Given the amount of time those of us interested
in Marx spend on the rate of profit, you'd think
we would know about how profits and depreciation
are calculated when fixed capital is present. I
admit it has been a problem for me. Consider the
table below. It shows how a capitalist might
recover a fixed investment of 400 over 4 periods
using amortization. Given the total amount
recovered each period, shown in column 4, must
be equal; I am puzzled.
a. How do methods of depreciation like straight line,
ddb, etc. fit into the picture?
b. How is this way of computing the rate of profit
compatible with empirical work, the transformation
problem, etc.?
Rounded to nearest whole number.
r=20%
(1) (2) (3) (4)
Invest Dep. Profit Sum
at Rec. of
Start of at end (2)+(3)
Period of
Period
1 400 75 80 155
2 325 89 65 155
3 236 107 47 155
4 129 129 26 155
totals 400 218
John