Q001: What do you mean by the word "engendering"?
Q002: What do you mean by the phrase "the Capital-praxis"?
Q003: Is the "techno-depreciation" problem of capitalism related to "Old Money" versus "New Money" conflicts?
Q004: What does the term "Fixed Capital"? Does it mean capital that becomes "stopped" as opposed to capital that "keeps moving"? Does it mean "hoarded" capital? "Stagnant" capital?
Q005: What do "w.r.t." and "w/r/t" mean?
Q006: What do you mean here by phrases like "Obsolete Fixed Capital"?
Q007: Isn't even "Fixed" Capital still spendable?
Q008: What makes "obsolete" fixed capital "worthless"?
Q009: "Obsolete Fixed Capital" is not savable or investable anymore?
Q010: What is the nature of the accumulated value of the fixed capital before it becomes a "loss"?
Q011: What exactly is it that makes the new fixed capital plant and equipment — the new "vintage" of machinery that "obsoletes", or "techno-depreciates" earlier vintages — "more advanced" than those earlier vintages?
Q012: How do capitalists "retire" their "obsolete fixed capital"? Do they spend it? Do they [re-]invest it?
Q013: How is "Obsolete Fixed Capital" connected to "debt" and to "the compounding of debt-service payment expenses on fixed capital no longer in use"?
Q014: What do you mean by the phrase "loss of revenue coverage" with respect to "fixed capital plant and equipment" that was purchased via bank loan(s)?
Q015: This "techno-depreciation dynamic", and its consequences, are all very humanly and socially wasteful, are they not?
Q016: Is such rapid innovation — innovation that causes losses-inducing, profit-reducing techno-depreciation of capital plant and equipment, before that capital plant and equipment can be amortized, its investment-costs recovered, with a profit, by wear-and-tear, physical depreciation — is such rapid innovation still a factor today?
Q017: Are changes as rapid as earlier? Causing the same accelerated obsolescence of production equipment, as earlier, e.g., in the mid-to-late 1800s in U. S. and U.K. private capitalist industry?
Q018: If so, does this phenomenon contribute to the slow-down of new investment?
Q019: How does "New Money" handle this phenomenon of returns-destroying "techno-depreciation" of their manufacturing plant and equipment industrial capital-value?
Q020: Is "New Money" aware that it is entering into the same circumstances that plagues "Old Money"?
Q021: Is there any way that innovation (becoming More and Better in production) can not be so damaging to investment already risked?
"Creating"; "producing"; "causing".
Background: "gen" is an Ancient Greek root of many Modern English words,
originally, I think, from "gentes", meaning a consanguine tribal sub-group
that was a key institution of early tribal/chiefdom human societies, e.g., per Morgan.
In Plato, this root is encountered in the key word "genos". Modern cognates
include "genesis", "generation", "generalization",
"genes", etc.
"Praxis" is a key traditional term in Marxian theories, from the ancient
Greek word for "practice" as a body of cultural, traditional, standard, or necessary
practices, as distinguished from theory.
"Capital-praxis" means the totality of social practices necessary to create, maintain,
and advance the Capital value-relation as predominant social relation of production
of "Modern Society".
The Capital-value-relation includes its predecessor value-relations — the
Money[-exchange]-value relation as predecessor social relation of production, and
the Commodity[-exchange]-value relation as predecessor social relation of production,
both of which have become subsumed by the Capital-value-relation, as it was created
out of the Money-value-relation, from out of the Money-mediated "circulation" of
Commodities, and then, even more so, as it launched on its own as a new, successor
value-relation, subsuming all previous human-social value-relations, "social relations
of production" [cf. Marx], or "forms of social-human intercourse" [cf. Marx].
Yes. "Old Money" tends to be based upon potentially technologically obsolete, "sunk" capital investments in older fixed capital equipment, and therefore to be hostile to "upstart" "New Money", often based upon technological-innovation-embodying newer vintages of more recently constructed fixed capital equipment, from more recent capital investments, that tend to obliterate the fixed capital-value base of "Old Money".
Yes, though "fixed capital" usually refers more specifically to "capital plant and equipment" — production machinery, and its housings — used to produce commodities for sale with a prospective / expected positive profit return.
Both are short for "with respect to", and are often used in the context of mathematical writing.
"Obsolete Fixed Capital" = No longer "Compete-[t]ent" Fixed
Capital.
Refers to machinery vintages embodying an "inferior" technology — "inferior"
from a profitability-productivity point of view — "inferior" relative to other
extant competitor's machinery, so that the "obsolete" machinery is no longer profitable
to operate in the face of the competition from those competitor's employing the
"superior" technology-embodying mchinery.
Usually not!
Plant and Equipment investment is traditionally called "sunk"
investment, because it usually cannot be liquidated to recover its historical cost
minus physical "wear-and-tear" depreciation since installation.
"Net Realizable Value" [NRV] upon liquidation of "obsolete" fixed capital equipment is
often zero, or even negative, due to costs of disposition exceeding 'gross realizable
value', or usually, "pennies on the dollar" of its accounting, historical cost
minus physical depreciation value.
Example [Thought-Experiment]: If I am an "oil baron" with billions of dollars "tied
up" in oil refining plant and equipment, and you invent a compact fusion reactor
that runs on water, I'm going to have a hard time finding anybody to give me cash
for my therefore "obsolete" oil refineries, at anything like its historical cost
minus physical depreciation value, once fusion power reactor driven engines are
expected to be installed and thus placed in competition with oil-fueled engines
of all kinds.
Hence, oil refining capacity would head rapidly toward being "worth-less".
The "obsolete" fixed capital becomes "worthless" when its products cost more to
produce than the competing products of its competitors who use the "more advanced"
capital equipment to produce those competing products.
Example [Thought-Experiment]: If oil costs $90.00 a barrel, and fusion fuel costs
$9.00 a "barrel", so that most of the market stops buying oil, and buys fusion fuel
instead, then the equipment that makes barrels of oil will quickly lose all or most
of its capital-value.
No, for the reasons already given to explain its "worth-less-ness" in Q008, immediately above.
A given capitalist's accumulated past capital-value, in the form of commodity-production machinery, retains its past capital-value only so long as it can be employed to produce commodities at a profit, at costs/prices which are competitive with the costs/prices at which other capitalist competitors are offering their similar commodity-products to the same market.
The "upstart", "new-entrant" capitalists' new fixed capital plant and equipment
are "more advanced" relative to the "old entrant" capitalists' old fixed capital
plant and equipment — in the sense of "more advanced" which is immanent to
capitalism — if the production of similar, competing new entrants' products
with their equipment is, on average, more profitable than
the production of similar, competing commodities by the old entrants' equipment.
The profitability advantage of the new entrants that gives rise to the "techno-depreciation"
of the old entrants' capital plant and equipment are usually of the following kinds,
or of any possible combinations thereof:
They typically scrap the
"techno-depreciated" machinery/plant, or sell it at "salvage prices".
Spend it or invest it?
They can ordinarily only "spend" or "invest" its "Net Realizeable Value", which
is typically its "scrap" value, a zero value, or even a negative value, if costs
of disposition exceed its 'gross realizable value'.
"Techno-depreciated" fixed capital plant and equipment is typically "written off"
the books, as a LOSS contribution to current-period net profits for the period in
which this "retirement" occurs.
Example: [Thought-Experiment]: Suppose I am Andrew Carnegie, and
I buy a blast furnace,
embodying a certain level of metallurgical technology, for the production of steel,
today, for three million dollars, financed by a three million dollar, fifty year
loan from J. P. Morgan Bank, at 10% per year simple interest, paid monthly.
Suppose that, tomorrow, a new entrant competitor competing company starts selling
steel produced with new blast furnaces that it has just brought into production,
embodying a "more advanced" metallurgical technology, giving them some combination
of the four aspects of technological competitive advantage described above, in
Q011.
I, Carnegie, want to stay in the steel business, so I [A.] have my old blast furnaces junked,
and [B.] buy and have installed new blast furnaces, like those of my new blast furnaces
competitors, or even better than theirs, say taking out a new three million dollar,
50 year, 10% per year simple interest loan from J. P. Morgan Bank to finance the
purchase of those new blast furnaces.
Well, now, my cost of production of steel includes twice the monthly debt-service
expense that I had before, adding to the unit cost, and therefore, typically, to
the unit price, of each unit of steel that my company produces.
That is, just because I had my old equipment junked, which is therefore no longer producing
any output, and therefore no longer producing any sales to cover its costs with new
revenues — especially NO new NET revenues, or profits — doesn't mean
that I don't still owe Mr. Morgan's bank monthly "debt service" — principal
repayments together with interest payments each month — on that first three
million dollar loan.
So, now, I have monthly debt service expenses to be paid to Mr. Morgan's bank on
SIX MILLION DOLLARS of 50 year loans at 10% simple interest, NOT just on three million
dollars of loans anymore!
So, even if I had had my old blast furnaces junked, and had replicas of the new-entrant
competitors' new blast furnaces installed, my cost of production of a unit of steel will still be
— "all of other things being equal" — higher than that of my new entrant
competitors, because they never took out loans for the old, "obsolete" vintage of blast furnaces
in the first place.
So, even if I restore "equipmental parity" with those "upstart", new entrant competitors,
because of my past history in the steel industry — simply because I am an
"old entrant" — my costs of steel production, hence my steel prices, may be
higher than theirs, or, if I match their prices, my profit margins will fall relative
to theirs, and relative to my old level of profit margin.
This phrase refers to the fact that older-vintage, obsolete fixed capital
plant and equipment, once "scrapped", no longer generates any continuing cash inflow,
from sales of its output [because it has been idled or destroyed, hence is no longer producing
any output], sales revenues that would otherwise help "cover" the costs of its original
purchase, which costs are ONGOING, if it was purchased using bank loans, even though
the fixed capital plant and equipment no longer exists, or is no longer being used
in production.
Below are some historical quotes and links, which may help make all of the lengthy
description above clear in a wink:
Example A:
From Charles Babbage's (circa 1832) book, On The
Economy of Machinery and Manufactures. Even in the early-to-mid 1800s, in
the U.K.'s machine-based manufacturing:
"... The improvement which took place not long ago in frames for making patent-net was so great, that a machine, in good repair, which had cost ￡1200, sold a few years later for ￡60. During the great speculations in that trade, the improvements succeeded each other so rapidly, that machines which had never been finished were abandoned in the hands of their makers, because new improvements had superseded their utility."
Example B:
From Harold Livesay's book, Andrew Carnegie and the Rise
of Big Business. In the late 1800s, around 1888, in the U. S. steel industry:
"Carnegie ... [gave] his staff standing orders to replace obsolete machinery.... Bill Jones complied enthusiastically and soon had a renowned dump full of outmoded though not outworn machinery.... Carnegie once ordered Charles Schwab to rip out and rebuild a three-month-old rolling mill when Schwab said he had discovered a better design." [emphasis added]
['in a nutshell']:
From Geert Reuten's paper "The Incompatibility of Prolonged Technical Change and
Competition: Concurrence and the Socialization of Entrepreneurial Losses through
Inflation". [See http://www1.fee.uva.nl/pp/bin/642fulltext.pdf;
excerpted from "Malady and Remedy".]:
"To the extent that technical change accelerates, price competition precludes the
full amortization of capital investments.
In contrast with the common opinion that both technical change and competition are
key characteristics of the capitalist system, they are incompatible, at least when
technical change accelerates.
Such acceleration then gives rise to forms of concurrence — abstinence from
price competition, price leaderships, cartels. The particular form depends on the
structure of production of enterprises (i.e., the make-up of the stratification of
capital).
Concurrence is a major determinant of the inflationary form of the accumulation
of capital.
Because it is in their interest, banks tend to accommodate the concurrent price
settings of enterprises and so to accommodate a socialisation of private losses
that would be due to the devaluation of capital in the case of price competition.
Price inflation also puts enterprises in a relatively advantageous position
vis-á-vis labour."
See also: Graph entitled "U. S. Industrial Profitability History" in on-line slide-deck in "Crisis and Solution" at http://www.equitism.org/Equitism/CrisisAndSolution/CrisisAndSolution.htm.
YES, but INESCAPABLE for a socio-economic system in which the capital-relation is the predominant human-social relation of human-societal self-reproduction.
YES, though key aspects of such rapid innovation — radioactivity-less FUSION
POWER, and the concomitant proliferation of low-cost, high-energy-density plasma
technologies, such as "fusion torch" complete, one-step,
elemental recycling, and such as industrialization in most of Africa, Asia, and
Latin America [until recently], and other innovations that would techno-depreciate
the 'Rocke-Nazi' Oil Companies' and Banks' capital, etc. — have been suppressed
by the machinations of the Rocke-Nazis.
To see with what effectiveness the Rocke-Nazi Plutocracy has accomplished this suppression,
overall, see the two graphs of slide 19 in
http://www.equitism.org/Equitism/CrisisAndSolution/CrisisAndSolution.htm.
The old ideology that the Rocke-Nazis used to cover their operations against the
"Third World" countries in Africa, Asia, and Latin America — i.e., to help
"cover-up" their CIA, MI-5, etc. installation of servant-dictatorships in those
countries [e.g., Batista, Somoza, Peron, Syngman Rhee, Marcos, Idi Amin, Chiang
Kai Shuck, the ShahanShah and his Savak, etc., etc., ad nauseam]
to suppress technological development and industrialization there, and to slaughter
the democratic nationalists in those countries — was the racist one, that
"gooks cannot industrialize".
However, after Stalin turned "Franken-Dictator", after WWII, the Rocke-Nazis had
to allow Japan, and then, later, China, to [re-]industrialize, to help them to defeat
the global challenge to their power from the [formerly] allied "Franken-Dictatorships"
of Stalinist Totalitarian State-Capitalism in Russia, China, and Eastern Europe.
Now, the Chinese are making the now-"de-industrializing", former "gook-mongers"
of the U. S. and the U. K. look like the real
"gooks", so that the old Rocke-Nazi
racism is losing some of its effectiveness as a cover[-up] story.
We also hypothesize that advanced life-extension technology is being
withheld from the public — who are being subjected instead to
lethal side-effects cascades from publicly-promoted
pharmaceuticals as part of the Rocke-Nazi's "stealth genocide"
programs/pogroms against the American people — and these new life-extension
technologies are being reserved for plutocrats like David Rockefeller, and for their
thugs, like "Mad Dog" Cheney [also known as "Seven Heart Attacks Cheney"].
See "Meet the Meta-Nazis Face-to-Face" at
http://www.point-of-departure.org/Point-Of-Departure/ClarificationsArchive/MetaNazisFaceToFace/W_MetaNazisFaceToFace-n1.htm.
However, some rapid innovations work in favor of Rocke-Nazi power, and are allowed
to come through — e.g., the techno-depreciation of newspaper, magazine, and
book publishing capital plant and equipment by the internet "Omni-Com" mass medium,
which allows the Rocke-Nazi interests to buy out newspaper, magazine, and book publishers
for pennies on the dollar, and, thereby, to further concentrate their already near
monopoly ownership and control of the mass media of public communication, and opinion-formation.
HYPOTHESIS: The Rocke-Nazis plan to shut-off access to the intermediate medium
to their critics whenever they please, or whenever the perceived threat to their
power from internet "samizdat"-like public communication scares them enough, given
their prostitution of essentially the entire U. S. Government: Executive, Legislature,
and Judiciary... lock, stock, and barrel.
Some rapid innovations may be matters of indifference to the power interests of
the Rocke-Nazis, e.g., the techno-depreciation of movie films manufacturing capital
plant and equipment by VHS video tapes manufacturing capital plant and equipment,
then, later, the techno-depreciation of VHS video tapes manufacturing capital plant
and equipment by DVD manufacturing capital plant and equipment, etc., or, e.g.,
the techno-depreciation of 45 and 38 plastic phonograph records manufacturing plant
and equipment by magnetic cassette tape manufacturing capital plant and equipment,
and the techno-depreciation of magnetic cassette tape manufacturing capital plant
and equipment by CDs manufacturing capital plant and equipment.
Rocke-Nazi capital/power threatening rapid innovation in broad technological areas
— such as in the cases of the "high tech" and "dotcom" booms — or in
whole countries, or in whole regions, comprising multiple countries — such
as the former ascendancy of the "Asian Tigers" — can be destroyed by the Rocke-Nazis
using a technique pioneered, in part, by lower-plutocracy servant-family patriarch
Joseph Kennedy for the Rockefellers: "Capital Asset Bubble Engineering", for more
about which, see
http://www.point-of-departure.org/Point-Of-Departure/ClarificationsArchive/BubbleEngineering/W_BubbleEngineering-n1.htm.
YES — see examples given above — in those areas where it is allowed by the ruling, Rocke-Nazi Plutocracy, because techno-depreciation in those areas favors their power interests, or does not adversely affect those power interests, in their judgment.
Yes. For example, see http://www.adventures-in-dialectics.org/Adventures-In-Dialectics/TechnoDepreciation/TechnoDepreciation-partA.pdf, extract source #1 [first page, first entry].
Depends on how cognizant the "New Money" is of the techno-depreciation
dynamic.
In our anecdotal observations, many "New Money" entrepreneurs fall blindly into the
"techno-depreciation trap" without ever anticipating or preparing for their vulnerability
to later techno-depreciation until it is too late [if ever].
Often not, in our [anecdotal] experience.
Yes — for the equitist solution to this problem, see: