Marshes Social Economy . Cologne: Bund-Verlag, 1959. P. 50f.

[3] Karl Marx: The capital . Anaconda, Cologne, ISBN 978-3-86647-325-6 , p. 572 : "Whenever the composition of capital is briefly mentioned, its organic composition is always to be understood."