[OPE-L:1359] Re: Better Machines

John R. Ernst (ernst@pipeline.com)
Thu, 7 Mar 1996 11:23:49 -0800

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Per our discussion of "Better Machines"

1. It would seem that we have agreed that a machine
that is simply "cheaper" than one in service cannot
"kill off" those "in service."

2. I ask for comments on my OPE post 1213 which attempts
to show how a machine can be retired. (If you don't
have it, I'll forward it to you.) In that post, I
used an amortization formula to get at the rate of
profit. In so doing, it became clear to me that the
usual assumption of straight line depreciation is
woefully inadequate to capture the manner in which
the rate of profit, profit and depreciation are
determined. (I've promised to bring something to
the Value Conference next week, so I am anxious for

3. We should be aware that Marx himself often "abstracted
from" fixed capital and, to the best of my knowledge,
never calculates the rate of profit using fixed capital
that will last for a presumed number of turnovers.

4. Treatments of fixed capital within structure of production
models are rather strange. That is, there is no technical
change that resembles anything in Marx or in reality if there
is any technical change at all. (I hope I am wrong about this.)

5. On Jerry's posts. In calculating those losses on the old
technique both Jerry and I agree that the before switching
to the newer, the capitalist would have to account the losses.
My idea is that the losses are part of the "cost" of switching
to the new and hence should be included as such in the calculations.
These losses would be the "value" not recovered in the old
technique. Here, I am having some difficulty.

If the capitalist uses amortization as the way in which profit
and depreciation charges are determined, then the usual
methods of depreciation are simply inappropriate for use
in making the calculation. Of what use are the usual methods?
It seems to me that Paul Cockshott hit the nail on the head
when he pointed to the need for capitalists to track the
"value" of their assets over time. Here "straight line"
or some other method of depreciation would be of
use. Obviously, they are also of use in computing profits
for tax purposes. But what else? My contention is that
they would not be of use in calulating the rate of profit, etc.