Saad-Filho draws on
Marx to make clear
that there are three
of capital: Technical
TCC); Value (VCC);
and Organic (
that the distinction
between them can be
traced back to the
relations between the
spheres of production
and circulation, and
argues that it is
central for an analysis
of capital accumula-
tion and technical
change based on the
labour theory of
A Note on Marx’s
Analysis of the
Composition of Capital
● Marx’s innovative approach to scientific analysis led him
to introduce several new concepts into the economic literature
of his time and to attribute a distinctive significance to many
already-known categories, which he felt would be relevant to a
critical understanding of the capitalist mode of production.
However, the unfinished status of many of his works,
complexity of his method, make the meaning of several of his
concepts and categories far from obvious. Their role in Marx’s
investigation of capitalism is discussed in a vast body of
literature and a number of polemics, both of which consider-
ably increase our understanding of Marxian economics and
the objects of its critical inquiry. The controversy about the
nature of value is probably the best-known case, although
debates concerning abstract labour, money, price of
production, rent, the rate of profit and its tendency to fall,
among others, are also prominent. In this article, I am
concerned with the concept of composition of capital.
Although several interpretations of Marx’s notion of
composition of capital exist in the literature, its complexity
and relevance have not always been fully recognised. It is an
128 Capital & Class
extremely important concept, because it is central in some of
Marx’s most relevant and polemical analyses. The concept of
composition of capital is essential, for example, to the
discussion of the use of machines in industry and accumula-
tion of capital, the transformation of values into prices of
production, the law of the tendency of the rate of profit to fall,
and the distinction between the various types of rent.
Widely different understandings of the composition of
capital found in the literature may, at least partly, result from
Marx’s use of three forms of the concept: the technical
composition of capital (TCC), the organic composition of
capital (OCC) and the value composition of capital (VCC).
While the content of each term is quite evident at times, there
are moments when he seems to use them randomly or even in
a contradictory way; as a consequence, large parts of his
inquiry may look arbitrary and puzzling. A brief review of
differing views of the composition of capital may give a better
idea of the difficulties involved in our study.
Paul Sweezy (1968), for example, believes that the
composition of capital is the relation of constant (c) to
variable capital (v) in the total capital used in production. For
him, although ‘[s]everal ratios would serve to indicate this
relation, …the one which seems most convenient is the ratio
of constant capital to total capital’ (p.66). Thus, he defined
the OCC as q = c/(c+v), a formulation also adopted by Seton
(1957) and Desai (1989). Moreover, in his discussion of the
transformation problem Sweezy follows Bortkiewicz’s
treatment and, as may be gathered from our discussion below,
attributes the different sectoral rates of profit to their distinct
value and not organic compositions of capital, which is
contrary to Marx’s argument.
Michio Morishima (1973) is closer to the mark in his
understanding of the TCC and the VCC, but misinterprets the
OCC by defining it as the name Marx would have given to
the VCC, in case the TCC underwent changes such that all
relative values were left unaltered (in other words, for him
OCC is the name of the VCC when the changes in the TCC
are precisely reflected by changes in the VCC —as if
productivity increase is proportionate across all sectors).
Morishima believes that Marx only defined the OCC to
simplify his treatment of technical changes, but it will be
shown here that this is incorrect.
A note on Marx’s analysis of the composition of capital 129
Nobuo Okishio (1974), who elsewhere formalises the so-
called ‘Okishio theorem’ dismissing Marx’s analysis of the law
of the tendency of the rate of profit to fall, works with the
value composition of capital under the name of the organic
composition in his treatment of the transformation, and he is
by no means the only one to do so. Laibman (1973), Yaffe
(1976) and Kliman and McGlone (1988), for example, share
the same belief that the OCC can unproblematically be
defined as c/v, and they transform values into prices on the
basis of this mistake. For Marx matters were slightly more
complicated than that, as I will show. Roemer (1979), in his
analysis of the law of the tendency of the rate of profit to fall,
also calls OCC what should really be termed VCC, and his
whole discussion bears the mark of this misconception.
Shaikh (1977), in his now classic paper proposing an
iterative solution to the transformation problem, calls OCC
the ratio (c+v)/v, which cannot be accepted as a valid
formulation. On the other hand, Foley (1986), in an
otherwise very useful textbook, defines the ‘composition of
capital’ as v/(c+v), and the ‘OCC
’ as c/v. And, finally, Groll
and Orzech (1987, 1989a, 1989b, 1990), in their detailed
discussion of the composition of capital (one of whose merits
is the careful distinction of the
TCC, OCC and VCC from each
other) argue that the OCC is a long-run value-concept while
the VCC is measured in market prices and refers to the short-
run, something with which I believe Marx would not agree.
The problems mentioned above are merely a sample of the
difficulties one encounters in literature concerned with the
composition of capital, and in this article I search for a correct
interpretation of Marx’s understanding of the concept. An
important aspect of the study is the identification of progress
Marx, himself, made in this field. In what follows I will show
that, while in the Grundrisse he does not yet employ the concepts
with which he would later call the composition of capital, in the
Theories of Surplus Value he introduces the physical (technical)
composition of capital and the organic composition of capital
and, finally, in Capital he uses the technical composition of
capital, the organic composition of capital and the value
composition of capital in their most developed form.
The progressive introduction of these terms reflects an
increasing refinement of Marx’s own perception of the matters
at stake and, as it will be shown, allows him to clarify the
130 Capital & Class
presentation of his point of view. As the argument progresses,
Marx’s views on the composition of capital and the precise
meaning of TCC, OCC and
VCC will become clear. Although
the form of Marx’s arguments change, it will not escape the
reader that the problems with which he deals and the results he
reaches are essentially unaltered through the years.
My argument develops in two steps. I first follow Marx’s
analysis of the composition of capital in the absence of technical
change. Each concept used by Marx will be defined and its
introduction justified. In the second part, I discuss how the
TCC, OCC and VCC are affected by technical
progress. It will be concluded that one of Marx’s aims in
distinguishing the OCC from the VCC is for the accurate analysis
of this particular case, where the accumulation of capital occurs
with technological innovation. The arrangement of this article,
which contrasts a static case to the dynamic imposed by technical
change, is essential, not only to the orderly introduction of the
concepts that concern us, but also to the appreciation of their
contradictions, limits and changes. Moreover, this arrangement is
useful in its direct connection with the distinct levels of
abstraction involved in the analysis of the composition of capital.
THE STATIC CASE
For Marx the productivity of labour is technically determined,
and he has defined it as the mass of means of production that
can be processed into final commodities in a given labour time
(Capital I, p.773). This notion is captured by the concept of
technical composition of capital (TCC, earlier entitled physical
composition of capital ), the physical ratio between the mass of
material inputs (dead labour) and the amount of living labour
necessary to transform them into a definite output:
A certain quantity of labour-power, represented by a certain
number of workers, is required to produce a certain volume
of products in a day, for example, and this involves putting
a certain definite mass of means of production in motion
and consuming them productively—machines, raw
materials etc… This proportion constitutes the technical
composition of capital, and is the actual basis of its organic
composition. (Capital III, p.244).
A note on Marx’s analysis of the composition of capital 131
As the TCC is a relation between a heterogeneous bundle of
use values (the material inputs) and a quantity of labour, it
cannot be measured by a single index; for similar reasons, a
comparison of the technical composition of capitals engaged
in distinct sectors (shipbuilding and gold mining, say, where
the use value of the inputs processed per hour of labour is very
different) is impossible. We know, however, that in capitalism
all inputs are commodities; because of that, the technical
composition of any capital can be assessed in value terms. This
value-assessment of the TCC gives us the organic composition
of capital (OCC), or the value of the means of production
required to absorb an hour of living labour in a particular
The OCC is, for Marx, an immediate value-reflex of the
TCC, and both are determined in the sphere of production.
Because of that, the OCC is called a ‘technological composit-
ion’ that synthesises, in value terms, the technical relations
typical of the production process under consideration. In
other words, the
OCC relates the total value of the constant
capital (irrespective of the circulation-based distinction
between its fixed and circulating parts) to the total labour time
required to transform the inputs (whether paid or unpaid).
Marx referred to the
OCC in the following terms:
The ratio between the different elements of productive
capital… [can be] determined… [b]y the organic
composition of productive capital. By this we mean the
technological composition. With a given productivity of
labour, which can be taken as constant so long as no
change occurs, the amount of raw material and means of
labour, that is, the amount of constant capital—in terms of
its material elements —which corresponds to a definite
quantity of living labour (paid or unpaid), that is, to the
material elements of variable capital, is determined in every
sphere of production (Theories of Surplus Value III, p.382).
There is, however, a major difficulty with the analysis of
capital from the point of view of its organic composition. As the
value of a bundle of means of production is the product of the
unit values of its components by the quantities used up, it seems
impossible to tell whether changes in a certain OCC result from
modifications in the underlying TCC (and thus from changes in
132 Capital & Class
the technology of production and the productivity of labour in
the industry under consideration ) or from alterations in the value
of the means of production used up (that reflect changes in the
production processes of other industries ). For Marx there was no
ambiguity, though. As the OCC is defined as an immediate
value-reflex of the TCC, it must not change if the TCC is kept
constant, whatever the changes in the value of the elements of
capital may be, despite the fact that the OCC is a value-concept.
Having made this clear, Marx says:
[I]f one assumes that the organic composition of capitals is
given and likewise the differences which arise from the
differences in their organic composition, then the value ratio
can change although the technological composition remains
the same… If there is any change in [e.g.] the value of
variable capital independent[ly] of the organic composition, it
can only occur because of a fall or a rise in the price of means
of subsistence that are not produced in the sphere of produc-
tion under consideration but enter into it as commodities
from outside… The organic changes and those brought
about by changes of value can have a similar effect on the
rate of profit in certain circumstances. They differ however
in the following way. If the latter are not due simply to
fluctuations of market prices and are therefore not temporary,
they are invariably caused by an organic change in the
spheres that provide the elements of constant or of variable
capital (Theories of Surplus Value III, pp.383–6, various
Thus, Marx is clearly aware that, for a given production
process, changes in the value-ratio between the (fixed and
circulating) constant capital and the (paid and unpaid) quantity
of labour technically required, can stem from either variations in
the value of the inputs or technological (‘organic’) changes in
production. Based on this definition of the OCC, and well aware
that value changes should not be conflated with technical
modifications, Marx planned to discuss in Chapter II of Part III
1. Different organic composition of capitals, partly
conditioned by the difference between variable and
constant capital in so far as this arises from the stage of
A note on Marx’s analysis of the composition of capital 133
production—the absolute quantitative relations between
machinery and raw materials on the one hand, and the
quantity of labour which sets them in motion. These
differences relate to the labour-process. The differences
between fixed and circulating capital arising from the
circulation process have also to be considered…
2. Differences in the relative value of the parts of different
capitals which do not arise from their organic composition.
These arise from the difference of value particularly of the
raw materials, even assuming that the raw materials absorb
an equal quantity of labour in two different spheres.
3. The result of those differences is diversity of the rates of
profit in different spheres of capitalist production (Theories
of Surplus Value I, pp.415–6).
I believe Marx eventually realised that an adequate treat-
ment of these problems would require an even more refined
distinction between the effects of application of different
technologies and the consequences of use of inputs of distinct
values. With this aim, he introduces, in Capital, the concept of
value composition of capital (VCC). The VCC is a circulation-
based concept, defined as the ratio between the value of the
(circulating) constant capital and the variable capital required
to produce a final unit of commodity (in other words, it is the
ratio between the two components of the commodity’s cost
price). We will now follow Marx’s discussion of the same
problem both before and after the definition of the VCC, which
will show the place of the VCC in his analysis and its precise
relation to the TCC and the OCC. Marx wants to point out that
if the technical and organic compositions of two capitals are
equal, but the value of the means of production used is
different, a circulation-based value-assessment of their TCCs
may mislead the analyst into the belief that their TCCs are also
distinct. In the Theories of Surplus Value he argues as follows:
In the case of capitals of equal size… the organic composition
may be the same in different spheres of production, but the value
ratio of the primary component parts of constant and variable
capital may be different according to the different values of the
amount of instruments and raw materials used. For example,
copper instead of iron, iron instead of lead, wool instead of
cotton, etc. (Theories of Surplus Value III, p.386).
134 Capital & Class
The introduction of the VCC allowed Marx to be more rigorous,
and, in Capital, he says:
[I]t is possible for the proportion [the TCC
] to be the same in
different branches of industry only in so far as variable capital
serves simply as an index of labour-power, and constant
capital as an index of the volume of means of production that
labour-power sets in motion. Certain operations in copper or
iron, for example, may involve the same proportion between
labour-power and means of production. But because copper
is dearer than iron, the value relationship between variable
and constant capital will be different in each case, and so
therefore will the value composition of the two capitals taken as a
whole. (Capital III, p.244; my emphasis).
These examples concern the impact of a difference in the
value of the means of production used per labour hour in two
sectors which otherwise have equal TCCs and OCCs. If copper
and iron utensils (or wool and cotton clothes) are manufactured
with identical technologies, and thus by capitals with the same
technical and organic compositions, Marx says that their value
compositions will be distinct because the values of the material
inputs are different. In the first example, from the Theories of
Surplus Value, he measures the
TCCs only through the OCCs.
However, as the OCC reflects the TCC from the point of view of
the production process, it disregards the differing value of the
inputs consumed by the two capitals. Marx is reduced, then, to
‘observing’ that capitals that use means of production of
differing values may have equal TCCs and OCCs. In the second
case, presented in Capital, his argument proceeds differently, by
directly pointing out that if two capitals in distinct sectors have
the same technical (and thus organic) composition, but use
means of production of different value, the equality of their
TCCs and OCCs would appear distorted by their differing VCCs.
The inverse situation was also the subject of Marx’s
attention. If we now suppose that two sectors had equal VCCs,
could they still have different OCCs (and hence distinct TCCs)?
His answer is in the affirmative:
A capital of lower organic composition… considered simply
in terms of its value composition, could evidently rise to
the same level as a capital of higher organic composition,
A note on Marx’s analysis of the composition of capital 135
simply by an increase in the value of its constant parts…
Capitals of the same organic composition can thus have a
differing value composition, and capitals of the same
percentage (value) composition can stand at varying levels
of organic composition, displaying various different levels
of development of the social productivity of labour.
(Capital III, pp.900-01)
Therefore, if two production processes combine different
quantities of means of production and labour power, they will
have different TCCs and thus distinct OCCs. However, if the
value of those inputs is such that the ratio between the constant
and the variable capitals used up is equal, then their value
compositions will be equal. From the two cases above we can
see that differences in the value of the constant and variable
capital consumed in distinct industries concern their VCCs but
not their OCCs, while differences in their technologies of
production affect their OCC
s but this may not be accurately
reflected by their VCCs. Given Marx’s view that production, and
not circulation, is the dominant sphere in capitalism, it will
come as no surprise that he considered differences in the
theoretically more important than differences in the VCCs.
A final example will show the precise scope and limitations of
the concept of OCC and the place of the VCC in Marx’s analysis:
[L]et us assume that the raw material is dearer and labour (of
greater skill ) is dearer, in the same proportion. In this case
(capitalist) A employs 5 workers, where (capitalist) B employs
25, and they cost him £100 —as much as the 25 workers,
because their labour is dearer (their surplus labour is therefore
also worth more). These 5 workers work up 100 lbs. of raw
material, y, worth (£)500 and B’s workers work up 1,000 lbs.
of raw material, x, worth (£)500… The value ratio here—
£100 v to (£)500 c is the same in both cases, but the organic
composition is different (Theories of Surplus Value III, p.387)
This example is clear enough. Although capitalists A and B
spend equal amounts of money on means of production and
labour power—which means that their capitals have equal value
compositions—Marx states that their organic compositions
are distinct because they adopt different technologies of
136 Capital & Class
We can therefore conclude that, although both the OCC
VCC are value-assessments of the
TCC, they are undeniably
distinct and their difference stems from the method of assessing
the value of the means of production and labour power. An
OCC-comparison of the technologies of production adopted in
two industries will give results that are independent of
differences in the values of the components of capital, because
the OCC is defined with reference to the sphere of production.
Distinctions (or, as we will see, variations) in the values of
constant and variable capital are detected by the VCC, a
separate concept that pertains to the sphere of circulation.
Only if this point is made absolutely clear does it become
possible to apprehend Marx’s definition in full:
The composition of capital is to be understood in a twofold
sense. As value, it is determined by the proportion in which
it is divided into constant capital… and variable capital…
As material, as it functions in the process of production, all
capital is divided into means of production and living
labour-power. This latter composition is determined by the
relation between the mass of the means of production
employed on the one hand, and the mass of labour
necessary for their employment on the other. I call the
former the value-composition, the latter the technical
composition of capital. There is a close correlation between
the two. To express this, I call the value-composition of
capital, in so far as it is determined by its technical
composition and mirrors the changes in the latter, the
organic composition of capital. (Capital I, p.762).
THE DYNAMIC CASE
It is entirely legitimate to ask at this point, which values could
possibly establish equality between the OCCs of two sectors
with the same TCCs, if the value of the means of production
consumed per hour of labour is different in each case? In what
follows it will become clear that, while in the static case
discussed above such values are abstractions, in a dynamic
environment they do exist and, moreover, the distinction
between the OCC and VCC gives us invaluable clues to an
understanding of the accumulation of capital.
A note on Marx’s analysis of the composition of capital 137
Marx firmly believes that in capitalism there is an inherent
tendency towards the development of the techniques of
production. Technical change is usually introduced in
individual firms, raising their TCCs,
OCCs and VCCs. As a
result of the adoption of new technologies, these firms enjoy a
higher level of productivity and may generate a greater mass of
use values with the same labour power. As the individual value
of their commodities falls below their social value, innovative
capitalists can capture surplus profits, which is the object of
the whole exercise.
Competition between firms of the same branch will
generalise these technical advances, which reduces the value of
the commodity and eliminates the scope for absorption of
surplus profit by some capitalists. This process of introduction
and subsequent diffusion of technical innovation is typical of
an intensified expanded reproduction of capital,
given mass of living labour processes an ever larger quantity of
means of production into outputs. In this case the technical
and the organic compositions of all capitals tend to rise
through time, and the values of all commodities tend to fall.
In abstract terms, it may be said that in every cycle of
production the individual, as well as the social (or the
economy-wide), TCCs and OCCs rise,
and that the values of
all commodities (inclusive of labour power) fall. In other
words, the TCC and OCC of capital-in-general rise with time,
and this causes the value of all commodities to fall.
We must, however, be extremely careful to distinguish the
level of analysis. As far as an individual capital is concerned, or
with the analysis set at the level of many capitals, the
introduction of a technological innovation leads to an
identical change in technical, organic and value compositions.
As time passes and the new technique is more widely adopted,
its VCC tends to fall because of the reduction in input values.
With regard to capital-in-general, though, matters are quite
different. At this level of analysis, technical progress is
synonymous with an increase in its technical and organic
compositions, and immediately leads to a reduction in the
value of the output.
As technical change modifies the values assigned to all
commodities at the start of the subsequent phase of
circulation, it can safely be concluded that the determination
of the OCC and VCC in a dynamic environment is contingent
138 Capital & Class
upon the way changes in production affect commodity
circulation. An adequate understanding of this situation can
only be achieved through an analysis of capital-in-general,
where the values that exist at the beginning of the cycle
(‘earlier values’), at which the inputs are purchased, are higher
than those at which the output is sold (‘later values’; see
Carchedi, 1984 and 1992). Even though this is a conceptual
distinction rather than a chronological one, it is of extreme
relevance for the analysis of accumulation and the dynamics of
[S]ince the circulation process of capital is not completed
in one day but extends over a fairly long period until the
capital returns to its original form… great upheavals and
changes take place in the market in the course of this
period… [and] in the productivity of labour and therefore
also in the real value of commodities, [and] it is quite clear,
that between the starting-point, the prerequisite capital,
and the time of its return at the end of one of these periods,
great catastrophes must occur and elements of crises must
have gathered and develop… The comparison of value in
one period with the value of the same commodities in a
later period is no scholastic illusion… but rather forms the
fundamental principle of the circulation process of capital
(Theories of Surplus Value II, p.495).
Now, which set of values is to be used in the calculation of
the OCC and the VCC, the older and higher or the newer and
lower? For Marx, the answer is unambiguous. The OCC reflects
the TCC at the initial (and higher) values of the component
parts of capital, before the new technologies affect the value of
the output, while the VCC reflects the TCC at the final ( and
lower) values of the elements of constant and variable capital.
As a result, changes in the social VCC will capture the previous
rise in the social TCC as well as the ensuing fall in commodity
values, inclusive of those that have been used as inputs in the
last production period. Because of that, the VCC will tend to
increase more slowly than the social TCC and OCC:
This change in the technical composition of capital… is
reflected in its value-composition by the increase of the
constant constituent of capital at the expense of its variable
A note on Marx’s analysis of the composition of capital 139
constituent… However, …this change in the composition
of the value of the capital, provides only an approximate
indication of the change in the composition of its material
constituents… The reason is simple: with the increasing
productivity of labour, the mass of the means of
production consumed by labour increases, but their value
in comparison with their mass diminishes. Their value
therefore rises absolutely, but not in proportion to the
increase in their mass. (Capital I, pp.773–4)
The social OCC, on the other hand, is measured at ‘earlier’
values, and rises in concert with the social TCC. In our context
of intensified expanded reproduction and increasing
centralisation of capital (where, as we have seen, technical
progress is the essential lever of accumulation), Marx points
out that we may well find that the TCC and the OCC grow
even faster than social capital itself:
[T]he development of the productivity of labour… and the
change in the organic composition of capital which results
from it, are things which do not merely keep pace with the
progress of accumulation, or the growth of social wealth.
They develop at a much quicker rate, because simple
accumulation, or the absolute expansion of the total social
capital, is accompanied by the centralisation of its
individual elements, and because the change in the
technical composition of the additional capital goes hand
in hand with a similar change in the technical composition
of the original capital. (Capital I, p.781, my emphasis).
It is quite obvious at this stage that a proper distinction
between the OCC and the VCC can only be made by means of
a comparison between contrasting situations. If we compare
two capitals at the same moment of time, as we did in the first
part of this text, we would contrast the value of the constant
capital productively consumed per hour of labour (which
defines their VCCs), with the mass of means of production
processed in the same time (that determines their OCCs).
Despite the conceptual clarity of this distinction, the values
that should be used in calculation of the OCC are abstractions.
The difficulty of calculating the OCC in the static case does
not imply that it is without use as a concept, as it was precisely
140 Capital & Class
in a static comparison of capitals with distinct organic
compositions that Marx developed, in Part II of Capital III,
his transformation of values into prices of production (which
marks a change in the level of abstraction of his analysis, as
capital-in-general is superseded by many capitals; see
In a dynamic environment, as discussed in the second part
of this text, matters are remarkably different. Both the OCC
and VCC of a capital undergoing technical change can be
calculated numerically, and, as we have concluded, they
diverge because the OCC is an ex ante evaluation of the value
of the (fixed and circulating) constant capital technically
required per hour of (paid and unpaid) labour, while the VCC
is the (ex post) ratio between the new value of the (circulating)
constant and the variable capital spent in the last phase of
Thus, in the dynamic case, the production-based
nature of the OCC is reflected in its measurement at the time
of production, while the circulation-based VCC
is calculated at
end of production, when values are determined and
commodities enter the sphere of circulation. It was with
reference to this dynamic context, where the organic
composition of a single capital changes through time because
of technical progress, that Marx presented his law of the
tendency of the rate of profit to fall, in Part III of Capital III.
The use by Marx of the notions of TCC, OCC and VCC may at
times look ambiguous, since both the OCC and the VCC assess
the TCC in value terms. However, we have seen that these
concepts have very different theoretical roles, and the
terminological changes Marx gradually adopts almost certainly
indicate his growing awareness of the importance of the
composition of capital for analysis of the accumulation
My conclusions, which confirm and build upon previous
findings in Fine (1979, 1983, 1989 and 1990), Fine and Harris
(1979) and Weeks (1981), can be summarised as follows.
Marx defined the OCC as the means to assess the TCC, a
technical variable, in value terms. He recognised that a value-
measurement of the TCC would be affected by differences or
A note on Marx’s analysis of the composition of capital 141
changes in the TCC itself, as well as by differences or changes
in the values of its components. Since the
OCC is incapable of
discriminating any phenomenon outside the sphere of
production (inclusive of the distinction between fixed and
circulating capital and of the effects of differences or changes
in the process of value creation upon the actual level of
commodity values), Marx developed the concept of
defined as the value ratio between the (circulating) constant
and the variable parts of the advanced capital.
In a static situation the OCC assesses the TCC at values that
cannot be but abstractions. However, in a dynamic environ-
ment, these values are theoretically calculable and the OCC is
determined (for capital-in-general) by an assessment of the
constant capital at the ‘old’ (ex ante and higher) level of values,
while the VCC evaluates the TCC at the ‘new’ (ex post and
lower) values of the inputs. These ‘new values’ prevail at the
passage to the sphere of circulation, where the evolving
conditions of production determine a new level of values and
these are expressed in money terms. The use of both
as forms of assessing the TCC enabled Marx to discuss the
processes of capital accumulation and technical change from
the points of view of production and circulation simulta-
neously, which is otherwise impossible.
Despite the difficulties arising from Marx’s inability to
conclude much of his work, it is still, therefore, possible to
identify the precise meaning of the concepts of
TCC, OCC and
VCC and to situate them relative to the main body of his
writing. Apart from dispelling widespread misconceptions
with regard to the meaning of these concepts, this article has
also shown the intrinsic connections between questions such
as the production of relative surplus value, the transformation
problem and the law of the tendency of the rate of profit to
fall, that have generally escaped the literature. However, a
deeper understanding of the implication of these conclusions
for the investigation of problems that Marx himself tackled, as
well as their application to new questions, remains to be
I am grateful to Ben Fine, Alan Freeman, Paolo Giussani, Derek Kerr,
Deborah Johnston and Brian McGrail for their helpful comments
on earlier versions of this paper.
142 Capital & Class
1. Marx’s most important economic writings are the Contribution to
the Critique of Political Economy, the Grundrisse, the Theories of
Surplus Value and Capital. Only the Contribution and the first
volume of Capital were completed during his lifetime, while the
others were left in a more or less unfinished state and were
2. I do not have space to make a more detailed critique of Groll and
Orzech, who have a highly sophisticated understanding of the
composition of capital. See, however, Fine (1990).
3. The Grundrisse was written in 1857–8 and the Theories of Surplus
Value derive from the 1861–3 manuscript, which also contributed
to all three volumes of Capital. Apart from that, Capital III was
written in 1864–5 and 1875; Capital II in 1865 (or 1867), 1870,
and 1877–8, and Capital I was written after earlier versions of the
other two volumes, published in 1867 and improved for later
editions (see Engels’s Preface to Capital II and Oakley, 1983).
4. ‘The organic composition can be taken to mean the following:
Different ratios in which it is necessary to expend constant capital
in the different spheres of production in order to absorb the same
amount of labour.’ (Theories of Surplus Value III, p.387).
5. Or, if ‘it is assumed that no change has taken place in the organic
composition of capital… [t]he same number of workers as before is
required… in order to work up the same volume of raw material
with the same amount of machinery.’ (Theories of Surplus Value II,
p.276; all emphases are Marx’s, unless otherwise stated).
6. Oakley (1983) analyses the stages of Marx’s elaboration of Capital
and the various subdivisions considered for the book.
7. Marx presents the same argument elsewhere: ‘With capitals in
different branches of production—with an otherwise equal physical
composition—it is possible that the higher value of the
machinery or of the material used, may bring about a difference.
For instance, if the cotton, silk, linen and wool [industries] had
exactly the same physical composition, the mere difference in the
cost of the material used could create such a variation’ (Theories
of Surplus Value II, p.289; the term in  was added by the
8. See, for example, Grundrisse, p.99. The relative preponderance of
production is also quite obvious in the following passage, which
refers to a situation where two capitals have distinct
OCCs, but equal VCCs: ‘[W]e immediately see, if the price of the
dearer raw material falls down to the level of that of the cheaper
one, that these capitals are none the less similar in their technical
composition. The value ratio between variable and constant
capital would then be the same, although no change had taken
place in the technical proportion between the living labour
applied and the quantity and nature of the conditions of labour
required’ (Capital III, p.900).
A note on Marx’s analysis of the composition of capital 143
9. The value of skilled labour power and the value-creating capacity
of skilled labour have been the subject of considerable discussion
since Bohm-Bawerk (1975) first criticised Marx’s arguments for
their circularity or worse. For an overview of the vast literature
concerning these questions, which cannot be dealt with here, see
Giussani (1986), Harvey (1985), Itoh (1987), Lee (1990) and
10. Or, what amounts to the same, ‘[t]he organic composition of
capital is the name we give to its value composition, in so far as
this is determined by its technical composition and reflects it.'
(Capital III, p.245).
11. When the accumulation of capital is based upon its concentration
it takes the form of an extended expanded reproduction, with a
constant composition of capital. In developed capitalism, where
centralisation predominates, accumulation tends to take the form
of an intensified expanded reproduction. In this case, the use of
machinery for the production of relative surplus value brings about
rises in the
TCC and in the OCC (see Fine and Harris, 1979).
12. In the Grundrisse Marx was already aware of the importance and
the wide implications of this fact. Despite this, he had not yet
defined the appropriate concepts to develop the analysis of the
composition of capital, and we read on p.389: ‘if the total value of
the capital remains the same, an increase in the productive force
means that the constant part of capital (consisting of machinery
and material) grows relative to the variable, i.e. to the part of
capital which is exchanged for living labour and forms the wage
fund. This means at the same time that a smaller quantity of
labour sets a larger quantity of capital in motion’.
On p.831 we have: ‘The fact that in the development of the
productive powers of labour the objective conditions of labour,
objectified labour, must grow relative to living labour… appears
from the standpoint of capital not in such a way that one of the
moments of social activity—objective labour—becomes the ever
more powerful body of the other moment, of subjective, living
labour, but rather… that the objective conditions of labour
assume an ever more colossal independence, represented by its
very extent, opposite living labour, and that social wealth
confronts labour in more powerful portions as an alien and
dominant power.’ (see also pp.388–98, 443, 707 and 746–7).
13.In the same vein, Marx says in Capital II, p.185: ‘[P]eriodic
revolutions in value thus confirm what they ostensibly refute: the
independence which value acquires as capital, and which is
maintained and intensified through its movement… This
sequence of metamorphoses of capital in process implies the
continuous comparison of the change in value brought about in
the circuit with the original value of the capital.’ (see also Theories
of Surplus Value III, p.154)
144 Capital & Class
14. Or: ‘[s]ince the demand for labour is determined not by the
extent of the total capital but by its variable constituent alone,
that demand falls progressively with the growth of the total
capital, instead of rising in proportion to it, as was previously
assumed. It falls relatively to the magnitude of the total capital,
and at an accelerated rate, as this magnitude increases. With the
growth of the total capital, its variable constituent, the labour
incorporated in it, does admittedly increase, but in a constantly
diminishing proportion.’ (Capital I, pp.781–2).
15. See Saad-Filho (1993) for a more thorough analysis of the impact
of technical progress upon the determination of values.
16. Ben Fine, Laurence Harris and John Weeks were, as far as I know,
the first to interpret correctly Marx’s analysis of the composition
of capital, but they fail to give sufficient evidence in support of
their argument and do not appreciate the gradual elaboration of
Marx’s point of view.
A note on Marx’s analysis of the composition of capital 145
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