Re: [OPE-L] calculating the not rate of profit

From: Philip Dunn (hyl0morph@YAHOO.CO.UK)
Date: Wed Apr 04 2007 - 03:32:55 EDT

On Tue, 2007-04-03 at 19:39 -0400, ope-admin@RICARDO.ECN.WFU.EDU wrote:
> > Suppose a capitalist buys an asset and expects it to last 5 years. Let
> > the depreciation shown in the accounts be 20% per annum linear, for the
> > sake of the argument. Due to unanticipated technological progress, the
> > capitalist is forced to replace the asset with a new and better one
> > after 4 years. I think that the way that this should be accounted for is
> > by prior year adjustments.
> Hi Phil:
> Are you sure you agree with us?
> The above is a type of "rule of thumb" that Michael and I have been saying
> can't reliably be used to accurately anticipate sudden technological
> changes in means of production.  What you are doing is basically proposing
> a depreciation schedule which takes into account the *expected* rate of
> moral depreciation. Yet, what is the expected/anticipated rate of moral
> depreciation other than a guess based on past rates of moral depreciation?
>  The actual extent of moral depreciation is only known ex post.
> In solidarity, Jerry

I agree that the actual extent of moral depreciation is only known ex
post. But how is it to be known? I would depreciate according to revenue
over the actual life of the asset. How would you do it?

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