[OPE-L:4016] Re: More Depreciation Questions

Michael Perelman (michael@ecst.csuchico.edu)
Fri, 17 Jan 1997 18:02:26 -0800 (PST)

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andrew kliman wrote:

> But I'm not sure we agree about the following. I understand Marx's concept of
> moral depreciation to be such that, if the machine is scrapped after three
> years instead of its technological lifetime of 10 years, it does not therefore
> transfer additional value per year during the first three years. If the
> machine had a price of $15,000, and no price drops occurred during the first 3
> years, my interpretation implies that a value of $15,000/10 = $1500 is
> transferred each year for the first 3 years (assuming the machine is run at
> normal intensity), for a total of $4500. The transfer *per year* is identical
> to what it would be were the machine used the full 10 years. The moral
> depreciation is $15,000 - $4500 = $10,500, which is a loss to the firm.

I read Marx as a method for understanding the motion of capitalism.
Marxian microeconomics is more of a method of illustrating how
capitalism works rather than an exact science. I think of the transfer
of value associated with the "c" to be illustrative, as well. Andrew is
correct that, in his example, that the capitalists treat their machines
as if they transfer 1/10 of the value. With moral depreciation, the
value of the undepreciated capital just disappears.

So I don't disagree with Andrew, except that I do not think that we can
treat value as an exact quantity, capable of precise measurement.

Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 916-898-5321
E-Mail michael@ecst.csuchico.edu