[OPE-L:7199] [OPE-L:718] Re: Market Values and Market Prices

John R. Ernst (ernst@PIPELINE.COM)
Sun, 21 Mar 1999 19:47:54

Re: Rakesh's OPE-L 713

Rakesh wrote:

John, one of the problems I had with the passage is Marx's argument that a
slower depreciation of machinery implies that "the fixed constant capital
are increased as against the variable." I tried to figure out how he could
come to this apparent conclusion.

John writes: I'm not sure I see the problem. If fixed capital lasts
longer, then the annual depreciation charge would drop and hence there
would be more fixed capital in each period.

John had asked:

>1. What is "antiquated" fixed capital?

Rakesh wrote:

Antiquated fixed capital would a machine the continuing use of which to
produce a given level of output requires more labor than the labor required
to construct and operate a new machine to produce the same level of output.

John writes: Are we talking about the output that can be produced in
a year or in a turnover or in a ???

For now, let me assume that in each year there is one turnover and
that the lifetime of the machines in question is greater than a year.
I'll also assume that in using the "antiquated" machine the capitalist
would have a rate of profit of 10% when the antiquated machine is
fully depreciated. If the capitalist can get a rate of return greater
than 10%, he'll attempt to do so. If the antiquated machine is not
fully depreciated, the capitalist would have to take into account
the "write off" in making the decision to scrap the old and to
introduce the new. But if the price level is such that the rate of
profit is at most 10% when the older machine is fully depreciated,
then clearly its use means a rate of return of less than 10%. The
amount that must be written off in this case may be so large that
the capitalist continues to use the old machine.

Rakesh wrote:

The new machine may not be assimilated due to an insufficiency of surplus
value or due to fact that since capital only pays for labor power, not
direct labor time as a whole, the saving in direct labor enabled by the new
machine is not sufficiently profitable for capital to assimilate.

This is part of Marx's theory of how capitalism comes to fetter the
development of the productive forces.

John writes:
Here I definitely think we need to know how many turnovers are in

John wrote:

>3. To argue against Brenner, you introduce the notion of an increase in the
>labor force in Dept. 1 and a consequent increase in the mass of surplus
>But does not the very process Brenner suggests shorten the lifetime of fixed
>capital? Moral depreciation, in his scenario, increases. With that
>increase there is the possibility that the introduction of new techniques
>becomes foolhardy in the eyes of the capitalist.

Rakesh wrote:

I don't think it is that simple. To the loss from the moral depreciation or
technogical obsolence of old machines, you must add the surplus value
gained from the addition of labor in dept to produce those new machines
with the means of production already available there. Marx seems to derive
falling profitability more from the inability of dept I to continue to
absorb labor due to the slower turnover of fixed capital than from the
losses on old machines once new ones are introduced. Again, I think this
passage raises several problems

John writes:
Where do you find this in Marx? I'd like to explore some of this a
bit more.