To Michael (Re:4227) + Jerry (Re: 4228),
OK. I get the gist of what each of you are saying and
I honestly think we are avoiding the issue here. Let me
say why.
1. To a large extent this thread started by looking at Marx's
letter to Engel's dated August 24, 1867 in which Marx expresses
his curiosity about depreciation charges, "sinking funds", and
accumulation funds. He asks Engels what he does with the returns
"...you receive for fixed capital before it has to be replaced."
In this letter, I would not say Marx was on a level of abstraction
beyond that of Vols II and III of CAPITAL.
2. As I stated in a previous post, Engels tells us that when he
began his editing of Vol. III, he was left with only a blank
page for Chapter 4 entitled "The Effect of Turnover on the Rate
of Profit." Engels wrote the entire chapter. His effort sets
aside any treatment of the turnover of fixed capital and its
effect on the rate of profit. For me, this makes the chapter
incomplete. Put simply, we have few answers when it comes to
computing the rate of profit, given that fixed capital is
depreciating.
3. Marx himself was curious about depreciation after the publication
of Vol. I and after he wrote some of chapters of Vol III which are
the centers of controversies today -- Chapter 9 and Chapters 12-15.
My suggestion is that with a better understanding of "the effect
of turnover on the rate of profit", the content of those chapters
and the formulas used in them may have been altered by Marx himself.
4. Note I am not exploring the manner in which tax codes and the like
may affect the amount of depreciation charges. Nor am I looking at
the interests of the managers of the firm versus those of the owners
of its stock. Further, I am willing to set aside issues of interest
rate determination, internal versus external financing, etc. I am
simply asking what is the rate of profit for a given investment in
fixed capital assuming the gross returns to that investment are known
for the number of periods that make up the life of that fixed capital.
That's it.
5. Many moons ago, Duncan suggested I look at a 10 year investment
by using "present values." Andrew consistently uses the formula
s/C to compute the rate of profit as he uses straight line
methods to depreciate the fixed capital. I have merely pointed
out that these two methods seem to give two different answers to the
question, "What is the rate of profit?" Or, again, "What is 'the
effect of turnover on the rate of profit'?"
6. Put simply, the level of abstraction on which I feel the question
can and should be answered is that of Chapter 4 of Vol. III. Marx's
blank page seems to present us with a bit of work to do.
John