John E [#4093] Clearly the machine depreciates by aging during its "off" hours or the other 12 hours. I think you're saying that that value is simply lost and not transferred. Yes? If so, how do we figure this loss as we compute the rate of profit? Why "clearly"? This sounds like petitio principi to me. John [#4097] At first, it seems obvious that if a machine *never* produces output it never transfers value. But let's consider this a bit. For example, let's say to make sure he can fulfill orders in a timely fashion a capitalist buys 5 machines even though he only needs 4 to produce the output he thinks he can sell. The 5th is there --"just in case." Now if he never uses that 5th machine, does its value get transferred to the value of the output that the other 4 produce? I'd say yes. I'm not sure what you would say. > Surely it's a question of what is socially necessary? Suppose other capitalists find it expedient to buy 10 and use 9 -- or alternatively that they are still accustomed to buying 10 and using 7? John [#4097] Here maybe we can jump ahead a bit so that I can better understand how you deal with "losses" that occur when not all the value is transferred from the means of production to the output during the lifetime of fixed capital. Let's call the loss, x. Does "x" enter into your calculation for the rate of profit? If so, how? Let me say why I think this gets to the matter rather quickly. If a capitalist buys a machine for $100 to produce an output worth $150 in each of 2 years, then, assuming all other costs are negligible, given that $50 of the machine's value is transferred in the 1st year, he would expect a rate of profit of (150-50)/100. The surplus value would clearly be $100 --- the term in the numerator. However, if the machine is rendered useless at the end of 1st year due to moral depreciation, then the untransferred value would be lost to him. His *real* rate of profit would be (150-50-50)/100 or only 50/100. However, had we assumed that the moral depreciation of $50 is transferred to the output, we would get the same result. That is, (150-50-50)/100 where one of "50's" represents real depreciation and the other moral depreciation. The same 50 is deducted from the output no matter how we compute the transfer of value. Thus, I suppose the real question is -- is Marx's falling rate of profit computed before or after allowances for moral depreciation. > > I think the real question is what rate of profit the entrepreneur had been hoping to achive over what period -- in other words, it matters whether the moral depreciation was unexpected (hence unplanned for) or not, and hence what the actual balance sheet looks like compared to the expected balance sheet at the end of year 1. In John's example it is clearly unplanned by construction: the entrepreneur had planned to make 100 per cent profit for each of two years; they do actually do this for one year, but end up with total assets of ($150 cash + $0 machine) at the end of it, instead of ($150 + $50 machine) as planned. If they borrowed the original $100 on overdraft at 50 per cent interest, they are (just about) in the clear -- better luck next time. If they instead sold $100 of stock to investors who could have got 75 per cent in a different project, the entrepreneur is in a bind, as the investors now only have $150 where they could have had $175. In this case the entrepreneur should probably not look forward to any "next time". On the other hand, if the entrepreneur *had* anticipated the moral depreciation but went ahead anyway (because, for example, the general rate of profit was only 25 per cent) the stockholders should be perfectly happy. Julian
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