[OPE-L:1344] Re: Better Machines

glevy@acnet.pratt.edu (glevy@acnet.pratt.edu)
Wed, 6 Mar 1996 14:26:27 -0800

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John wrote in [1341]:

> 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.

No, my "addition" only says that capitalists are going to decide whether
to purchase 2 based on the anticipated gain in terms of surplus value
and productivity (and profitability) of switching to 2 versus the
current productivity realized with 1 *taking into account*
the outlays already invested in constant fixed capital and
how much it has already physically depreciated. Presumably, if the gain in
productivity of 2 is marginal in relation to the current productivity of 1
*plus* the value of the current cc, then Cap A holds-off on purchasing 2.

> Calculating the losses on 1 would be no mean feat.

I don't think it would be that difficult for Cap A to make such a
calculation based on the information that she has at the beginning of
Time Period 2. Losses, though, can only be approximated ex ante. The
actual losses (or gains) would depend on whether the expected gain in
productivity of 2 versus the loss involved in switching over to 2, and
thereby not realizing the full potential of 1 in terms of value creation,
turns out as expected. Of course, other capitalists are innovating as
well and there may be yet another technology (Technology 3) that may in
Time Period 3 render Technology 2 obsolete in terms of productivity
within branch Q.

In OPE-L Solidarity,