Obsolescence

A fall in the value of an asset as a result of its age. For example, plant and equipment may not have actu­ ally worn out but may have become outdated because technology has advanced and the more efficient plant has become available. It also applies to consumer durables (see CONSUMER GOODS) in which a change of style may render a fine piece of equipment, such as a car or washing machine, out of date. This can result in a fall in the value of such items held in stock by a company. Built­ in obsolescence or planned obsoles­cence is a deliberate policy adopted by a manufacturer to limit the durability of his product to encourage the consumer to buy a replacement more quickly than he otherwise might have to. The morality of this technique has been frequently questioned but is usually defended because many west­ ern economies depend on strong con­sumer demand; if such consumer durables as cars and washing machines were built to last for their purchaser’s lifetime, consumer demand would be reduced to a level that would create enormous unemployment.