[OPE-L:4031] Depreciation Answers?

john erns (ernst@pipeline.com)
Tue, 21 Jan 1997 18:17:58 -0800 (PST)

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I'm not sure where we are on this depreciation stuff;
however, I do think that it is fairly clear that Marx
himself was including some amount of value as "moral
depreciation" in determining the value of constant
capital used to produce a commodity. If there is
another way of reading Marx on this, I'd sure like
to know more about it.

For Marx, depreciation charges like the wage rate
are socially determined within the bounds given by
technology. Machines that should last 20 years by
engineering standards only last, say, 10 years because
of "moral depreciation." The value transferred over
those 10 years sums up to that invested, given that
"moral depreciation" is part of the reality in which
that investment occurred. To be sure, for the machine
to be mere "scrap" at the end of those 10 years, we are
assuming that better machines are produced after 10
years such that the use of the original machine even with
no depreciation charges is not as profitable. Here,
perhaps it becomes obvious that we should say that
the 10 year term of depreciation is "on average." It
may be 15 years or 5 years, etc. Should the machine
"die" too quickly, the capitalist experiences a loss;
the opposite, should the machine live longer than

Using "moral depreciation" as Marx does also gives another
reason to compute the rate of profit without revaluing
constant capital at the end of each and every period of
production when technical change takes place. Clearly, it
calls into question the use of what we referred to as an
IVA when it comes to fixed capital. Granted this goes
against most interpretations of Marx's treatment of
depreciation and presents those of us who see the need
to represent Marx's concepts in relatively simple models
with more than a few problems as we attempt to place fixed
capital within those models.