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Title: Without capital accumulation, is productive scale expansion possible?

Authors: Masaya Fujita

Addresses: Kyushu University, Motooka 744, Nishi-ku, Fukuoka City, 819-0395, Japan

Abstract: The expansion of productive scale is often funded by the immediate reinvestment of a depreciation fund. This phenomenon is called Lomann-Ruchti effect. The question is whether this is possible without additional investment or not. One theory claims this is attributable to the increased circulation of advanced capital, whereas, this article argues that the effect is realised by capital accumulation hidden behind depreciation procedures.

Keywords: depreciation; depreciation fund; Lomann-Ruchti effect; cycle of fixed assets; depreciation multiplier; reinvestment of depreciation fund; expansion of productive scale; capital accumulation.

DOI: 10.1504/IJCA.2020.105055

International Journal of Critical Accounting, 2020 Vol.11 No.2, pp.114 - 124

Received: 22 Nov 2018
Accepted: 21 May 2019

Published online: 05 Feb 2020 *

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