The Organic Composition of Capital : An Example of How Bourgeois Economics Tries to Bury the Secret of Capitalist Exploitation.
Marx writes that capital’s ‘value composition, in as much as it is determined by and reflects, its technical composition, is called the organic composition of capital’ (pp 145-46, Capital, Vol 3, Lawrence and Wishart, London, 1974). Marx makes a distinction between the value composition and the technical composition of capital. The technical composition is the “real basis of its “organic composition”. In other words the actual physical relationship between machinery, materials, etc, employed and the number of productive labourers is the “real basis” of its “organic composition”. This technical composition – as the “real basis” of the organic composition – is reflected in the value composition of productive capital. Not commodity capital, of course, which – as a value composition – does not have an “organic composition” as such.
However, the technical composition can rise, fall or remain the same with constant or varying value composition and vice versa. The relationship between the two compositions may remain constant or rise or fall according to the productivity of labour i.e whether the latter rises or falls accordingly.
The value composition of commodity capital is, of course, different and includes the component of surplus value. But the value composition of commodity capital is not included in Marx’s category ‘organic composition’ because it is not a ‘technical composition’. Productive capital (C+V) does not contain the value component of surplus value but rather surplus value is the manifestation of surplus labour created in the course of the valourisation process in the production of commodities. Accordingly, the value composition here (productive capital) is contrasted with that of commodity capital in which productive capital exists only in potentio.
Only productive capital has a “technical” and therefore “organic” composition in contrast to commodity capital (C+V+S) which also, nevertheless, like productive capital (C+V), does have a value composition. The category of ‘organic composition’ is a category of productive capital and not of any other form of capital (commodity or money capital). For Marx the organic composition of capital is NOT the ratio between the value accumulated as dead labour (C) and the value created by productive workers (V+S)
Marx writes that the organic composition of capital is equivalent to the relationship between dead accumulated labour and necessary labour time which is a totally different conception as reflected in the ratio C/V. Nowhere in Marx is there any explicit conceptual development or suggestion that the organic composition of capital is anything other than the relationship between constant and variable capital.
The constancy or variation in the relationship between constant and variable capital does not actually change the determinate character of this relation. It merely alters the form of the relation. Whether or not relative surplus value is being produced which is an academic question anyway. If no valorisation is taking place, then the means of production are not functioning as capital per se. The organic composition of capital has a “real basis” in its technical composition and this is always reflected, either directly or inversely, in the alterations in the value composition and vice versa. The rise in the quantity of relative surplus value produced is a consequence of the increase in the organic composition of capital and therefore a relative fall in its variable compared to its constant component.
The organic composition of capital is its value composition rooted in and mirroring alterations in its technical composition. If we admitted the formula C/(S+V) for the organic composition, the law of the tendency of the rate of profit to fall would itself actually be undermined by the very basis of its concept. The root conception (organic composition) would negate the derived one (law of tendency of the rate of profit to fall)
This value composition of productive capital – which mirrors directly or inversely the technical composition – is called by Marx the ‘organic composition of capital’. The value composition of productive capital always, therefore, in one way or another, directly or inversely, reflects its technical composition. And this applies regardless of the constancy or variation in variable capital. The “value of the real wage” may rise or fall or remain constant but this does not alter the character of the value composition as being equivalent to the organic composition of capital under historically determined technical conditions of production. Theoretically, if no relative surplus value were produced, this would not alter the determinate character of the relation involved in the organic composition. This organic composition is only determined by “unpaid labour” insofar as unpaid labour is the substance of surplus value which is then accumulated after realisation. This may or may not alter the organic composition of capital. C/(S+V) is the ratio of constant capital to the total value created by productive labour i.e. (V+S) in the valorisation process during production. But this is definitely NOT what Marx means by the organic composition of capital.
The bourgeois vulgarisers of Marx, and those who have never studied Marx, or those who only have a superficial acquaintance with his work, sometimes refer to this latter ratio [C/(V+S)] as the “capital-output ratio”. The term is frequently found in the pages of the economics texts and journals of the bourgeois vulgarians and ideologues of capital such as Kaldor and the “Post-Keynesian” Pasinetti, for example. Sometimes we find it used by so-called “Marxists” who have themselves vulgarised Marx. They give Marx a bad name when they accredit such conceptions to him.
Most of them are located in superannuated posts at some of the “best” universities and in the financial institutions of the enemy class. Kaldor was based at Cambridge and was an advisor for the Wilson government in the 1960s in Britain.
The burying of the distinction between variable capital and surplus value in the term “output” serves to conceal the secret of capitalist exploitation and the origins of profit itself as the realisation of uncompensated labour. What Marx refers to as “the theft of alien labour time” is buried under the “capital-output ratio” of the bourgeois vulgarian. Marx must be studied with the necessary degree of attention and thought which he deserves rather than being casual with his conceptions. In other words, we must and should leave dilettantism in such matters to those who feel comfortable with it, whoever they may be.