[OPE-L:1341] Re: Better Machines

John R. Ernst (ernst@pipeline.com)
Wed, 6 Mar 1996 13:46:10 -0800

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Thanks for your response. I think that it is helpful.

The key is "more than offsets" in what you say. For me,
that would mean that technology 2 is more profitable than
1 even when the losses are seen as part of the cost of 2.
But what is more profitable? The profit rate on 2 is greater
than the profit rate on 1 even when 1 is fully depreciated and
(your addition) even when the losses or write off's on 1 are
added to the cost of 2.

Calculating the losses on 1 would be no mean feat.

The task here is to get folk to start considering "better"
technologies and get out of the rut of simply talking about
"cheaper" technologies.


Jerry says:

John: consider the following simplified scenario that takes into account
a "better machine."

Let's take the case of an individual capitalist in a competitive market
and let's not consider joint production.

Time Period 1:

* Capitalist A in branch of production Q purchases new constant fixed
capital which we will call Technology 1. Let's assume that at the time
that Technology 1 is purchased it is the major process technology used in
branch Q.

At the time that Capitalist A purchased Technology 1, she anticipated
that Technology 1 would depreciate over, let's say, 5 years, taking into
account physical depreciation and anticipated moral depreciation.

Time Period 2:

* Capitalist A can now either purchase Technology 2 or maintain
production with Technology 1.

Which will she do? If the gain in the anticipated production of
relative surplus value and productivity (and profitability including
possible "surplus profits") more than offsets the loss in capital values
already invested in Technology 1, then Capitalist A switches to
Technology 2 and vice versa, ceteris paribus.

In other words, what matters in terms of timing is the relative
efficiency of the new technology (Technology 2) versus the cost of
capital already invested in the "old" constant fixed capital (Technology
1) taking into account normal physical depreciation.

What's wrong with the above as a simplified scenario?

In OPE-L Solidarity,