[OPE-L:4203] Revaluation

From: John Ernst (ernst@pipeline.com)
Date: Sat Oct 21 2000 - 16:36:18 EDT

```Andrew,

Thanks for your 4175.   Let me review matters briefly and
then comment. I gave an  example of a capitalist purchasing
5 machines but only using 4 in production.  The 5th machine
was solely a back-up to the other 4.   In 4175, you took
the position that the value of the 4 machines was
transferred to the output while that of the 5th was a loss.
That loss was to be deducted from "operating profit", P,
so that "realized profit" becomes P-V where V is the value of
the 5th machine.

My comment.  Let me, at first, for the sake of discussion,
agree that the 5th machine's value is not transferred to
the output.  Let's also assume that the total living
labor involved as the machines transfer their value is L.
If all circulating capital costs are negligible,
then the total value of the output is 4V+L or the
value the 4 machines plus the living  labor.  L is thus
what you call the "operating profit."  To get the realized
profit, you subtract from the operating profit the value
of one machine, V.  Now if the total value of the output
remains the same before and after this distinction between
types of profit, we can write

Total Output =  (4V+V)+(L-V)

Our difference on these matters thus comes into sharper focus.
If I were to view  the total value transferred as 5V and you
see it as 4V, then I'm looking at the living labor added to the
output net of any losses due to "waste",  you find it helpful
to use the terms "operating profit" and "realized profit."
Put another way,  I would see the

Total Output = 5V + A

where A is L-V.

If that one V were a loss due to moral depreciation, I think
the our differing ways of viewing the total output would still
hold.

Let me stop here and simply say that I think our next step is to look
at these differences as we consider the falling rate of profit.

John

```

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