[OPE-L:6285] Historical, real and current costs

Rakesh Bhandari (bhandari@phoenix.Princeton.EDU)
Mon, 16 Mar 1998 02:37:47 -0500 (EST)

I would like to speak to the historical cost debate in a roundabout way (I
will suggest that such costs can be recovered, despite rapid technological
progress, through the export of machinery to the dominated countries; and
this serves as a very powerful counter-tendency to falling profitability).

Reading over the chapter "Export of Machinery" in Babbage's On The Economy
of Machinery and Manufacture, I noted this rather interesting passage (one
of a great many):

Here Babbage is quoting from a committee report from the House of Commons:

"the exportation [of machinery] would often consist of those tools and
machines, which although, already superceded by new inventions, still
continue to be employed, from want of opportunity to get rid of them."

Writing about the contemporary export of machinery, Ranjit Sau writes:

"we have demonstrated the following three propositions: (i) the export of
obsolescent machinery to underdeveloped cournties raises its salvage value
and thus pushes up the factor price frontier in the advanced country; (ii)
thereby it expedites the rate of technological progress in the [advanced]
country; (iii) stimulates the launching of new products there, which goes
further to improve the rate of profit in the advanced country....[T]he
point to be understood here is that the trade in old or obsolete capital
goods generates *additional* benefits* in terms of national income the
advanced country itself by accelerating the rate of technological progress;
and that the additional benefit under reference is not reflected in the
selling price of those capital goods.... What we are saying is that in view
of the 'external economies' created by the transfer of technology and
capital goods from advanced coutnries to underdevleoped countries--in the
shape of accelerated technological progress in the the advanced countries
themselves--*the loan which finances the export should not be never
repayed, but should rather be written off after the borrowing
underdeveloped country pays only interest for a certain finite number of
years." *Economy, Class and Society* Hyderabad: Orient Longman, 1986: