The social, technical and industrial reasons which determine the capital/labor ratio (2021-02)

This is an extremely interesting subject.

Suppose the capital/labor ratio is 200%.

Suppose that, for social reasons, capital is used 8 hours a day, by an army of workers working 8 hours a day, but only during the day.

Suppose now that, again for social reasons, the capital is used 16 hours a day, by the same army of workers working 8 hours a day but divided into two shifts: one working day and the other at night.

The capital required to employ the same number of workers is halved.

Capital wears out twice as quickly.

Capital is twice as productive.

In short, the capital/labor ratio falls to 100% for purely social reasons.

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If the number of working hours per day does not change, the capital/labor ratio may be changed for technological reasons. In one industry, it may be necessary to put 4 units of capital in front of 1 unit of labor, or in another, one for one. This ratio may change due to changes in productivity in the production of capital. If it takes half as much labor to produce the same amount of capital in the face of the same amount of labor, due to the increase in productivity in the production of capital, the value of capital is halved, and the capital/labor ratio, which was for example 2/1, changes to 1/1. Conversely, if it takes twice as much labor to produce more capital in the face of the same amount of labor, due to more advanced technology, the ratio which was for example 2/1 changes to 4/1.

In practice, man increases the productivity in the production of capital at the same time as he introduces new and more advanced technologies, so that the capital/labor ratio remains remarkably stable throughout history.

But we are not immune to major social or technological changes that can significantly alter the capital/labor ratio.

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The same type of reasoning applies to the production of consumer goods, which determines the value of the labor force, which in turn determines the capital/labor ratio.

Consumer goods function as means of production which participate in the production of a particular capital: variable capital. What I have so far called the capital/labor ratio is nothing more than the ratio of constant capital to variable capital, i.e. the value composition of capital.

The composition of capital is to be understood in a two-fold sense. On the side of value, it is determined by the proportion in which it is divided into constant capital or value of the means of production, and variable capital or value of labour power, the sum total of wages. On the side of 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.

Between the two there is a strict [translation!] correlation. 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 of the latter, the organic composition of capital. Wherever I refer to the composition of capital, without further qualification, its organic composition is always understood.

Marx – Capital Book I: XXV.I

[ADDENDUM: “enge Wechselbeziehung” is translated by “close interrelationship”, not “strict correlation”. Scientifically, there can be no “strict” correlation (see below). Spanish (“estrecha interrelacion”, “close interrelationship”) and French (“lien intime”, “intimate link”) translations are more accurate.]

The value composition of capital can vary according to the productivity in the production of consumer goods or the means of production. With a constant technical composition, if productivity increases faster in the production of consumer goods than in the production of the means of production, then the value of variable capital decreases relative to constant capital, and vice versa.

(ADDENDUM: With a constant productivity, if we modify the technical composition of capital, its value composition varies, i.e. its organic composition varies, since here the value composition varies according to the technical composition)

But since productivity increases at the same time in the production of consumer goods and means of production, in particular because these two sectors often share the same technological level (assembly-line work, energy source, etc.), the value composition of capital has remained relatively constant throughout history.

Socialization of domestic work and domestic property (2021-09-10)

Domestic work constitutes a significant part of human work: it represents around 33% of commercial GDP in France ^[1]

Domestic work: 60 billion hours in 2010 – Insee Première – 1423 . (2021). Insee.fr. https://www.insee.fr/fr/statistiques/2123967#titre-bloc-13

. Converting part of domestic work to wage labor changes the labor / capital ratio. This is particularly the case for the institutionalized population (retirement homes, hospitals, prisons, etc.)

To the socialization of domestic work corresponds the socialization of domestic property, where consumer goods are rented instead of sold. These consumer goods are then transformed into capital.

We then observe that wage labor or capital can be extended without creation of wealth, by the simple conversion of private production relations into capitalist production relations. This conversion may be accompanied by an increase in productivity, associated with an increase in alienation, as private persons then become doubly dependent on capitalists both as employees and as tenants.