Ratios
The value composition of capital (VCC) is usually expressed as a ratio of constant capital to variable capital, or . Other measures are also used in the Marxian literature. One is . This is the ratio of constant capital to newly-produced value (roughly, what modern economists call "value added"), i.e., surplus-value + variable capital and close to the concept of a capital/output ratio. Less common is the measure used by Paul M. Sweezy, i.e., the ratio of constant capital to the total capital invested.
The total capital tied up by a capitalist enterprise of course includes more than fixed assets, materials and wages/salaries; it also includes liquid funds, reserves and other financial assets. For instance, an employer must normally reserve funds to pay for ongoing operating expenses, until these are recouped from product sales.
Read more about this topic: Organic Composition Of Capital
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