[OPE-L:4177] Re: depreciation and financing

Gerald Lev (glevy@pratt.edu)
Sun, 9 Feb 1997 08:07:56 -0800 (PST)

[ show plain text ]

Alejandro R (btw, do you prefer to be called Ale?) wrote in [OPE-L:4176]:

> We can imagine that the "forecasted depreciation" is an
> "amount of payments" that Mr Wolf owes to banker and, by
> doing so, it is clearer that the profit rate is calculated
> taking into account the money effectively advanced in 1995. <snip>
> So, IMO, what we are discussing is basically how to
> calculate the real rate of profit, not merely the
> "depreciation". Of course we can consider the matter by
> means of "internal capital" but the recourse to "credit"
> illustrates better what is the amount that we have to put
> in the denominator of the profit rate on account of fixed
> capital.


Firstly: Are you including the "finance charge" (the magnitude of
interest paid by the capitalist to the bank) in the denominator of the
profit rate (as part of c) or in the numerator (as a deduction from s)?

Secondly, I agree that the inclusion of credit "illustrates better" the
actual process, i.e. it is a more concrete representation of the process.
Yet, to repeat myself, why can't the subject of depreciation first be
analyzed without reference to credit by assuming that the money-capital
required to finance constant fixed capital is generated "internally" with
the money-value received by capitalists after realization?

Thirdly, _why_ is the calculation of the magnitude of the "real rate of
profit" _the_ issue (as you seem to infer)?

In solidarity, Jerry