[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


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.


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