[OPE-L:4193] Re: depreciation and financing

aramos@aramos.b (aramos@aramos.bo)
Wed, 12 Feb 1997 15:16:50 -0800 (PST)

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In ope-l 4177, Jerry wrote:

> Alejandro R (btw, do you prefer to be called Ale?)...

Maybe "Ale" could save some bytes!!

> 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)?

I think the interest is a deduction of s, both at individual and
social level.

> 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 cant 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?

Certainly we can abstract credit. An alternative way for
calculating the real profit rate would be to consider money flows with
a constant monetary expression of labor, in such a way that they
represent the actual amounts of labor time that fixed capital
contained when it was advanced. This is Marx's assumption
at the beginning of Vol. III: "Firstly, the *value of money**. This
we can take as constant throughout." (Penguin, III, p. 142).
This means to work out a profit rate in labor-time terms,
although expressed "externally" by money.

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

Well, the issue is not only the calculation of the "real rate of
profit" but also of the nominal rate of profit and the analysis of
their mutual relationship.

The hypothesis is that it is the "real rate of profit" what
ultimately concerns to capitalists, not a nominal rate of profit. The
real rate of profit is given by labor time magnitudes (expressed by
a money with a constant MEL).

Alejandro Ramos M.