[OPE-L:1963] Re: depreciation, profits, and subjectivity

Gilbert Skillman (gskillman@wesleyan.edu)
Thu, 25 Apr 1996 15:23:53 -0700

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Michael P. replies to the following:

> Gil says
> >
> > But Mike, if you _know_ this, then presumably "the market" does too,
> > and thus the capital's value is not subjective, contrary to
> > suggestion--no matter what the present delusions of the current
> > owners.
> >
> > Gil
> >
> Michael responds:
> I have to disagree with you here. Even if we assume that markets "know" [and
> remember that knowledge of the value of a capital good requires the knowledge
> of the present value of the future returns from the good], markets only enter
> into the picture when the capital is put up for sale. Stocks and bonds are
> continually sold on the market; capital goods rarely, and when they are sold,
> the markets are thin. Do you agree?

Yes, I do. But if not based on (at least potential) market
relations, I don't know what the term "value of capital" in your
original post means. That is: I don't consider an owner's
subjective assessment of this prima facie evidence. Should I? Gil