Jerry
-----
If the gain in productivity is significant enough, then individual
capitalists *must* purchase new elements of constant fixed capital even
if it means that they have to take a huge loss on capital invested in
older technologies. "Older", in theory, could mean yesterday if they
purchased new means of production yesterday which have been
morally-depreciated by a huge margin between yesterday and today. Of
course, this would be a highly exceptional circumstance.
Paul
----
Substitute last year and it is not so exceptional. In the
lead industry of today - semi-conductor fabrication, the generations
of new equipment follow one another with such rapidity that the
cost of constant capital has been rising at 280er annum for
a couple of decades.
Each new advance in feature resolution effectively makes obsolete
the previous generation of wafer fabrication equipment. Using the
previous generation of equipment it is simply not possible to
be competitive in production. If AMD does not invest in fablines
capbable of making 4 million transitor chips, it is forced out
of the PC market place by the latest Intel chips.
There is an excellent article in the latest Scientific American
analysing the technology and economics of this. It shows that
the price of a semiconductor plant has risen from a few million
dollars to 1.5 billion over the last 20 years.
It also notes that this induces a cycle in the profit rate
of firms like Intel, lasting about 4 to 5 years, with low profits
in the years new plant are opened followed by 3 or 4 years recovery
before the next cycle. The authors note that with each cycle
the rate of return on investment is lower than in the previous.
Sounds familiar, does it not!