Monday, 18 February 2013

The Organic Composition Of Capital

The Organic Composition of Capital is the term Marx uses to describe the proportion between Constant Capital and Variable Capital. This proportion can be viewed from two different but related angles. Firstly, it can be viewed from the perspective of the Value of the Constant Capital as against the Value of the Variable Capital employed. Secondly, it can be viewed from the perspective of the physical amounts of each employed.

Marx calls the first of these relations the Value Composition of Capital, and the second the Technical Composition of Capital. However, for Marx it is the second of these which is determinant for several reasons.

Firstly, with constant values the Value Composition of Capital is itself simply a function of the Technical Composition. If 1000 kilos of cotton requires 10 workers to process it then this Technical Composition necessarily determines the Value Composition if we know the Value of Cotton and Labour-power. If cotton costs £10 per kilo, and a worker costs £100, then the Value Composition of Capital will be C (1000 kilos of cotton x £10) £10,000 : V (10 workers x £100) £1,000 = 10:1.

Although, this Value relation will change as the Value of the Constant Capital and the Variable Capital change, it will always have as its basis the Technical Composition i.e. 1000:10. As Marx says,

“The composition of capital is to be understood in a two-fold sense. On the side of value, it is determined by the proportion in which it is divided into constant capital or value of the means of production, and variable capital or value of labour power, the sum total of wages. On the side of material, as it functions in the process of production, all capital is divided into means of production and living labour power. This latter composition is determined by the relation between the mass of the means of production employed, on the one hand, and the mass of labour necessary for their employment on the other. I call the former the value-composition, the latter the technical composition of capital.

Between the two there is a strict correlation. To express this, I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital. Wherever I refer to the composition of capital, without further qualification, its organic composition is always understood.”

But, it is the Technical Composition, which is determinant for Marx for a further reason. That is because of what Capital actually is for Marx. For Marx, Capital is not comprised of machines, buildings, materials etc. In many ways these are simply ephemera. Earlier in discussing Constant and Variable Capital, he makes that clear, comparing Constant Capital with merely the laboratory vessels used to contain the chemicals, which are the real object of investigation. The real object of his investigation is not the Constant Capital, but the Variable Capital, the Labour which is the source of Surplus Value, and, therefore of Capital itself.

For Marx, Capital is the social relation between Capital and Wage Labour. Constant Capital is simply something that has to be present like the test tube for that social relation to occur, and for it to expand. For Marx, the expansion of Capital is precisely the expansion of this relation, and the expansion of that relation is a function not of the Value of the Constant Capital employed, but its physical quantity. A diamond may represent a Value of many thousands of pounds, and yet require just one worker to process it. A ton of cotton may cost only several hundred pounds, and yet require 10 workers to process it. From the perspective of expansion of Capital, of the social relation between Capital and Wage Labour, it is the latter which provides the greater basis for expansion than the former. So Marx writes,

“Growth of capital involves growth of its variable constituent or of the part invested in labour power. A part of the surplus-value turned into additional capital must always be re-transformed into variable capital, or additional labour fund. If we suppose that, all other circumstances remaining the same, the composition of capital also remains constant (i.e., that a definite mass of means of production constantly needs the same mass of labour power to set it in motion), then the demand for labour and the subsistence-fund of the labourers clearly increase in the same proportion as the capital, and the more rapidly, the more rapidly the capital increases...

The more or less favourable circumstances in which the wage working class supports and multiplies itself, in no way alter the fundamental character of capitalist production. As simple reproduction constantly reproduces the capital relation itself, i.e., the relation of capitalists on the one hand, and wage workers on the other, so reproduction on a progressive scale, i.e., accumulation, reproduces the capital relation on a progressive scale, more capitalists or larger capitalists at this pole, more wage workers at that. The reproduction of a mass of labour power, which must incessantly re-incorporate itself with capital for that capital’s self-expansion; which cannot get free from capital, and whose enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself, this reproduction of labour power forms, in fact, an essential of the reproduction of capital itself. Accumulation of capital is, therefore, increase of the proletariat.”


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