Constant capital (c; German: konstantes Kapital), is a concept created by Karl Marx and used in Marxian political economy.
Constant capital can be measured as a stock magnitude, i.e., the total value of means of production in use at a specific point in time.
It can also be measured as a flow magnitude, i.e., the total value of raw materials and fixed means of production used up in an accounting period.
Which measure is used depends on the purposes and assumptions of one's analysis, for example, whether one is interested in the unit-costs of output or in the rate of return on capital invested.
The higher value of output, compared to input costs, is (other things being equal) attributable to the exploitation of living labor-power only.
An example of variable capital would be as follows: a worker is hired for $100 and uses $1000 of materials and components to create a product which is sold for $1300.
[3] According to some Marxists, the first two types of objection above cut to the heart of the main dispute between Marx and mainstream economic theory—their different conceptions of value.
For Marx's critics, value, if it exists at all, is a technical feature of economic calculus or is simply another word for the price of a product.
Another clarification is that Marx may have used the terms fixed and variable capital to emphasize the idea that the input cost of compensation can be varied by the enterprise, which sets the compensation levels of its workers, whereas the price of the other input factors sold to the company is "fixed," insofar as it is set by external vendors.
However, the salaries of some "overhead" employees (who have long-term security from being fired or laid off) are in effect, fixed elements of variable capital.