Constant capital

Constant capital is the goods and materials required to produce a commodity, or the monetary cost of those goods and materials. It is one of two components of capital, the other being variable capital which is the wages paid to obtain the labour power required to produce the commodity.

Karl Marx used the terms "constant" and "variable" to denote the two kinds of capital because, according to the labor theory of value, it is only the labour component of capital which creates new value during the production process; the value of the material inputs is passed on unchanged. The value invested in labour power is thus variable in the sense that it "expands" during production. It is also variable in the sense that the amount of expansion (the rate of surplus value) is not fixed but contingent on the struggle between workers and employers over wages and working conditions.

Constant capital is usually abbreviated as C, and appears in the formula for the value of a commodity as follows:

P  =  C + V + S

  Where:  P = value of produced commodity
          C = constant capital
          V = variable capital
          S = surplus value

Typically constant capital includes machinery and raw materials as well as other non human input needs of a facility such as from property tax and the power used by machines to function.