Organic Composition of Capital

The composition of the value of capital reflecting the technical composition of capital, i.e., c : v. The composition of capital should be examined from two aspects. In terms of its material form, capital is composed of a certain amount of means of production and labor-power, and the ratio between them is determined by the technical level of production. This ratio between the means of production and labor-power, which reflects the technical level of capital, is called the technical composition of capital. In terms of its value-form, capital is composed of a certain amount of constant capital and variable capital, and the ratio between them is called the value-composition of capital. There is a close connection between the technical composition of capital and the value-composition of capital. The former determines the latter, and the changes in the latter usually reflect the changes in the former. This value composition of capital, which is determined by the technical composition of capital and which mirrors the changes in the latter, is called the organic composition of capital and can be expressed by the formula c : v.

In the process of accumulation of capital, the organic composition of capital tends to increase as the productivity of labor increases. The reason for this is, firstly, the intrinsic driving force of the pursuit of surplus-value and, secondly, the extrinsic pressure of competition. These two reasons make it inevitable that the capitalist will continuously improve the technical equipment of production, increase the technical composition of capital and lead to an increase in the value and organic composition of capital. Therefore, the increase in the organic composition of capital is an inevitable tendency of capitalist economic development.