[OPE-L:941] Re: constant capital and levels of abstraction

John R. Ernst (ernst@pipeline.com)
Sun, 4 Feb 1996 01:47:16 -0800

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Let me answer your recent post about fixed capital
and moral depreciation without rancor. For me,
the issues involved are important and I would argue
have to be dealt with to some extent as the concepts
of absolute and relative surplus value are introduced.
Here, I think we would both agree the level of
abstraction is capital in general.

As Marx introduces "machinery", he states that

"In the first place, it must be observed that
machinery, while always entering as a whole
into the labour process, enters only piece by
piece into the process of valorization. It
never adds more value than it loses, on an
average, by depreciation. Hence there is a
great difference between the value of a machine
and the value transferred in a given time by
the machine to the product. Equally, there
is a great deal of difference between the
machine as a factor in the formation of value
and as a factor in the formation of the product.
The longer the period during which the machine
serves in the same labour process, the greater
those differences." (CI,VI,p509,Pelican) (Ch15,
Sect. 2, Para 1)

Thus, in order to determine the amount of value
transferred by machinery to the product produced,
we have to know not only the value of the machine
but also the time in which it will be used in the
labor process. Now the normal way of treating
this is to assume that initially the physical life
of the machine is, say, 20 years and to divide
its value by 20 to determine the average value
transferred per year. At this point, there is
no room for "moral depreciation."

However, in order to account for the "Prolongation
of the Working Day", Marx notes

"But in addition to the material wear and tear, a
machine also undergoes what we might call a moral
depreciation. It loses its exchange-value, either
because machines of the same sort are being
produced more cheaply than it was or because better
machines are entering into competition with it."
(CI,VI,p528,Pelican) (Ch15,Sect. 3b, Para 6)

How then is "moral depreciation" taken into account.
In a footnote following the above, Marx, citing an
article in the TIMES, notes that the capitalist

"'makes an allowance for the deterioration of
machinery ... to cover the loss which is constantly
arising from the superseding of machines before they
are worn out, by others of a new and better
construction.'" (CI,VI,p528,Pelican)

To be sure, for Marx, capitalists in their efforts to
avoid losses due to "moral depreciation" prolong the
working day, intensify the labor process, etc. I do
agree with you, Mike, that this is the purpose of
introducing the concept at this point in CAPITAL.
But, in turn, ask you to note that capitalists are
including an "allowance" for moral depreciation at
this point as well. Should we not take this into
account as we read?

Earlier, in an example, we assumed that the physical
life of a machine was 20 years. Now because of moral
depreciation let us assume that it can be used by
the capitalist for only 10 years. Which time frame do
we use to calculate the annual depreciation charge?
If we are to follow Marx and note that capitalists
include moral depreciation as part of the overall
depreciation, it seems to me we have no choice but
the shorter period of time. This in no way negates
Marx's idea that the fear of moral depreciation
gives capitalists greater incentive to prolong
the working day, intensify the labor process, etc.
Thus, moral depreciation is taken into account by
the capitalist as he attempts to minimize any
further losses due to technical change.

At the level of abstraction of Vol. I, I think there
is little more to be said of moral depreciation.
However, both of us know that in most treatments of
Marx we seldom see any efforts to include the
concept in any part of his argument. By including
the concept I mean taking into account that
capitalists make some allowance for it in their annual
depreciation charges. (Hence, you perhaps correctly
detected a bit of paranoia on my part as I saw the
concept "put off" again.)

The consequences either of completely ignoring moral
depreciation or of failing to note that capitalists
themselves at least partially include it in computing
their depreciation charges are significant.

1. The physical life of the machine rather than its
economic life is used in setting up most models
constructed to represent Marx's notion of

2. The cheapening of a machine or the construction of
better machines is seen as totally unforeseen and
unexpected. In static models, prices and values
are recomputed whenever such changes take place.
The loss of value is often ignored as relative
prices and a new rate of profit is calculated.

3. Efforts to account for such losses of value with
continual deductions from surplus value or
profit quickly lead one to ask why such losses
were not anticipated as techniques change.

4. By including moral depreciation in models that
attempt to explain Marx's work, we represent
technical change as endogenous. If we are
to even attempt to understand his "economic
law of motion", this would seem crucial.