Duncan,
Welcome back. Below are a few comments on your
depreciation post (OPE-L 4059).
Referring to the recent discussion on the list, Duncan wrote:
(snip)
3. This discussion is a good illustration of the slipperiness and ambiguity
of the concepts of the "total price" and "total value" produced in an
economy in a period, as opposed to the value added, which can be defined
unambiguously and associated unambiguously with the living labor expended
in the period. The problem is that "total price" and "total value", under
realistic conditions of changing technology and prices inherently have an
expectational or subjective element in them. Of course, once an investment
has completely run its course, it is possible ex post to calculate its rate
of return, but there's no reason to think that capitalist competition can
equalize these ex post profit rates in the face of the inevitable
uncertainty of human life. This is one strong argument for defining the
"monetary expression of labor" as the ratio of value added to living labor,
which is unambiguous and operational no matter what is happening to prices
and technology, and gives a transparent system of accounts in which one can
discuss the windfall gains and losses from price changes.
John comments:
I'm not sure how using the "monetary expression of labor" (MEL) will
help us as we attempt to sort things out. With the introduction of
"better" machines in a given sector, we would see those working with
the improved machines adding more value than others working with
unimproved machines. Thus the ratio of value added to living labor or
the MEL would change if we count this more productive labor in the
same way as all other labor in the sector. Given this and assuming
our efforts involve looking at matters before and after the introduction
of the new technique, it's not clear how we would obtain "a transparent
system of accounts" since our construction of that system would be
based upon a changing MEL. Put simply, it is not clear to me how
using the MEL will help us eliminate ambiguity. On the other hand,
if, like Marx, we assume a constant MEL via assumptions about gold
and its value, we then lose what I think you mean by "operational."
I'm certain that there is no clear way to resolve this dilemma.
However, your suggestion concerning moral depreciation seems
worth pursuing. In that same post, you wrote:
"It seems to me that the clearest way to approach this is to
consider capitalists in a particular sector in an economy with
a given average rate of profit, and to consider simultaneously
the depreciation accounting and the competitive price formation."
Following this suggestion, we could perhaps eliminate some, if not
all, of the ambiguity surrounding the MEL. For me, this would
mean, at first, looking at matters without using the MEL, no matter
how defined.
John