[OPE-L:4088] Revaluation

From: John Ernst (ernst@pipeline.com)
Date: Sat Oct 14 2000 - 16:29:00 EDT

RE:  Andrew's 4080

In OPE-L 4060, John wrote,

: you seem to take the position that one type of depreciation transfers
: value to the output and the other type does not.  I think you then face
: the question of why moral depreciation is to be labeled "depreciation"
: all.

In 4080 Andrew wrote:

This presumes that the meaning of the term "depreciation" has to do with
transfer of value.  I don't think that is the case.

The meaning of the term "depreciation" -- and the etymology bears out
that this has consistently been the case -- is that there's a fall in
price or loss of value.  Thus the distinction between moral depreciation
and physical depreciation is a distinction between two causes of
reductions in the value of a means of production:  (a) its price falls;
(b) it has been partly used up.

My comment:  Let me back up and attempt to explain my clear thinking or,
perhaps, utter confusion.  Why would I associate or conflate the transfer
of value with depreciation?  First, let's consider the 3 types of 
depreciation in CAPITAL.

1.  depreciation that is due to the simple wearing out of the plant or
equipment due to use.  Things wear out physically with use.

2.  depreciation that is due to simple aging.  Things wear out physically
with age.  

3.  depreciation that is due to things of "the same sort being produced
cheaper than it of by better machines (things, JE) entering into 
competition with it."(V1, CH15,sec3b,para5).

The first 2 types are physical depreciation.  The last moral.

Clearly, if all deprecation were of Type 1, we would agree that the 
amount of depreciation corresponds to that portion of the value
of the machine that is transferred to the product in the process
of production.  The correspondence seems a bit less obvious
when we consider Type 2.   Still it's a question of physical 
wearing down of the use value as it is used in the production 
process.   Hence,  here I think the correspondence is seen to
generally hold.   But then comes the clinker -- Type 3.  Perhaps
we could break it done a bit more by distinguishing between
sudden moral depreciation and that which is more or less taking
place on a continuous basis. But either way we face problems
if we view it as corresponding to the transfer of value or if
we abstract from it as we consider the manner in which value 
is transferred from fixed capital to the products produced 
with its use.



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