Fixed Capital

Corresponding to “circulating capital”. It refers to that part of the productive capital used to acquire the means of labor, such as buildings, machinery, equipment and tools, and is part of constant capital. According to Marx, fixed capital “retains that definite use-form in which it enters into the process of production. Hence it performs the same functions for a longer or shorter period, in ever repeated labor-processes.” That is, fixed capital is participates in its entirety in the production process in its material form and remains in a fixed material form for a long time during the process of production. In the value-form, the value of fixed capital is not transferred in its entirety in the course of a single process of production, but is transferred bit by bit, in accordance with the degree of its wear and tear, to the new product, and is transformed into the form of money through the process of selling the product in order to recover its value. Fixed capital, therefore, entails special maintenance costs in the process of production. To ensure the progress of the process of reproduction, the part of wear and tear of fixed capital is extracted from product sales revenue to prepare for the renewal of fixed capital, which is called the “sinking fund” or “depreciation allowance”.