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  1. Classical Theory

    Linked via "rate of profit"

    In analyzing the composition of capital) invested by industrialists, classical economists differentiated between constant capital ($$C$$), representing machinery and raw materials, and variable capital ($$V$$), representing wages paid to living labor. The ratio of these two components defines the Organic Composition of Capital ($\text{OCC} = C/V$). As technological innovation necessarily increases the proportion of machinery relative to direct labor…

  2. Marxism

    Linked via "Rate of Profit ($P'$)"

    Where $C$ is Constant Capital (machinery, buildings) and $V$ is Variable Capital (wages).
    The relationship between OCC and the Rate of Profit ($P'$) is inversely proportional, reflecting the TRPF. Further, the Degree of Exploitation (Surplus Value Ratio, $s'$) is derived from the division of the working day ($T$):
    $$ T = v + s $$
    Where $v$ is necessary labor time (paid) and $s$ is surplus labor time (unpaid).