[OPE-L:6521] Re: Re: Obsolesence

Allin Cottrell (cottrell@ricardo.ecn.wfu.edu)
Tue, 28 Apr 1998 00:30:48 -0400 (EDT)

Continuing the discussion with John...

> John comments (on Paul's observations):
> I must say I am surprised. A ratio of constant circulating
> capital to variable capital of 6:1 did not seem high to me.
> Yet, I'd be the first to admit you've seen more data
> than I. Let's say the ratio is 1:1. The question then becomes
> what is the price of the output.

My recollection of the data that Paul and I have worked with
tallies with his. That's the main reason why I had reservations
about the example (where the PV of the fully depreciated capital
stock went negative while operating profit was still quite
substantial). Take the 1:1 ratio above, and suppose also that
the rate of surplus value is 100%. Then, if I'm understanding
you right, the maximal rate of profit when the fixed capital is
all paid off would be 50% -- in which case it becomes
implausible than any new technique could make the continued
operation of the old one unprofitable. IMO, the more likely
fates to overtake the old means of production are (a) that they
simple become worn out, or (b) that new technology changes the
nature of the _product_ to such an extent that the stuff you can
make with the old plant is no longer a saleable use value (e.g.
i286 processor chips -- it doesn't matter how cheap they are,
nobody wants them).

> I would suggest that the two [i.e. negative PV of old means of
> production and positive operating profit? AC] are more likely
> to coexist in an age where there is a conscious effort to
> maintain prices both on the micro and macro levels. Drops in
> the output price in my example would provide a faster route to
> negative operating profits.

I'm not quite sure what you're envisaging, with regard to the
divergence of input and output prices. In an interdendent
economy, of course, inputs are also outputs and vice versa. Are
you thinking of the price of manufactured goods falling relative
to that of raw materials? If there were underlying economic
forces making for such a change in relative prices, how would
"conscious effort" serve to prevent it?