[OPE-L:4045] RE: Depreciation and the Rate of Profit

andrew kliman (Andrew_Kliman@msn.com)
Fri, 24 Jan 1997 08:05:30 -0800 (PST)

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A reply to John's ope-l 4044.

I agree, of course, that reserve funds (to replace depreciated machines, etc.)
can be invested, in the existing line of business, in some financial
instrument, etc. If this happens (as it usually does), then the rate of
profit calculation would need to be modified accordingly. How exactly to
modify it depends on the particular rate of profit one wants to compute. For
instance, looking at a firm's overall rate of return per annum, if the reserve
funds were invested in a bond, I'd add the interest to the surplus-value from
production, but keep the denominator the same.

What I tried to do was simply to give an example of the calculation under the
simplest possible circumstances.

I do not think anything of theoretical significance is at stake here.

Andrew Kliman