[OPE-L:1289] Cheaper Machines

John R. Ernst (ernst@pipeline.com)
Sun, 3 Mar 1996 17:30:13 -0800

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Some further thoughts on "moral depreciation."

1.
During our discussions concerning moral depreciation,
we focused primarily on "cheaper" machines. I do think
it is worth noting that if no "better" machine comes along
the cheapening of a machine by itself will NEVER force
the old machine to retire. That is, the economic life of the
machine would be equal to its physical life should the only
difference in machines be limited to price or value. This
is not to say that no one is better off with a more expensive
machine.

2.
Paul Cockshott pointed out that with the cheapening of machinery
capitalists may be forced to revalue their assets. He is, of
course, correct. But we should note that if the machine is
fully depreciated when the new, cheaper machine is produced
this revaluation may be unnecessary.

3.
If a fully depreciated machine is still in service, cheaper
machines of the same type would have no effect. Indeed,
the cheaper machine itself may be devalued should the
price of the commodity produced by the machine fall.

4.
Given 1-3, it would seem that the driving force behind
"moral depreciation" is not cheaper machines, but "better
machines."