Organic composition of capital

Relationship between fixed and variable capital advanced by the capitalists. It measures the relative weight of what the capitalists advance in machinery with respect to what they advance in wages.

Organic composition and the declining tendency of the rate of profit

The declining tendency of the rate of profit and the parallel increase of the mass of product, occurs because in order to improve their profit, capitalists need to invest in technologies that increase their productivity. In doing so, the organic composition of capital will increase, that is, the percentage of what they advance in machinery, while the percentage of what they advance in wages will be reduced. The inevitable result is that their rate of profit (the surplus value per unit of investment) will be lower. To compensate for the reduction in surplus value per unit produced and to obtain more surplus value, they will produce more units, i.e. they will increase the mass of product.

Organic composition of capital = Ca / Va

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