[OPE-L:1637] Re: s/v and Depreciation

Subject: [OPE-L:1637] Re: s/v and Depreciation
From: John Ernst (ernst@pipeline.com)
Date: Fri Nov 05 1999 - 00:16:24 EST

Jerry wrote:

A short comment on John's [OPE-L:1632]:

> (2) As the rate of surplus value increases, the economic life time
> of fixed capital would tend to increase.

This would only be the case if the quality of the constant fixed capital
was homogeneous. If we stipulate instead that there is more than one
quality fixed capital, then there is therefore a choice of technique for
the capitalists in the affected branches of production.

Comment: OK. On what basis do capitalist choose techniques? Note
that when we look at the price or value of fixed capital, it is indeed
homogeneous. No one is arguing that the constant capital employed
is completely homogeneous.

Jerry continued:

Thus, *even if* the rate of surplus value increased it wouldn't
necessarily increase the economic lifetime of the existing stock
of fixed capital if the new technique rendered the older means
of production obsolete at a greater rate than the increase in
the rate of surplus value.

Comment: You now refer to a rate of obsolescence. How is it measured?
You then compare that rate to the rate of surplus value. I confess
you lost me.

Note as well that I referred to the tendency of the economic life
of fixed capital to increase as the rate of surplus value increases
In no way am I saying that with an increase in surplus value the
economic lifetime of existing fixed capital *necessarily* increases.

Jerry continued:

Further, it seems to me, that when we consider the age stratification
of constant fixed capital, we can't make the implicit heroic assumption
that the quality of different vintages of means of production remains

Comment: How do you assess the "quality of different vintages..."?
Who is making the assumption --heroic or not -- that the vantages
of means of production are constant?

Jerry continued:

Thus, we can't determine the effect of an increase in surplus value
on the economic lifetime of fixed capital unless we consider the
stratification *by quality* of the fixed capital and how this process
of moral depreciation affects the timing of new investment
in different types and vintages of means of production.

Comment: What is "the stratification *by quality*"? I thought
the point I made was somewhat obvious. To see it, consider that
which all fixed capital has in common -- price or cost. If
the basic goals of investing in fixed capital are to reduce overall
costs and to increase profitability, then a technique with higher s/v
ratio would be more difficult to displace than one with lower s/v ratio.

For a better technique to render an older technique obsolete, the return
on the older technique must be less than the better one even with a
complete write-off of the fixed capital used in the older technique. The
higher the rate of surplus value generated by the older technique, the
more difficult it is to displace.


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