In most treatments of the transformation problem the
starting point is either a set of values or a set
of physical quantities. The values most often used
are determined by the embodied labor times. To derive
prices of production from the given, several additonal
assumptions are made. Here let's focus on one, not often
acknowledged -- the economic lifetime of fixed capital.
That is, no matter what we use to perform the
transformation -- values or physical quantities -- we
are forced to assume that fixed capital has some given
lifetime. Indeed, this is the case even when we include
only the depreciated portion of fixed capital as the
transformation is carried out.
On what basis do we impute economic lifetimes to
the quantities of fixed capital involved? Further,
do we need to know the prices of production themselves
in order to determine the prices of production? This,
of course, would mean that deriving prices of production
from values based upon embodied labor times or from a
given set of use values is impossible.
The simplest way to resolve this dilema is to assert that
the economic lifetime of fixed capital is given by its
physical properties. In other words, fixed capital is
fully depreciated only when it is completely useless.
That fixed capital can become obsolete because of the
introduction of better techniques must be ignored.
Marx's concept of moral depreciation must be set aside
as the derivation of prices of production takes priority.
Do we pay too high a price for prices?
John