a capitalist might figure that so and so > much amount of fixed capital depreciates into so and > so many commodities over say five years and then the > piece of fixed capital is replaced. But what happens > when the technological advance is so rapid that the > old calculation is off by years?
Normally, depreciation schedules are fixed by law for taxation purposes, and the tax regime changes over time, but depreciation can be modified by the government to provide investment incentives, by the market valuation of fixed assets (discrepancy between historic cost, replacement cost and market value of assets), by physical circumstances affecting the deterioriation or conservation of asset values, by insurance costs, by the price inflation rate, and by creative accounting. Often depreciation write-offs will hide undistributed profits, i.e. they do not truly reflect the actual consumption of fixed capital, i.e. the transfer of the value of fixed capital to output produced. That is to say, depreciation schedules implemented are crucial for the amount of distributed and undistributed profits. The same applies here as applies to the valuation of inventories - by valuing inventories differently (because of market price fluctuations), profit figures can be boosted or lowered. In national accounts, the consumption of fixed capital often contains insurance premiums, which are regarded as part of the costs of owning fixed assets. For Marx, however, insurance premiums are faux frais of production (incidental expenses). Jurriaan
