Re: [OPE-L] Re: Historical Costs

Duncan K. Foley (
Fri, 6 Feb 1998 22:58:48 -0500

A comment on John's [OPE-L] Re: Historical Costs:

In a discussion of the unreliability of the realized profit rate calculated
on the basis of some estimate of depreciation as an indicator of future
profitability, John remarks:

>A capitalist who suffers huge losses due
>to moral depreciation may well be told that his rate of profit is
>rising as he suffers bankruptcy. Moral depreciation disappears in
>this type of ex post analysis.
It seems to me that this is precisely what happens over and over again in
the course of capital accumulation. Sectors often become "hot" areas for
profitable new investment precisely when the historical costs have been
liquidated through bankruptcy. Isn't this also the theme of Marx's view
that crises have a reproductive role to play?


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947