[OPE-L:881] Re: Valuation Again

Michael Perelman (michael@ecst.csuchico.edu)
Tue, 30 Jan 1996 17:19:02 -0800

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John E. wrote:

> I am going to call myself one of those who assumed that information
> about devaluation can be known in advance and further claim that it
> is. Let me be clear. I do not think capitalists have perfect
> information. Rather, I have stated (perhaps not as well as I
> should have) that capitalists in Marx's day knew that the elements
> of fixed capital that they purchased would often be available
> at lower prices while they were using the fixed capital. To
> compensate for this loss as they price their commodities, they
> included a charge for "moral depreciation." This does not preclude
> sudden devaluations in the future which are entirely unanticipated.

Yes, I agree that capitalists may have an anticipated moral depreciation.
When competition becomes fierce (I regard a depression as being
associated with fierce comeptiton), devalorization accelerates. Keynesian
policy was a method of keeping devalorization within bounds, but it does not
always work.

> I'm not sure why we would assume that prices would move toward
> marginal costs. Doesn't the general story for this type of movement
> assume that techniques are unchanged?

No. New technology can reduce marginal costs for new technology, but it
will add pressure to drop prices toward marginal costs for older capital

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321 E-Mail michael@ecst.csuchico.edu