Constant capital

Constant capital, or c, in Marxian political economy is one of the two forms that capital adopts in the workplace, in contrast to variable capital (v). It is typically conceived of as plant and machinery -- the fixed investments made by a capitalist entrepreneur (or industrial capitalist), with which employees (the variable capital) produce commodities. The two forms are distinguished by their role in (social) value relationships.

Constant capital has been measured as a stock magnitude, i.e., the total amount of means of production in use at a specific point in time. It has also been measured as a flow magnitude, i.e., the total amount of raw materials and fixed means of production used up over time. Which is used depends on the purposes and assumptions of one's analysis.

The "constant" in this form of capital's name is the unchanging magnitude of its value. In the most abstract, an entrepreneur invests x value in constant capital, and it, in turn, confers precisely x value to the commodities it is used to produce over its useful life. The magnitude, x, remains constant. On the social level, in Marx's view, constant capital does not create profits or surplus-value. Instead, the value of the used-up means of production and raw materials are transferred to the product.

In this, constant capital is taken to differ sharply from variable capital, v, which can be conceived of as the payroll (the cost of hiring labor-power). When the entrepreneur invests x value in variable capital, it confers x into the commodities it makes while covering its own living costs, but then continues to work for the entrepreneur for the rest of the day, producing profits, or x + y. This y is Marx's surplus-value or s, the result of exploitation.

Critics of Marxian value theory object that this attribution of profits to workers, alone, is arbitrary and political, not scientific. In various ingenious thought experiments, cases are raised in which constant capital can seem to be the only possible source of the variability of an entrepreneur's capital (i.e., its growth through the accumulation of profits). The objection cuts to the heart of the main dispute between Marx and mainstream economic theory -- their different conceptions of value. For the critics, value, if it exists at all, is a technical feature of economic calculus or simply corresponds to the price of a product. For Marx, value is a form of social relationship specific to certain historical conditions. Inanimate objects can only feature in value relations as tokens of prior human effort, since they are not social beings. Further, machines lack consciousness and the ability to act on their own, whereas people think, are creative, and can thus be the active force in production.

The ratio, c/v is one measure of the organic composition of capital.