[OPE-L:5007] Re: RRI and The Rate of Profit

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Wed, 14 May 1997 04:37:42 -0700 (PDT)

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At 10:48 97-05-13 -0700, John wrote:

>In (A), you seem to have jumped ahead of me. That is, are you
>saying that the rate of profit does take into account expected
>losses and gains in capital value?
>

Well, in calculating the sum of discounted expectations of future revenues
and costs, we have to assume a given general interest rate (which I assume
to be equal with the general arte of profit). This terminology is
neo-classical. The concept of the capital gain and losses are originally
from the neo-classical. Duncan's revaluation would have to accommodate the
future market prices of the currently employed machines. If so, his concept
of capital gains and losses should be termed differently so as not to be
confused with the neo-classical terms. I should call them the revaluation
or devaluation.

>But is not at least some of this loss of capital value, no matter how
>defined, expected? If so, should it not be included in considering
>the rate of profit?
>
>Put simply, if a machine is to be depreciated over a certain amount
>of time, how is that time determined? For Marx, the determination is
>made not solely upon the basis of physical wear and tear but also upon
>the degree to which it undergoes moral depreciation. How then can
>a rate of profit be computed without reference to the expected time
>a machine will last? In turn, how can we refer to the lifetime
>of the machine without reference to moral depreciation?
>

Yes, I agree with you. The moral depreciation would have to be re-adjusted
every period so as to accommodate new situations. Yet, as far as the
transformation of value into PrPr is concerned, we need not take long
periods into account. The transformation is carried out in one period.
On what occasion do you think the RRI matters, by the way?

In solidarity,

Chai-on