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A reply to John's ope-l 4105.
John: It seems I gave you an inch and you took a bit more. That is, I did
not expect that you would see the anticipated falling output prices iff no new
machine were introduced."
Sorry. It never occurred to me that the new techniques were the cause of the
expected price drops.
John: "I find your table interesting. ... the value added in each period
falls by 100. ... Why are those output prices(values) falling?"
I think you answered it. Value added is falling, so total value is falling.
Price = value, by assumption, so prices are falling. Why is value added
falling? A simple increase in efficiency with the same machinery, maybe.
(What is Marx's term for this?)
John: "You seem to stick with straight-line depreciation no matter what.
Why? Recall that in Marx we really do not find a way to deal with the
separation of depreciation and profit. That is, he gives us no formula to
evaluate, either *a priori* or *ex post*, an investment in fixed capital."
Well, first, I happen to think Marx's view is clearly that the value
transferred is proportional to (i.e., is the price multiplied by the) average
loss of use-value of the machine. Remember the passage I quoted from Vol.
II?:
"Depreciation (apart from moral depreciation) is the portion of value that the
fixed capital gradually gives up to the product as it is used, according to
the average degree of its loss of use-value" (p. 250, Vintage).
"By wear and tear (moral depreciation excepted) is meant that part of value
which the fixed capital, on being used, gradually transmits to the product, in
proportion to its average loss of use-value" (p. 174, Progress).
(These are 2 translations of the same sentence.)
I don't know how average (degree of) loss of use-value can mean anything other
than straight-line depreciation in the sense of equal wear-and-tear
coefficients that sum to 1 over the physical life of the machine.
Second, I don't think it matters all that much. _Capital_ is not a manual of
economic planning or a managerial economics text. If one doesn't care to
predict the actual values on a period-by-period basis, and I don't see
anything that indicates that Marx cared, the pattern of value transfer isn't
important. What is important are the conceptual relations, stuff like (a) if
the machine isn't used, it loses all value; (b) if used throughout its
technological life, and if prices remain constant, all value is transferred;
and (c) if its use is truncated or if prices fall, only some value is
transferred.
John indicates that he'll deal with my "cases" in a forthcoming post. Also,
John, I'm willing to deal with the situation you had in mind, in which the
firms' anticipate new (better or cheaper) machines and anticipate that the
introduction of these machines will lead to reductions in the price of the
output. What would really help is if you could tell me the QUESTIONS you are
asking, trying to answer, and wishing that I answer by examining this
situation. I'm not sure what topic we're focused on anymore. It isn't clear
to me that or how this situation (or the one I had thought you were posing)
pertains to the issue of whether value transfer is determined by the economic
life or the technological life of the machine.
Andrew Kliman