[OPE-L:4037] Re: More Depreciation Questions

andrew kliman (Andrew_Kliman@msn.com)
Wed, 22 Jan 1997 09:38:32 -0800 (PST)

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A reply to Chai-on's ope-l 4027. I thank him for answering my question.

I agree with his answer:

"Before and after exchange. Value is determined IN the process of production
independently of the producers' decision. To sell the products successfully,
the capitalists have developed the accounting skill of production costs.
Depreciation is determined objectively, but is known to the capitalists after
several years (after the duration),"

although I'm not entirely clear about what Chai-on means by "objectively."

But the fact that we agree makes me more confused, because I still don't
understand Chai-on's objection to my interpretation. In an earlier post, he

"Accounting is of course to be different from the determination of value. But
you appear to have confused the two things. Value is determined ex ante but is
revealed ex post. So, we have to account the values to avoid a loss. In your
equation, (Surplus-Value - "Profit") = ("Depreciation" - Value Transferred),
what we account ex ante is the "depreciation" not the "transfer of value" (it
was a conjecture of the latter). The latter can only be accounted ex post
because the VALUE as a LAW is not conspicous from the outset. And it is a law
not because it follows a physical, technological life but because it should
obey an economic life determined by the capitalist competition. The
technological (physical) life has thus nothing to do with the determination of
value nor with the accounting."

I do not understand "what we account ex ante." If ex ante is "before
exchange" here, who is the "we" that is "accounting" before exchange?

In Marx's theory, no element of value can ever be determined by competition.
Competition merely enforces and expresses the inner laws of capital; it does
not create them.

You agree that accounting is different from value determination. Then you
discuss --- as accounting categories --- both value transfer and what
businesses record as "depreciation." Clearly the latter is an accounting
category, but, just as clearly, value transfer is a category of value
*determination*, not accounting. The value transferred is the "c" in c+v+s.
PRECISELY because value is created in production, and the magnitude of value
is determined in production, before sale of the product, it is then the case
that the transfer of value takes place before sale and the magnitude of the
value transferred is determined before sale. (I'm speaking here of Marx's
theory, of course.)

The argument given for the conclusion in the last sentence, "The technological
(physical) life has thus nothing to do with the determination of value nor
with the accounting" is not clear to me at all. My key point is this: if the
whole of a machine's price were to be transferred to the value of the product
even though the machine was not used for its whole technological (physical)
life, then moral depreciation would not be a problem for capital. If your
machine could last for 10 years, but its price falls in half in one year (due
to a cheaper machine coming along) or its price falls to zero (due to a BETTER
machine coming along) after two years, so what? What would you lose?
Nothing, if you sold your stuff at its value. The machine would just transfer
value faster than if it were used for 10 years. There would never be losses
due to cheaper or BETTER machines coming along. Capital would never be driven
to use up the machines as quickly as possible. It would not be driven to
intensify the exploitation of working people accordingly. There would be no
crises of devaluation --- how much it would cost to REproduce the machines
wouldn't matter at all.

All this contradicts Marx's theory. Therefore, if his theory is to be
understood in a consistent manner, the technological life of a machine does
affect value transfer: if a machine is used for less than its technological
life, it transfers less than its own price to the value of the product (unless
it is used at above-normal intensity).

Andrew Kliman