 
|
 |
|
The
only essential distinction within his capital that impresses itself upon
the capitalist is that of fixed and circulating capital
Engels
in
Captal IIII: 75
|
The individual process
of production
|
fixed and circulating
capital
choice of 'best
technique', life time of K |
Technical progress:
increase of productivity
|
Fall of prices >
return on existing techniques |
Return on new capital:
rate of return on circulating capital
|
Obsolescence: r
falls below the avg profit rate
(assumed
avg profit rate > Keynes)
Substitution of
old technique
("bygones
are forever bygones..." Marshall) |
Observe
difference with Ricardian marginalism/ equilibrium (< never obtains)
Bibliography.
Salter,
W E G (1960) Productivity and technical change CUP, Cambridge
Deák
(1985) Chap 5: "Fixed capital and the transformation of the production
process"
(Caption
of Figure cont'd) >> in diagram (a) is
the contribution of fixed capital in total return R). |
Figure
5.1- Obsolescence of the individual process of production.- As the
market price falls with the increase in productivity of labour Ot,
so falls the return R
of an individual process of production (a, top), and consequently also
the rate of return r on
its circulating capital (b, bottom). When the latter falls below the assumed
rate of profit p,.the
technique becomes obsolete and must be substituted. At this stage, the
corresponding fixed capital is wholly devalorized (darker area > |
