Marx divides capital as factors of production into two categories:
(1) constant capital, andConstant capital is the means of production used in the production process whose values are merely transferred to the output product (Marx 1990: 307; Harvey 2010: 128).
(2) variable capital (Marx 1990: 317).
How do fixed and durable capital goods transfer value? For Marx, they do so gradually day by day during their working lifetime:
“If therefore an article loses it utility, it also loses its value. The reason why means of production do not lose their value, at the same time that they lose their use-value, is this: they lose in the labour-process the original form of their use-value, only to assume in the product the form of a new use-value. But, however important it may be to value, that it should have some object of utility to embody itself in, yet it is a matter of complete indifference what particular object serves this purpose; this we saw when treating of the metamorphosis of commodities. Hence it follows that in the labour-process the means of production transfer their value to the product only so far as along with their use-value they lose also their exchange value. They give up to the product that value alone which they themselves lose as means of production. But in this respect the material factors of the labour-process do not all behave alike.However, it is not quite clear here what happens if, for some reason, a durable capital good does not last for its average lifetime. Does such a machine still transfer its full value but in a shorter period of time?
The coal burnt under the boiler vanishes without leaving a trace; so, too, the tallow with which the axles of wheels are greased. Dye stuffs and other auxiliary substances also vanish but re-appear as properties of the product. Raw material forms the substance of the product, but only after it has changed its form. Hence raw material and auxiliary substances lost the characteristic form with which they are clothed on entering the labour-process. It is otherwise with the instruments of labour. Tools, machines, workshops, and vessels, are of use in the labour-process, only so long as they retain their original shape, and are ready each morning to renew the process with their shape unchanged. And just as during their lifetime, that is to say, during the continued labour-process in which they serve, they retain their shape independent of the product, so, too, they do after their death. The corpses of machines, tools, workshops, &c, are always separate and distinct from the product they helped to turn out. If we now consider the case of any instrument of labour during the whole period of its service, from the day of its entry into the workshop, till the day of its banishment into the lumber room, we find that during this period its use-value has been completely consumed, and therefore its exchange value completely transferred to the product. For instance, if a spinning machine lasts for 10 years, it is plain that during that working period its total value is gradually transferred to the product of the 10 years. ….
It is known by experience how long on the average a machine of a particular kind will last. Suppose its use-value in the labour-process to last only six days. Then, on the average, it loses each day one-sixth of its use-value, and therefore parts with one-sixth of its value to the daily product. The wear and tear of all instruments, their daily loss of use-value, and the corresponding quantity of value they part with to the product, are accordingly calculated upon this basis.” (Marx 1906: 225–227).
It is particularly interesting that, for Marx, factors of production that have no embodied labour value transfer no value into the output commodity:
“It is thus strikingly clear, that means of production never transfer more value to the product than they themselves lose during the labour-process by the destruction of their own use-value. If such an instrument has no value to lose, if, in other words, it is not the product of human labour, it transfers no value to the product. It helps to create use-value without contributing to the formation of exchange value. In this class are included all means of production supplied by Nature without human assistance, such as land, wind, water, metals in situ, and timber in virgin forests.” (Marx 1906: 227).This is a development of Marx’s idea in Chapter 1, as follows:
“A thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c. A thing can be useful, and the product of human labour, without being a commodity.” (Marx 1906: 47–48).That is to say, things that are not produced by human labour have no real labour value (e.g., air, uncultivated soil, natural meadows) and only fetch an “imaginary” money price (Marx 1906: 115). But, since a large number of capital goods bought by capitalists must be included in the list of things that Marx thinks have no labour value, we have a severe problem here. Many such goods used in production processes that for Marx have only “imaginary” money prices and no labour values still from part of the monetary costs of production for capitalists and are used to calculate cost-based mark-up prices. Therefore the whole theory of exchange value in volume 1 of Capital is undermined, for goods cannot tend to exchange at pure or true labour values when many of them have prices that include mere “imaginary” money prices of factor inputs with no labour values (such as land, water, metals in situ, and timber in virgin forests, etc). This is yet another terrible problem for Marx’s labour theory of value.
To return to Marx’s analysis of constant capital, he thinks that even material necessarily wasted in a normal and average production process can transfer its value (Marx uses the example of wasted cotton in spinning yarn: Marx 1990: 313). But what happens if the necessary waste can be re-used in a new production process? Does it transfer value to both output products or just one? Marx does not explain this.
Furthermore, it is obvious that many durable capital goods of the same type will last for different times in different factories or businesses. Is it really the case that a machine worth $100,000 that lasts for 1 year and working for 360 days transfers $277.77 of value into each unit of output it produces (with price reflecting this), but the same type of machine worth $100,000 that lasts for 10 years and working for 3600 days transfers only $27.77 into each unit of output it produces in that time? (and with a price for the output goods also reflecting this). If so, there would have to be a radical price difference in the output goods produced by each machine if they exchange at their pure labour value, but this is absurdly contrary to what happens in the real world, where prices would be the same and the company would just have some warranty on the machine (and obtain a new one) or insure it (and claim a loss for one that broke down after a year).
Crucially, constant capital can never transfer more value than it has itself:
“We have seen that the means of production transfer value to the new product, so far only as during the labour-process they lose value in the shape of their old use-value. The maximum loss of value that they can suffer in the process, is plainly limited by the amount of the original value with which they came into the process, or in other words, by the labour-time necessary for their production. Therefore the means of production can never add more value to the product than they themselves possess independently of the process in which they assist. However useful a given kind of raw material, or a machine, or other means of production may be, though it may cost £150, or, say, 500 days’ labour, yet it cannot, under any circumstances, add to the value of the product more than £150. Its value is determined not by the labour-process into which it enters as a means of production, but by that out of which it has issued as a product. In the labour-process it only serves as a mere use-value, a thing with useful properties, and could not, therefore, transfer any value to the product, unless it possessed such value previously.” (Marx 1906: 229).But it is living labour that adds new value to products:
“It is otherwise with the subjective factor of the labour-process, with labour-power in action. While the labourer, by virtue of his labour being of a specialised kind that has a special object, preserves and transfers to the product the value of the means of production, he at the same time, by the mere act of working, creates each instant an additional or new value. Suppose the process of production to be stopped just when the workman has produced an equivalent for the value of his own labour-power, when, for example, by six hours’ labour, he has added a value of three shillings. This value is the surplus, of the total value of the product, over the portion of its value that is due to the means of production. It is the only original bit of value formed during this process, the only portion of the value of the product created by this process. Of course, we do not forget that this new value only replaces the money advanced by the capitalist in the purchase of the labour-power, and spent by the labourer on the necessaries of life. With regard to the money spent, the new value is merely a reproduction; but, nevertheless, it is an actual, and not, as in the case of the value of the means of production, only an apparent, reproduction. The substitution of one value for another, is here effected by the creation of new value.The labour value of constant capital does, however, change if the prior production conditions for that commodity change (Marx 1990: 318).
We know, however, from what has gone before, that the labour-process may continue beyond the time necessary to reproduce and incorporate in the product a mere equivalent for the value of the labour-power. Instead of the six hours that are sufficient for the latter purpose, the process may continue for twelve hours. The action of labour-power, therefore, not only reproduces its own value, but produces value over and above it. This surplus-value is the difference between the value of the product and the value of the elements consumed in the formation of that product, in other words, of the means of production and the labour-power.” (Marx 1906: 231–232).
Changes in productivity tend to decrease the abstract labour time needed for a given unit of output but increase the amount of constant capital needed (Marx 1990: 319).
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.
Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.
Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.