[OPE-L:4097] Revaluation

From: John Ernst (ernst@pipeline.com)
Date: Sun Oct 15 2000 - 20:50:36 EDT

Hi Andrew,

RE:  4094

You wrote:

I'll be happy to respond to your points (OPE-L 4093), but what responding
to mine?

Specifically, do you agree or disagree that "in Marx's theory, what
allows the value of a means of production to be preserved (by being
transferred) is that it is used in production.  If the same kind of item
is *not* used in production, but depreciates through aging (a machine is
idled in a slump, and rusts out), its value is lost along with its

Do you agree or disagree that "If a machine doesn't produce any output,
it can't transfer value to that output"?

My comment:

At first, it seems obvious that if a machine  *never* produces output
it never transfers value.  But let's consider this a bit.  For example,
let's say to make sure he can fulfill orders in a timely fashion 
a capitalist buys 5 machines even though he only needs 4 to produce
the output he thinks he can sell.  The 5th is there --"just in case."   
Now if he never uses that 5th machine, does its value get transferred 
to the value of the output that the other 4 produce?  I'd say yes.   
I'm not sure what you would say.   

You wrote: 

Now to your points:
: A machine is used all day (say for 12 hours) in production.  Its
: value is thus fully transferred to the output produced in that
: day.

Ceteris paribus, yes.

: Clearly the machine depreciates by aging during its "off" hours or
: the other 12 hours.   I think you're saying that that value is simply
: lost and not transferred.  Yes?

No.  First, the machine isn't necessarily depreciating due to aging
INSTEAD OF TO USE.  A 12-hour pause is not what I would normally regard
as depreciation due to aging INSTEAD OF TO USE.  Twelve hours a day might
be the normal rate of utilization; machines often need to rest.

Second, preservation and transfer are not taking place during those other
12 hours, but that doesn't mean that value is being *lost*.  Value
contained in a machine is lost, rather than transferred, if and when the
machine becomes unusable due to aging (e.g., it rusts out) before the
value contained in it has all been transferred.  Once the machine becomes
unusable, no more value can be transferred.  Its untransferred value, the
portion of its value that has not yet been transferred, is then lost.
If, however, the machine is still *usable*, even if it isn't *in use* at
this moment, the untransferred part of its value is not (yet) lost.  If
your machine gets used during the next day, and the next, etc., then,
ceteris paribus, all of its value will be transferred rather than lost.

My comment:

Here maybe we can jump ahead a bit so that I can better understand how you
deal with "losses"  that occur when not all the value is transferred 
from the means of production to the output during the lifetime of 
fixed capital.   Let's call the loss, x.   Does "x" enter into your
calculation for the rate of profit?  If so,  how?

Let me say why I think this gets to the matter rather quickly.
If a capitalist buys a machine for $100 to produce an output
worth $150 in each of 2 years, then, assuming all other costs
are negligible, given that $50 of the machine's value is
transferred in the 1st year, he would expect a rate of 
profit of   (150-50)/100.   The surplus value would clearly
be $100 ---  the term in the numerator.   However, if the
machine is rendered useless at the end of 1st year due to 
moral depreciation, then the untransferred value would be lost
to him.  His *real* rate of profit would be (150-50-50)/100
or only 50/100. 

However,  had we assumed that the moral depreciation of $50
is transferred to the output, we would get the same result.
That is, (150-50-50)/100 where one of "50's" represents real
depreciation and the other moral depreciation.  The same 50 
is deducted from the output no matter how we compute the 
transfer of value.
Thus,  I suppose the real question is --  is Marx's falling
rate of profit  computed before or after allowances for 
moral depreciation.  



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