> B) Moral depreciation example
> Let us suppose a case in which one of the capitals, in the
> second period, has depreciated completely its old fixed
> capital. Then, this capital introduces another fixed
> capital which is cheaper (500f the older). The
> productivity of this machine is, however, the same. The
> modification involves only the price of the machine. So, we
> have a branch with an heterogeneous stock of fixed capital,
> in terms of its cost.
I will not scrap machines because new machines cost less than my
historical costs. Historical costs are irrelevant. If the machine has
phyically worn out, I may buy a new machine, but the value of the old
machine must reflect the value of the replacement machines.
I have said this before [either I am wrong or nobody cares] but the
notion that value is necessarily a fixed quantum may be true in
equilibrium or near equilibrium conditions, but not otherwise.
California State University
Chico, CA 95929