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Constant capital is the value expended on raw materials, instruments of labor, or in general, the means of production, that is required to produce a commodity.[1] 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.[2]
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.[1] 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 '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.
In a capitalist economy, "constant capital" and "means of production" denote the essentially the same group of objects. In non-capitalist economies means of production are not capital, constant or otherwise.
It is important not to confuse the term constant capital with fixed capital which denotes capital, such as plant and equipment, that is not used up during a single cycle of the production process. All fixed capital is constant capital, but not all constant capital is fixed.
See also[edit | edit source]
References[edit | edit source]
- ↑ 1.0 1.1 “That part of capital then, which is represented by the means of production, by the raw material, auxiliary material and the instruments of labour does not, in the process of production, undergo any quantitative alteration of value. I therefore call it the constant part of capital, or, more shortly, constant capital.”
Karl Marx (1867). Capital, vol. I: 'VIII: Constant and variable capital'. [MIA] - ↑ Encyclopedia of Marxism, "Variable and constant capital" https://www.marxists.org/glossary/terms/v/a.htm