"Constant" and "Variable" Capital
This is a short chapter, easy to read, but
very interesting, bearing on the reasons why fixed capital (machinery, et cetera)
does not yield any surplus value during production.
This is in turn the reason for the tendency
of the rate of profit to fall in “capital-intensive” as opposed to
“labour-intensive” industries.
You can be confident that the capitalists can
never do away with workers. They are compelled, unless they are to perish as
capitalists, to employ people.
Capitalists are compelled to continue to
extract Surplus-Value from human workers because it is the only way that their
Capital can be sustained. Without the constant extraction of Surplus-Value from
people, Capital must shrivel away.
It is useful to read this chapter together
with the previous one. There, it was shown that value comes from human labour.
Here, it is shown how the labour contained in the makings of a product, such as
machinery and raw materials, is transferred from the original products into the
new ones without being increased.
The graph, above, is a standard type of
illustration in capitalist accounting theory, to show how the cost of a fixed
asset, such as a piece of machinery, can be “written off” over, say, five
years, for example. Such an asset is said to “depreciate”. It is used up, at a
constant rate.
The concept of Surplus Value is the same as
the concept of Value Added, which is the basis of Value Added Tax, or VAT. For
VAT, the inputs are deducted and only the increase in their value gained
through the application of labour to the inputs, is taxed.
These things (Value Added and Depreciation),
which are commonplace in capitalist accounting, show that at the practical
level, the basic facts of business life have to be recognised, even while the
ideologues and theorists of capitalism deny them.
The source of increase of capital is labour (that
is labour expended, minus labour power paid for, creating Surplus Value). Machines
do not, and cannot, produce Surplus Value. As businesses employ relatively more
machinery and relatively less labour, so their rate of profit must fall.
Says Marx:
“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.
“On
the other hand, that part of capital, represented by labour-power, does, in the
process of production, undergo an alteration of value. It both reproduces the
equivalent of its own value, and also produces an excess, a surplus-value,
which may itself vary, may be more or less according to circumstances. This
part of capital is continually being transformed from a constant into a
variable magnitude. I therefore call it the variable part of capital, or,
shortly, variable
capital.”
Please
Download and read this short, 8-page chapter:
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