Depreciation and Replacement of Fixed Capital in Expanded Reproduction

Abstract

With respect to the relation of depreciation and replacement of fixed capital in simple reproduction, K. Marx solved this problem in his "Das Kapital". But the problem on expanded reproduction is not yet fully discussed. This article is devoted to the analysis of the some pending questions related to the movement of fixed capital in the condition of expanded reproduction of social gross capital. In expanded reproduction, depreciation (D) and replacement (R) of fixed capital is not equal in the amount, and D is inevitably greater than R. The difference of D and R, (D-R), is realised by the additional expenditure on fixed capital. This additional expenditure of (D-R) is requisite condition of normal expanded reproduction process. The money used for this additional expenditure must be mobilized from the depreciation funds that are free in this period. As a result of the realisation of (D-R), the amount of fixed capital in natural increase and the reproduction on expanded scale occures without capital accumulation, i, e., conversion of surplus value into capital. Owing to the peculiar nature of turnover of fixed capital, the total value of fixed capital has dual form in natura and money. The realisation of (D-R) which is achieved by the free depreciation funds brings about the value of fixed capital in natura and the decrease of the same value of fixed capital in money form. Therefore, total value of fixed capital remains unchanged after the realisation of (D-R). In respect of fixed capital, two conditions, D=R+(D-R) and (D-R)< the amount of the free depreciation funds in this period, are nothing but requsite coditions for the normal proceeding of expanded reproduction. The anarchic nature of capitalist reproduction process, however, converts the above two conditions into one for the abnormal proceeding of expanded reproduction.