Changes Of The Organic Composition Of Capital And Its Income Effect In The Knowledge Economy Era

The organic composition of capital theory is an important part of the Marxist political economy theory, and reached a conclusion that continuously improvement of the organic composition of capital is the objective trend of the development of capitalism. On one hand, scholars around the world have been doing many theoretical researches and empirical testings about the conclusion, and there still exists doubt on the increasing trend of organic composition of capital. On the other hand, based on the prevailing economic conditions and for the sake of facilitating studies, capital that Marx studied is mainly limited to the field of physical capital, and factors like proprietary technology, trademarks, goodwill, knowledge, which affect the value of the proliferation are abstracted. However, with the continuous development of science and technology, intellectual capital has become format of capital corresponding to physical capital, and plays an important role in economic development. Both practice and theory proved that intellectual capital plays an even more important role than traditional physical capital during the value creating process.This paper is positioning in the knowledge economy era. Firstly, the paper redefines the scope of constant capital and variable capital, and analyzes the influences of skill-biased technical progress on expanded organic composition of capital. This paper argues that intellectual capital is composed by structural capital and human capital, and structural capital has the nature of constant capital, and human capital has the nature of variable capital. After redefining, constant capital includes fixed capital, floating capital and structural capital, while variable capital includes general labor compensation and human capital gains. Then along with skill-biased technical progress, the organic composition of capital has possibilities to decline. In general, the organic composition of capital will experience three stages of improvement, fluctuation and decline.Secondly, this paper estimates traditional organic composition of capital and expanded organic composition of capital in China. Both of them shows an upward trend on the whole, with some individual years declines. However, the expanded organic composition of capital is at a relatively low level and maintains a narrow range. Changes in the value of labor structure, employment structure and industrial structure state that the expanded organic composition of capital can reflect the different types of capital invested more accurately, and the interaction of human capital and structural capital inhibits the upward of organic composition of capital.Thirdly, under Marxist political economy framework, factor income ratio transforms into surplus value rate, and it has the same change direction with the organic composition of capital. In this paper, effect that changes of the organic composition of capital on income factor share are called income effect of the organic composition of capital. Specifically, it refers that changes of the organic composition of capital will cause capital income share moves in the same direction and labor income share moves in the opposite direction. Granger causality test results of China show that there is a one-way causal relationship between expanded organic composition of capital and labor income share, and the improvement in the expanded organic composition of capital will lead to the decline in the labor income share.