Re: [OPE-L] how industry-specific are most capital goods?

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Apr 19 2007 - 09:01:31 EDT

> If you don't mind me intervening, I might have some suggestions.

Hi Martin:

Of course I don't mind: that's what we're here for.

> I think the answer to the main question (about flexibility) is "it
> depends".

I agree.

>  As regards computers they are now completely integrated to all of
> industry (except for a few places in the world) this is true, but when we
> talk about capital goods, they constitute an indefinitely small part of
> the total value of the capital stock. Perhaps the equivalent of a few days
> paycheck for one employee.

On what basis did you come to that conclusion?

> I think that somebody who would be interested in researching this
> seriously would actually look at fixed capital assets sold (in one branch,
> or year), and follow the stream, that is, try to find out where it ends
> up. You get some methodological problems (how do you define
> alternative use?)  but most likely something will come out of it.

I agree: it's a topic which is worthy of further empirical studies.  There
are many studies which have been conducted in industrial organization
and accounting and management literature, although those studies tend to
define terms differently and are tend to look at somewhat different but
related issues.

There are important theoretical issues from a Marxian perspective concerning
how industry-specific most constant capital goods are, including:

o  the extent to which constant fixed capital is mobile or immobile and
hencethe extent to which it constitutes barriers to exit and can disrupt
the formation of a general rate of profit and lead instead to persistent
variations in rates of profit by branches of production and sectors.

o how changes in the re-sale value of means of production affects the
depreciation methods and schedules employed by capitalist firms.

o  with computerization,  there is the likelihood of a further "disconnect"
between the technical composition of capital (TCC) and the value composition
of capital (VCC).  That is,  computers make possible miniaturization where
an increasing value of constant capital can be represented by a decreasing
physical mass of means of production.

In solidarity, Jerry

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