# [OPE-L:3993] A Comment on Allin's Work on Moral Depreciation

From: John Ernst (ernst@pipeline.com)
Date: Fri Oct 06 2000 - 19:11:08 EDT

```Allin,

Thanks for sharing your short piece "Marx on 'Moral Depreciation'
and the Working Day"  which you linked to your post in OPE-L 3974.
In it you state:

"The aspect of Marx's argument here that I'm unsure about is his
claim that moral depreciation provides a `special incentive' to
lengthen the working day-that is, an incentive that would not be
present even in the absence of moral depreciation.

"Suppose a capitalist invests in a fixed capital of value K which,
absent moral depreciation, will last n years and transfer Cd =
1/n of its value to the product each year, when run for 12 hours
per day. Suppose that operating the equipment at this rate
involves hiring a workforce for an annual wage bill (variable
capital) of V and the working up of materials to an annual value
of Cm. Let the rate of surplus value be 100 percent. Assume the
capitalist pays wages in arrears (out of the value of the product
sold) and gets his materials on trade credit, so that his total
capital stock is just K.

Under these assumptions the annual value of output is

C + V + S = Cd + Cm + V + S = K/n + Cm + 2V

while the `cost-price' is

C + V = K/n + Cm + V

"Assuming the product is sold at its value, the capitalist makes
an annual profit of S = V and gains a rate of profit on his
capital stock of V/K. This is sustained over n years, at the
end of which the capitalist has his K back, ready to buy a
new machine, plus profit.

That's the benchmark. Now suppose the capitalist moves to operat-
ing his plant 24 hours per day. What happens?

As regards the fixed capital, let's assume this change simply
means it wears out twice as quickly. It lasts n/2 years, and
transfers to the product 2K/n per year.

As regards materials and labour costs, the simplest assumption
would be that everything just scales proportionately: in shifting
to 24-hour operation the capitalist pays twice the wages and
twice the materials bill for twice the amount of labour and
materials, and generates twice the output. The rate of surplus
value remains at 100 percent. We'll run with this for the moment
but will consider alternative scenarios shortly.

In that case the annual value of output becomes

Cd + 2Cm + 2V + 2S = 2K/n + 2Cm +  4V

for a `cost-price' of

2K/n + 2Cm + 2V

The profit is 2V and the annual rate of profit on capital stock
is now 2V/K, twice what it was in the benchmark case. This is
sustained for only n/2 years, but that doesn't matter. The capi-
talist still has his K back, ready to start again. " (pp2-3)

___________

Granted we're working with some rather strong assumptions here but
your point is nevertheless well taken.   Indeed, it's not obvious
why Marx introduces "moral depreciation" in order to show the
capitalists' incentive to lengthen the working day.

But let's consider the matter a bit more closely.   Clearly, for
the sake of simplicity you assumed that by doubling the working
day the capitalist will use up his fixed capital in 1/2 the time.
For some types of fixed capital, this is no doubt true.  However,
for other types, it is not.  Or, perhaps, we could say that it
is true for fixed capital in so far as depreciation is due
solely to use.  It is not true in so far as depreciation is due
solely to age.   Thus, for the capitalist, there is a huge
incentive to use the fixed capital 24/7 in so far as depreciation
is due to age.  Indeed,  it's a bit like spreading out a rent
charge over a greater output.  As Marx points out, capitalists
hate to see the workers go home at night lest all of their
fixed capital lay idle till the next day.  Capitalists know
that some depreciation occurs even during those idle hours;  hence,
an "special" incentive to keep things going day and night.

In Vol. I,  moral depreciation occurs in exactly the same fashion
as the type of depreciation that is due to solely to age.  Hence,
Marx discusses or, more precisely, introduces the concept in that
context.  Given that it adds to the type of depreciation that
comes solely with age, it provides a greater incentive (special?)
for capitalists to prolong the working day.

John
```

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