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The organic composition of capital is a concept from Marxian political economy. This "OCC" can be seen as the form the capitalist epoch gives to the relationship between means of production and labor-power, determining the productivity of labor and the creation of a social surplus. In one interpretation, Marx took the growth of this underlying ratio as central -- indeed, essential -- to economic progress under capitalism.
The organic composition of capital is usually expressed as a ratio of constant capital to variable capital, or c/v. Other measures have been seen in the Marxian literature. One is c/(s + v). This is the ratio of constant capital to newly-produced value (what modern economists call "value added"), i.e., surplus-value + variable capital. This is similar to the "capital/output ratio" seen in much of economics. Less common is the measure used by Paul M. Sweezy, i.e., c/(c + v), the ratio of constant capital to the total capital invested.
By any of these measures, the plant- and machinery-intensive oil industry would have a high organic composition of capital, while labor-intensive businesses such as catering would tend to have a low organic composition of capital.
The organic composition of capital varies according to differences in production technology, between sectors of an economy, or changes in technology over time. Its exact proportion is of crucial importance to Marxist crisis theory, as one of the four variables varying during the business cycle and determining the fluctuations and trends of the rate of profit.
The different organic compositions of different branches of industry raised a problem for the classical economic schema of Ricardo and others, who could not reconcile their labor-cost theory of price with the existence of differences in the organic composition between sectors. The latter imply different profit rates in different industries. Marx either solved this problem, or failed to solve it, according to which side of the debate over the transformation problem one finds convincing. Others see this "problem" (the development of a mathematical relationship between prices and labor-values) as a false one, rejecting the idea that Marx aimed to use his labor theory value to understand relative prices instead of the nature of capitalist society.
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