Re: [OPE -L] Historical Costs

Michael Perelman (
Fri, 23 Jan 1998 09:58:53 -0800

John R. Ernst wrote:

> One of the difficulties in following the discussion
> between Andrew and Fred is my lack of understanding
> of Marx's notion of "moral depreciation." If we
> define the total depreciation between any two periods
> as the difference in the present values of the fixed
> capital, I do think we can gain greater clarity.
> Further, while this allows us to look at the rate of
> profit, it will also enable us to consider what the
> capitalists of today use to measure profitability --
> the rate of return.
> _____________________

John's explanation is somewhat different than what I read in Marx,
although it might come to the same thing. For Marx, I understand moral
depreciation to be the difference between the historical cost and the
reproduction cost of an equivalent unit of capital.

Present value can change for a number of reasons other than technology.

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321 E-Mail