[OPE-L:5186] capacity utilization and the transfer and depreciation of the value of means of production

["Gerald_A_Levy" <Gerald_A_Levy@xxxxxxxxxxxxx>]

I want to expand on [5178] by introducing a related

question: capacity utilization.

 

I. In discussing the table below, I said nothing about

capacity utilization. However, I did suggest that value

transferred by the means of production can be seen

as a non-linear process. However, in reconsidering

the table below, I think that (although non-linear

explanations are possible) one could get these

numbers through a linear relationship between

*working hours* (i.e. the actual production time

that the means of production are employed) and

*value transferred* by the means of production.

 

This was my original table:

 

(Table 2)

 

Year                       Transfer of Value

------                        ------------------------

1                                  10

2                                  20

3                                  30

4                                  10

5                                  30

Total:                           100

 

 

Now let's modify it as follows:

 

(Table 2A)

 

Year Value Transferred Shifts/day Working hrs/day

 ----          --------                ------             ---------

1               10                     1                   8

2               20                     2                  16

3               30                     3                  24

4               10                     1                   8

 

In the above table, the working week was assumed

to be 5 days/week. It can be very easily shown

that if one extends the working week from 5 to 6

or 7 days/week then we will observe the same

effect: i.e. as the workweek is extended the value

transfer from the means of production is hastened.

 

II. The above provides a powerful incentive for

capitalists to increase capacity utilization. It

also provides an additional incentive to increase

the length of the working day and the length of

the workweek for workers.

 

While capacity utilization is not often discussed

by Marxists and full capacity is ordinarily assumed

in many models and illustrations, it is important

to note that in reality there is hardly ever full

utilization of existing constant fixed capital capacity.

 

The implication of the above could be, then, that if

there is underutilization of fixed capital capacity

then the transfer of value of the means of  production

to output is slower than what it would have been

with full capacity.  Indeed, one could easily show

that, assuming a fixed "lifetime" for constant fixed

capital, if there is severe underutilization of capacity

then the value transferred by the means of production

will be *less than* the value of the means of

production. Thus, value can be "lost" if the means

of production are underutilized to the extent that the

fixed capital "dies" (of old age) before the full value of

that fixed capital has been transferred to output.

In the aggregate, this would suggest a systematic

loss of value.

 

III. We have not considered how the "moral

depreciation" of constant fixed capital enters into

this process.  Technological change in the production

of means of production can render older means of

production prematurely obsolete. I.e. there is a

devaluation of the older fixed capital caused by

moral depreciation. Yet, as we have discussed

before (and has John E has emphasized) capitalists

-- at least to some degree -- expect moral

depreciation rather than assuming that their constant

fixed capital will die a "natural death" due to physical

depreciation.

 

The clear implication of this is that moral depreciation

provides additional incentive to increase capacity

utilization and thereby to ensure that as little as

possible of the value of their means of production

are "lost" due to technical change. In other words,

it provides additional incentive to put the means

of production "to work" in the production process

immediately after purchase and to use that fixed

capital intensively especially in the early years

of its "life".

 

 

In solidarity, Jerry

 

PS: In reply to Steve K's [5183-4] -- I view use-value

as quality, exchange-value as quantity, and value

as a unity of quality and quantity (this is why I

suggested at one point that use-value stands in

opposition to exchange-value -- a point Chris A

and I discussed last year).

 

Thus, my perspective is that use-value is not

quantitative, BUT I am willing to listen to your

arguments as to why:

 

a) you think this is a logical extension of Marx's

philosophy; and

 

b) why you think it is a superior way of

conceptualizing use-value.

 

I.e. I want to hear the arguments themselves rather

than the assertions.