Capital is a term referring to any asset which is capable of producing additional exchange-value, i.e. monetary value. It is self-expanding value, or a value which generates surplus value (and hence more capital) as the result of exploitation of wage labor.
Distinguishing characteristics of capital include:
- Money can be used as capital, but this is not necessarily so. This is because capital is not the same as mere money, but it is a term for the wealth which includes money, land, buildings, machinery, and labour whose purpose (telos) is the production of more wealth, i.e. capital accumulation.
- If an ordinary person, a worker, has some money saved up, or still available at the end of the month, that is not capital! The reason is that the worker has no way of making use of that money to create more value, more capital. The capitalist, however, is somebody who does have that ability because the capitalist owns the means of production whereas the worker does not.
- The two appearances ought not to be confused insofar as the first deals with capital as a proper economic entity, and this second deals with the social economy taken as a whole.
- The opposition between this second appearance of capital and labour is what generates class struggle as the revealed object of Marx's analysis of the capitalist mode of production.
Variable and constant capital
In Marxian economics, there are two forms of capital: variable capital, and constant capital.
Variable capital refers to the investment of a capitalist in labor-power. Variable capital is the only source of surplus value; a capitalist can make a worker work more time than the worker would need to work in order to live, and that extra labor time creates surplus value.
Constant capital, unlike variable capital, cannot provide surplus value. It can only provide a constant amount of value, which is determined by the cost of the capital, i.e. a wrench costs five dollars, and is worth five dollars of added capital value in a business that uses wrenches. Constant capital refers to any capital which is not human labor-power, i.e. tools (wrenches, hammers), industrial machinery and factories, arable land, vehicles, et cetera.
“Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.” [Marx, Capital, Vol. I, ch. 10, sect 1.]
“... capital is a certain relation between people, a relation which remains the same whether the categories under comparison are at a higher or a lower level of development. Bourgeois economists have never been able to understand this; they have always objected to such a definition of capital.
“To regard the categories of the bourgeois regime as eternal and natural is most typical of bourgeois philosophers. That is why, for capital, too, they adopt such definitions as, for example, accumulated labor that serves for further production—that is, describe it as an eternal category of human society, thereby obscuring that specific, historically definite economic formation in which this ‘accumulated labor,’ organized by commodity economy, falls into the hands of those who do not work and serves for the exploitation of the labor of others. That is why, instead of an analysis and study of a definite system of production relations, they give us a series of banalities applicable to any system, mixed with the sentimental pap of petty-bourgeois morality.” [Lenin, “What the ‘Friends of the People’ Are” (1894), LCW 1:217]