How is the use of capital goods accounted for in calculating labor values?
Marx considers capital to consist of variable capital and constant capital. Those who might ask this question are probably thinking of the material components comprising constant capital alone. These material components can be divided into circulating capital and fixed capital. That portion of circulating capital that is also constant capital consists of those commodities, such as raw materials and semi-finished goods, that are totally used up in the (yearly) cycle of production and must be reproduced. Fixed capital consists of commodities that last for several production cycles, namely machinery and tools. Marx criticized the classical economists for frequently confusing circulating and variable capital. Labor values are easily calculated for production processes that use circulating capital. This was demonstrated above with Example 3.1 and Example 3.2. Fixed capital can be correctly analyzed as a type of joint production. The outputs of a production process using a machine consist of
Related Questions
- When calculating a companys weighted average cost of capital (used for discounting free cash flows when valuing the company), should we take the cost of net debt before or after tax?
- How is the use of natural resources accounted for in calculating labor values?
- How is the use of capital goods accounted for in calculating labor values?
