Constant and variable 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, or v. It is typically conceived of as plant and machinery - the fixed investments made by an entrepreneur, with which employees (the variable capital) produce commodities. The two forms are distinguished by their role in (social) value relationships.

The constant in this form of capital is the unchanging magnitude of its value. In the most abstract: The 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.

In this, constant capital is taken to differ sharply from variable capital, v, which can be conceived of as the payroll. 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.

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 (ie, its growth through the accumulation of profits). The objection cuts to the heart of the main dispute between Marx and mainstream economic theory - their difference conceptions of value. For the critics, value, if it exists at all, is a technical feature of economic calculus. 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.

The ratio, s:v is treated of as the organic composition of capital.