Depreciated Depreciation Methods? Alternatives to Sraffa’s Take on Fixed Capital

Dados Bibliográficos

ID12229366
AutoresJan Keil (0000-0002-6255-1890, University of the West Indies System, autor correspondente)
Ano2016
Volume28
Fascículo4
Páginas566-589
Data de publicação2016-09-06
Peer ReviewedSim
Open AccessNão
TipoARTICLE
PeriódicoReview of Political Economy (JOURNAL)
Identificadores do periódicoISSN: 0953-8259 • E-ISSN: 1465-3982
EditoraTaylor & Francis (PUBLISHER • GB)
DOI10.1080/09538259.2016.1222786
OpenAlexW2513055111
IdiomaEN
Citações recebidas1
Referências citadas16

This article discusses the treatment of fixed capital in the classical theory of price. Sraffa uses non-linear depreciation of ‘physical’ capital that equalizes all annual profit rates individually, but violates the proportionality of monetary machine value reduction and physical use-up on an annual basis. One alternative is to apply simple linear depreciation that has equal annual fixed capital costs. The key for consistency is that the internal rate of return on fixed capital investments throughout the fixed asset lifetime must be equated with the normal profit rate. A second alternative is to use ‘monetary’ capital, where the ‘correct’ amortization charges depend on the ability of the accumulated depreciation fund to earn interest. Among these valid alternative methods are the original proposals of Marx and Torrens, which were dismissed falsely and prematurely by Neo-Ricardian economists. These alternatives are shown here to imply fundamentally different prices of production. For all methods, the formulas for deriving amortization charges and fixed capital prices of all vintages are derived. The article also illustrates how the system of Sraffian price equations can be modified to incorporate these methods

Amortization · Capital (architecture · Capital formation · Consumption of fixed capital · Debt · Depreciation (economics · Econometrics · Economics · Financial capital · Fixed asset · Fixed capital · Fixed investment · Macroeconomics · Microeconomics · Monetary economics · Production (economics · Profit (economics · Economic Theory and Institutions · Economic Theory and Policy · Political Economy and Marxism

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