The organic composition of capital is a concept devised by Karl Marx that measures the existing balance between capital and labor force in a certain productive system.
The existing relationship between concepts such as constant capital (machinery, technology) and variable capital (affected by the value of labor) define the concept of the organic composition of capital.
That is, capital as goods destined for production and the human work necessary for it.
This is how these terms are related and measures the capital dedicated to means of production in an economy in comparison with that destined to work in the form of variable capital value.
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For the German Karl Marx, capitalism translated into the need for a greater volume of technology and machinery and, simultaneously, the reduction of the labor force necessary for productive processes.
In other words, the organic composition of capital was diminished. This means that there were proportionally more machines per active worker.
Origin of the organic composition of capital
This idea is located within the ideology developed by Marx, specifically, in his well-known work Capital.
For this reason it is considered one of the key elements of Marxist ideology, as well as its vision of the economic and social spectrum. That is, it is one of its argumentative bases.
Under its development, the thinker and economist established relationships that described the appearance of new, more capital-intensive models of productivity. This is how another basic concept of Marxism appears, such as the so-called surplus value.
In this way, the increase in said organic composition entailed the following negative aspects for a company:
- Increase in unemployment levels. A smaller number of workers is needed in the factories, etc.
- Worsening working conditions. By reducing the need for necessary work.
- social crisis. The working class is more numerous and suffers proportionally worse consequences due to the change exerted by capitalism. The capitalist owners are a minority owner and beneficiary, according to Marx.
Importance of the organic composition of capital
As has been commented, the organic composition of capital establishes a basic point of Marx’s point of view on the means of production in a given economy.
In this way, it uses the concepts of constant and variable capital to analyze how its behaviors act before other factors such as prices and wages to the worker.
This is how he based his attack or confrontation on the postulates of capitalism. Marx argued that technical advances and the appearance of advanced production processes had a negative impact on the worker’s profit.
On the other hand, he considered that the development of capital-intensive models also entailed the appearance of increasingly restrictive productivity standards.
That is, those capital holders with more efficient activity (greater production with fewer resources) would be fewer and fewer and wealth would be concentrated in a few capitalist owners.
The relationship between the mass of means of production and living labor (the amount of labor power) depends on the technical characteristics of the given branch of production, the degree of technical development of society and, finally, the technical level of the company. given company.