My experience in solving a Political Economy problem

As we read a problem, we may be confused when combining the definitions we've learned with the facts in the problem. Let's put it in this simple way:

- The constant capital (C) is the one that the capitalists use to buy the means of production which include the materials, machines, etc ... . It also consists of wear and tear expenditures.

- The variable capital (v) can be considered as the payment the worker receives. It is also the so-called 'the value of labor of each worker per a period'.

- The surplus value (m) is the value the worker creates without being paid. Most problems don't state the surplus value, they only give you the rate of surplus value (m'). From the given facts, you'll have to find the surplus value yourself.

- The total value of products is the summary of the three quantities C , V (= v. n[the number of workers] , M (= m. n). W = C + V + M.

EX: In an enterprise, the total wear and tear expenditure is $ 100000 . The materials expenditure is $ 300000. Find the total variable capital , provided that the total value of products is $ 1000000 and the rate of surplus value is 200%

Here is the way we'll solve this problem :
- The total constant capital is : C = 100000 + 300000 = $ 400000
- The total value of products : W = C + V + M
=> 1000000 = 400000 + V + M
=> V + M = 600000 (1)
- The rate of surplus value is : m' = m/v = 200% => m/v = 2 => M/V = 2 or M = 2V (2)
- From (1) and (2) we have : 3V = 600000 => V = $200000
- So the total variable capital is $ 200000.
He he, so our problem has been solved.



Here is another example: In an enterprise, there are 100 workers. In a month, they produce 12500 units of products. The total constant capital is $ 250000. The value of labor of each worker per month is $ 250. The rate of surplus value is 300%. Find the value of ONE unit of products and state its structure.



Here we go:
- The total variable capital is : V= 250.100 = $ 25000
- The rate of surplus value is : m' = m/v = 300% => The total constant capital is : M = m'.V = 3. 25000 = $ 75000.
- The total value of products is : W = C + V + M = 250000 + 25000 + 75000 = $ 350000
- The value of ONE unit of products: w = c + v + m = 350000/12500 = $ 28 (This is the value of ONE unit of products created by one worker).
- About the structure:
+ the amount of products a worker creates in a month: 12500/100 = 125 (units)
+ the variable capital spent for one worker: v = 250/125 = $ 2
+ the surplus value created by one worker per one unit of poducts: m = 75000/12500 = $ 6
=> the constant capital spent for ONE unit of product: c = w - v - m = 28 - 2 - 6 = $ 20

* In conclusion: + the value of ONE unit of products is $ 28
+ the structure is: c = $ 20, v = $ 2, m = $ 6

Phew, I've just introduced the two examples of Political Economy problems . Hope you'll find them useful.

[These examples come from the exercises the lecture gave us]
Here are the links for the pictures I used in this entry:
http://www.interiorhealth.ca/NR/rdonlyres/F7F71A9E-0455-4498-B256-F46458F92DEA/5929/manpain.jpg
http://www.sunderland.gov.uk/Public/Editable/Life-Episodes/LS/clsp/images/INGG0509.jpg
http://ocean1025.files.wordpress.com/2007/05/greed-for-money.jpg