[lbo-talk] revisiting the FROP and the Brenner hypothesis

[Philip Pilkington]

>
>
> By 'zombie capital' I'm referring specifically to the physical plant
> Brenner claims remains in use for years despite being unprofitable
> relative to new physical plant, or relative to physical plant newly
> located in lower-wage-cost areas. So it doesn't do its own
> re-investing. Rather, Brenner's argument is that so long as revenue at
> least covers the user cost, its owners will keep it running even if
> it's at below-average profitability because the purchase cost is
> already 'sunk'. The counter-argument is that while this is certainly
> true for a while, Brenner greatly overestimates depreciation time.
> Hence 'zombie capital', or undead plant.
>

No, its nothing to do with "user cost"... its to do with "circulating
capital". He claims that if a capitalist has invested a certain amount
within a plant and this plant is undermined through competition the original
investor will continue their investment because its already laid.

Let's go archaic... I build a railway. In order to do so I take out a load
of debt. Two years later someone builds a railway for less money that's
faster and more efficient due to (lower labour costs/technological
innovation). What do I do? Do I default...

Or... do I continue to try and run my railway to try and make as much as
possible OUT OF MY ALREADY FIXED CAPITAL????