[OPE-L:4039] Re: Depreciation Questions

Ian Hun (Ian.Hunt@flinders.edu.au)
Wed, 22 Jan 1997 17:08:35 -0800 (PST)

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not explicitly, although since both articles are looking at
technical choice, one sense of 'moral depreciation' is implicit in the
treatments. This sense of moral depreciation (appreciation) is just that
with new technologies, the values of existing fixed capital can change
downwards or upwards in the new system. When the value of an old machine is
lower in the new system than it was in the old, we can speak of 'moral

In both papers, the lifetime of a machine is never determined purely by
physical wear and tear, ie., there is no such thing as the purely technical
lifetime of a machine. Physical wear and tear determines maintenance costs
and productivity of an old machine which in turn determine whether it would
be profitable to scrap the old machine or retain it. The age of a machine
is something chosen by the capitalist as is its make etc. These choices in
real life are made according to accounting convention but we can
retrospectively model whether those choices maximized profits. If the
choice to scrap a machine (or hang on to it beyond its maximally profitable
lifetime) reduces its value from what it would have been, this would be
another element of 'moral depreciation', I think.