Capitalism's Fatal Flaw, and the Way Forward: Trump and ‘Technodepreciation’. GLOBAL STRATEGIC HYPOTHESES.

Trump and ‘Technodepreciation’.

GLOBAL STRATEGIC HYPOTHESES.

Dear Reader,

I’ve seen evidence for some years now that Trump understands ‘technodepreciation’ – understands that its negative impact on profits puts a damper on the willingness of industrial capitalists to risk investing their capital in new factories, new plant and equipment, new fixed capital.

Trump’s remarks at the FII’s [Future Investment Initiative Institute’s] Priority Miami 2025 Conference re-affirmed Trump’s understanding of the ‘techno-depreciation’ brake on industrial investment maintenance and expansion.

In Trump’s first Presidential term, he fought for changes to U. S. tax law that authorized 100% expensing of the costs of such fixed capital investment in the first year of such investment.

Trump even stated, in his FII 2025 remarks, that this 100% expensing policy was, he believed, a main reason for his first term economic successes in partially resuscitating U.S. industry, before the COVID plandemic intervened.

This ‘immediate depreciation’ of industrial capital investment does not fully solve the problem of the ‘technodepreciation’ driver of the ‘‘‘tendency of the general rate of profit on capital to fall’’’. For our proposed, trans-capitalist solution to this “fatal flaw” of capitalism, see --

http://www.dialectics.info/dialectics/Applications_files/Edition%201.,%20DPCAIT_,_Part_1_,_%27THE_MISSING_BLUEPRINTS%27_,_begun_22JUL2022_Last_Updated_08AUG2023.pdf

However, such ‘instant depreciation’ does substantially mitigate ‘technodepreciation risk’ for industrial capitalists, increasing the likelihood of new major fixed capital investments in the United States.

How?

Suppose that, as typically in the past, fixed capital is “wear-and-tear”-depreciated over, say, 10 years, e.g., with (1/10)th of the original investment cost of that fixed capital charged as depreciation business expense for each of those ten years, until, in the 10th year, that investment-cost has become “fully amortized”, or “fully depreciated”.

In that case, the U. S. fixed capital investment has 10 years of exposure to ‘technological obsolescence depreciation’ if key competitors – e.g., in China, or in other BRICS nation-states, or in other nation-states of the, rapidly-industrializing, and typically lower-wage, former “Third World” – install fixed capital, producing commodities for the same markets, that is, e.g., more productive, and/or cheaper to purchase, and/or cheaper to operate than the U. S. fixed capital in question.

If such “competitive technological obsolescence depreciation” – ‘technodepreciation’ – occurs during those 10 years, then, typically, the “unamortized”, “undepreciated portion” of the original investment cost of that U. S. fixed capital must be “written-off”: subtracted from gross profit for the accounting period in which this “moral depreciation” [Marx] is recognized, thus lowering net profit for that accounting period.

If this kind of depreciation occurs frequently – as it can in a competitive world market where rapid technological advancement is accelerating, i.e., where the “growth of the social forces of production” [Marx] is accelerating, and the Rocke-Nazi’s, “Third World”, ‘servant dictatorships’, set-up to suppress capitalist industrialization there, have been overthrown – then an extended secular fall in the rate of profit can result, as first broadly seen in the ~1870 to ~1890 ‘“Great [Techno-]Deflation”’, the capitalist ruling class ‘psychohistorical trauma’ that triggered the formation of the, ‘‘‘psycho’’’, ‘Rocke-Nazi’ faction of the U.S./U.K. ruling class, and the descent into the ‘descendence phase’ of the capitalist epoch itself.

Trump’s “immediate depreciation” policy, which he stated he is planning to fully implement in his present Presidential term, at least allows the immediate recovery, via “depreciation expense”, of the full investment cost of the fixed capital in question, not in 10 years, but in just 1 year, the very first year, of that fixed capital investment.

Even with this ultimate “accelerated depreciation” policy in operation, industrial capitalists still face the adverse profit, and adverse profit-rate, ‘technodepreciation’ impacts of having to scrap fixed capital long before it wears out physically, due to actual, physical “wear and tear”.

Even worse for their profitability, they have to purchase the newer, better fixed capital, that forced the scrapping of their older fixed capital, thus having to pay debt service expense, contra-gross-profit, for, e.g., 30 years of accounting-period-after-accounting-period, on, e.g., two loans – the still not-fully-repayed loan on the scrapped fixed capital, and the new loan, used to purchase the new, better fixed capital replacement – or face insolvency due to debt default.

Meanwhile, the, e.g., former “Third World” industrial capitalists are paying debt service on, e.g., only one loan, the loan that they had used to purchase and install the new, better fixed capital that outcompeted the old fixed capital, and that thus forced the scrapping of that older fixed capital, e.g., for the U.S. industrial capitalists.

This puts, e.g., the “First World” industrial capitalists at, as they say, “a competitive dis-advantage” relative to the, e.g., former “Third World” new entrants to world market industrial capitalist competition.

For more information regarding the Seldonian insights, please see --

www.dialectics.info

For partially pictographical, ‘poster-ized’ visualizations of many of these Seldonian insights -- specimens of ‘dialectical art’ – as well as dialectically-illustrated books, published by the F.E.D. Press, see –