Constant capital (c), is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital (v). The distinction between constant and variable refers to an aspect of the economic role of factors of production in creating a new value.
Constant capital includes the outlay of money on (1) fixed assets, i.e. plant, machinery, land and buildings, (2) raw materials and ancillary operating expenses (including external services purchased), and (3) certain faux frais of production (incidental expenses). Variable capital by contrast refers to the capital outlay on labour costs insofar as they represent workers' earnings.
The concept of constant vs. variable capital contrasts with that of fixed vs. circulating capital (used not only by Marx but by David Ricardo and other classical economists). The latter distinction corresponds to the very common distinction in economics, between fixed inputs (and costs) and variable inputs (and costs). It distinguishes inputs from the point of view of their user (the capitalist), in terms of the degree of flexibility that the user has in using them.
On the other hand, constant capital refers to the non-human inputs into production, while variable capital refers to the human input (the hiring of labor power to do labor).
Read more about Constant Capital: Measurement, Why "constant"?, Variable Capital, Criticism, Marxist Response, Value and Price, The Particular Fetish of The Money Commodity As Capital, Different Capital Compositions
Other articles related to "constant capital, capital, constant":
... The ratio, c/v is one measure of the organic composition of capital ... As noted above, the distinction between constant and variable capital overlaps with the distinction between fixed capital and circulating capital ... Constant capital has both fixed and circulating components for example, the fixed constant capital would include a factory and the machinery in it, while the circulating constant ...
... The implication of a rise in the organic composition of capital is a declining rate of profit for every new increase in surplus-value realised as profit from sales, an even larger corresponding ... The main ones include buying constant capital inputs at a lower cost ... a reduction of the turnover-time of constant capital inputs ...
... Marx argued that increased investment in constant capital (fixed capital (factories, machines, buildings), raw materials) relative to variable capital (labor) reduced the margin of ... Now the rate of profit equals surplus value divided by total capital, so the fall in surplus labor time relative to capital results in a fall in the rate of profit for ... Even as investment in constant capital increases productivity (i.e ...
... technique satisfies the cost criterion and the rate of real wage remains constant", then the rate of profit must increase (Okishio, 1961, p ... Assuming constant real wages, technical change would lower the production cost per unit, thereby raising the innovator's rate of profit ... enterprises, the overall end result is that average rate of return on capital falls for all of them ...
... In Part Three of Capital Volume I, Karl Marx explores the production of Absolute Surplus Value ... To better understand how this happens consider the following example from Marx's Capital Volume I ... These inputs can be represented with the capital advanced equation where C is capital advanced, c is constant capital, and v is variable capital ...
Famous quotes containing the words capital and/or constant:
“There is no private house in which people can enjoy themselves so well as at a capital tavern.... No, Sir; there is nothing which has yet been contrived by man by which so much happiness is produced as by a good tavern or inn.”
—Samuel Johnson (17091784)
“Sigh no more Ladies, sigh no more
Men were deceivers ever,
One foote in Sea, and one on shore,
To one thing constant never,”
—William Shakespeare (15641616)