Designing Economics of the Environment – Part 2 – The Problem with “Understand”

~700 words, ~ 3 min reading time

Part 1 here.

So, in the previous part, I laid out my course learning objectives for Economics of the Environment, putting the verbs in bold.

1. Students will understand economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will understand problems that arise in the efficient use of depletable and renewable resources, and understand potential solutions to these problems.

3. Students will understand problems that arise from the use of environmental resources such as air and water, and understand potential solutions to these problems.

Normally, the verbs in learning objectives provide a great clue for what kinds of assessments are appropriate for the course. If a learning objective says that students should “explain” something, you better ask them to “explain” it!

The verb “understand”, though, leads to…

The Problems with Understanding

There are two main issues with the verb “understand”:

(1) It can have multiple meanings, which vary by context.

(2) “Understanding” is inherently internal, which makes it impossible to observe – let alone assess.

Good news! There is a solution! Thanks to the work of Wiggins and McTighe on “Understanding by Design”, we have a way to translate the internal, unobservable “understanding” into observable activities that we can actually assess – the trick is actually to recognize the different meanings of “understand”, and then to assess based on those.

Wiggins and McTighe suggests there are 6 “facets” of understanding:

(1) Explaining – that is, the ability to connect “cause” and “effect”.

(2) Interpreting – that is, recognizing the meaning or importance of a concept.

(3) Applying – that is, being able to take a concept and use or recognize it in a different context.

(4) Shifting Perspective – that is, the ability to approach an issue from multiple points of view.

(5) Empathy – that is, the ability to imagine being in the place of someone else.

(6) Self-knowledge – that is, being aware of one’s own mastery and limitations.

Now, not every one of these “facets” is present in every learning objective that uses the word “understand”. For example, it would be silly to think that “understand” in “Students will understand economic concepts” means “empathize with”. However, “apply” and “explain” could pretty easily fit in there.

Translating “Understand”

So, a little rewriting, then. I’m going to take out “understand” and put the relevant verbs in…

1. Students will explain and apply economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will explain problems that arise in the efficient use of depletable and renewable resources, and explain potential solutions to these problems.

3. Students will explain problems that arise from the use of environmental resources such as air and water, and explain potential solutions to these problems.

Much better! Now, when looking at it this way, it’s clear that my students will have “some ‘splainin’ to do”! Also, I should be asking students to apply the various concepts, models, and tools in a variety of relevant problems. This, naturally, should have an impact on the kinds of assessments I give – specifically, this is not a class where multiple choice questions are going to do well assessing the learning objectives, unless I spend a lot of time crafting very good multiple choice questions (which is possible!). Probably just easier to have the students write – especially since I use Satisfactory/Unsatisfactory grading with revisions, which makes grading writing MUCH easier. Given the nature of the tools we’re using “applying” will require doing some problems, as well.

The Next Task

Now that I know what types of assessments I’m going to be giving (lots of writing), the next step is to figure out the content – in the learning objectives, there are three types of content mentioned:

(1) Concepts, models, and tools – I group these together, because, in this context, there is very little point in distinguishing between them.

(2) Problems

(3) Potential solutions to those problems

So, this provides a framework for me to start putting content into. Now, I have quite a bit of reading to do before I can really complete this… So, I’ll stop here for now.

Designing Economics of the Environment – Part 1 – General Principles, Backward Design, and Course Learning Objectives

~900 words, ~4 min reading time

Part 2 here.

So, next semester I’m going to be teaching Economics of the Environment for the first time. Because I think some people might find it interesting, I think I’m going to post some of my thinking process as I design this course over the break. So, I’m starting here today with some “initial thoughts”

General Principles

(1) I’m going to use Specs grading – I’ve been very happy with this so far. So, I’m going to stick with that.

(2) The Final is going to provide a “grade modifier” – where performance on the final will adjust the course grade based on other assignments by +1/3 of a letter grade to -2/3 of a letter grade. This gives the final a reasonable weight, but also ensures a clear “floor” to a student’s grade going into the final.

(3) The assignments are probably going to be a combination of reading responses, problem sets, and a research paper (for students who aim for an A). Also, need to ask metacognitive questions for all of these. (Even a simple “what did you learn while doing this assignment?” would work.)

(4) Deadlines scattered throughout the semester.

(5) I’m debating about giving the students the Final Exam on Day 1. When I heard Linda Nilson speak this year, she suggested this. For essay-based finals, I think this is pretty brilliant. As she pointed out, if you write a good final, you’re going to have students having the exact discussion that you want them to have over the course of the semester if you do this.

Planning Materials

While I believe very much that each of us needs to make a course “our own” in some fashion, I also believe that there needs to be enough commonality across instructors for a course that it can meaningfully be considered the “same course”. To that end, I have the following…

(1) Our Department has Course Learning Objectives for all courses. These have to be listed in the syllabus, and provide a good way too focus the course.

(2) Our Department also has “Basic Course Sheets”. This includes the Learning Objectives, the description in the catalog, and also a description of what in-class and out-of-class activities are used in the course.

(3) For courses that have been recently created or revised, we have “Course Information Sheets”. These add to the mix an example textbook or two, and a schedule with the amount of time spent on each topic in the course. Unfortunately, this course has not been updated recently, so getting one of these is extremely difficult.

(4) When I start teaching a course that someone else teaches or has taught, I often get whatever they’re willing to share with me – I usually just ask for a syllabus and thoughts on textbook choices, but often get more than that. The professor who teaches this course at the Kent campus was EXTREMELY generous, and provided syllabus, assignments, lecture notes, etc. I have LOADS of material here. Obviously, I’m not going to just use everything I was given – I have to adapt things to my style. But, editing a pre-existing course is much easier than reinventing the course from scratch.

Backward Design

“Backward design” is kind of the “state of the art” in course design. The idea is simple enough. While “forward design” starts with course activities/content, and then tries to figure out how to assess that, “backward design” starts with learning objectives, then moves to consider assessment, and finally designs the course activities with those assessments in mind. Now, the reality is that it’s a recursive process. Sometimes, when you’re teaching you realize that there are hidden learning objectives that you hadn’t thought about. Or, you realize that the assessments don’t *quite* assess what you wanted them to. Or that there are missing or extraneous course activities that don’t reinforce the assessed learning objectives. Alignment is a bit of a dance, and it takes a few iterations to get it right. (Example: when I taught stats this semester it was RADICALLY different than the last time I taught it.)

But, using a backward design, it turns out, works well as a first pass on the more realistic “recursive design” that actually happens. So, let’s take a look at my learning objectives.

Course Learning Objectives

Based on what I got from the Department, these are the three course learning objectives:

1. Students will understand economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will understand problems that arise in the efficient use of depletable and renewable resources, and understand potential solutions to these problems.

3. Students will understand problems that arise from the use of environmental resources such as air and water, and understand potential solutions to these problems.

When moving from learning objectives to assessments, the key is to look at the verbs in the learning objectives, as they hint at the kinds of assessments you should do. “Identify” is a different kind of assessment than “explain” which is certainly different than “apply”. (“Identify” often lends itself to a matching/multiple choice assessment strategy – though you can always frame these as short answer. “Explain” often lends itself to short answer or essay – but a well-crafted multiple choice question can do the same thing.)

As you can see, there’s a strong consistency in the learning objectives for this course – students will understand. It turns out that this is a particularly difficult verb to assess – but more on that in the next installment!

Miscellaneous Thoughts on Teaching

~300 words, ~2 min reading time

  • My students need deadlines throughout the semester – too many are just not very good at organizing their work on their own.
  • Satisfactory/Unsatisfactory (with revision) grading is AWESOME.  – Highly recommend.
  • Asking students to ask “FEEDBACK PLEASE” is also a great time-saver. – Highly recommend.
  • Need to clearly label all assignments as “Engagement” or “Mastery” assignments, to make clear what I’m looking for – and to make it clear in my mind, too!
  • I’m not comfortable with late penalties – make a form for requesting late work being allowed, which asks them to explain why and to develop a prevention plan.
  • All revisions should have a reflection attached, too. “Why didn’t I meet specs” and “What I will do to meet specs in the future.”
  • All assignments should have a meta-cognitive “What I learned” component. (A “cognitive wrapper”)
  • For Specs grading, I need to “adjust” the bars in certain ways. For Analytics, I set the bar too low, on the whole – except for the A level. Need to raise it for B and C levels, and reform my project to just being an “A” requirement, but make it more demanding. The bar isn’t way off for Micro, but ends up overweighting the Final in a way that is inconsistent with the Specs grading philosophy (that is, putting grades mostly in the student’s control, so that there’s little uncertainty for them). Shifting the Final to the way I’m treating the Final in Analytics would be an improvement. Need to replace with a more predictable “Mastery” component that happens throughout the semester. Need to think more about what that looks like. (Knewton is an option – but I don’t like making my face-to-face students pay to do homework…)
  • LOVED the Learning Target Quizzes in Analytics – sadly, can’t do it for Micro, because of scheduling issues.

Did Disney Really Underestimate Day 1 Demand for Disney+?

~400 words, ~2 reading time

It’s a common refrain. Before release: “New service/game/etc. coming out!” “Lots of pre-orders!” Day 1: “Site is slow and crashing!” “Underestimated demand”, etc.

The question: is it really reasonable for us to conclude that these companies, which are SO GOOD at estimating demand most of the time suddenly suck at it – ON A REGULAR BASIS, even when they have great data about what demand is going to be?

I submit that the best answer is “no”.

A few assumptions that I’m making here: (1) Day 1 demand is unusually high. (2) Setting up temporary servers that you won’t need in the long term is costly. (3) Companies believe that very few customers are going to punish them for poor performance on Day 1.

Put these all together, and you have an obvious interpretation of the situation. Disney+ estimated how many servers they’d need on an ongoing basis, and has that much capacity ready to go. (This follows from #2 above.) Now, they know this isn’t enough for Day 1 (#1 is something they can predict), so that there will be server problems – poor performance, crashing, etc. – on Day 1. But, that’s okay. The company isn’t really going to be worse off (#3). Yeah, there’s some PR that they’ll have to deal with, but that’s okay. They can always pull an EA, and offer people some free stuff (that’s how I got SimCity 4) – maybe put some movies they “didn’t plan to” on the platform, or offer people a free download of a specific movie through Google Play/Amazon Prime/iTunes, as long as they redeem in the next week. The point is that these are manageable, fairly cheap options compared to preventing the problem in the first place.

Now, there’s another possibility as well: it might be that Disney DOESN’T know how much long-term demand they’ll have. BUT, if it is costly to set servers up and then take them down, it might make sense for them to deliberately work UNDER the needed long-term capacity for the first couple days, so that they can get a better idea of what they should do.

Traditionally, manufacturers overproduce a bit – after all, if you run out of your good, customers will often just buy from a competitor that DIDN’T. (So, assumption #3 wasn’t true.) However, in a world of strong intellectual property protections and strong brand loyalty, that concern fades.

Marx’s Capital Volume III – Chapter 7 – Supplementary Remarks

~300 words, ~2 min reading time

Summary

This short chapter summarizes some of what came before, and also makes clearer the main purpose: Marx was trying to show that the rate of profit is typically not independent of the size of the capital involved. This view (which Marx attributes to the German socialist Rodbertus) claims that capital and profit levels move in lock-step – so a 20% increase in capital and 20% increase in profit would go together, so that the rate of profit would be unaffected. Marx claims that this is true in only two cases: First, if there’s a change in the value of the monetary commodity. In that case, it’s not really that capital and profit are both increasing by 20%, it’s that gold (or the dollar or whatever) is decreasing in value by 20%. So, here, there is actually no “real” (inflation adjusted) change in either capital or profit – only in its nominal (money) value. Second, if variable and constant capital move in lock-step, so that the ratio between the two does not change. (In modern terms, economists would say that the enterprise is changing by “replication”, a simple repeating of the same process an extra time, half a time or whatever.)

Why It Matters

Marx’s view of distribution and cycles are closely tied with the fact that there is a connection between capital accumulation and the rate of profit, I suspect. So, this is going to play a bigger role when we reach that point.

Where Marx Goes Wrong

Here, Marx’s comments are few enough, and mostly in the form of a recap and application against Rodbertus that I don’t have any specific objections that wouldn’t show up elsewhere.

Fitness Friday – My Current Workout and Why

~700 words, ~4 min reading time

So, it’s been a little while since I described my workout routine, and I’ve made some changes to it. So, let’s get into it.

Trait #1: Full Body Split

So, there are a number of ways to do splits – though the science seems to have come around to 2-3x a week per muscle group being the most effective. So, that basically means you want to do full body 2-3 days a week, upper-lower 4-6 days a week, or push-pull-legs 6 days a week.

I have other things to do, so that means full body 2-3 days a week.

Though the reason I switched back to this from other routines was simple: I can’t guarantee getting time to workout 4+ days a week, so if I miss a day, that pushes things way off schedule if I’m in a U/L or PPL routine. However, with a full-body routine, it can just mean that I take an extra rest day. I likely won’t end up accidentally having 5 days between training a particular body part.

Trait #2: 6 x 12 as my target set/rep scheme

The science seems to suggest that you get maximum hypertrophy (that is, muscle growth) from doing 40-70 reps over 6-10 sets in a workout for a specific body part. You can do this using one or two exercises. To minimize rest time, six sets makes sense. So, that means we should do 7-12 reps in a set. So, I target 12, and if I fall short odds are good that I’ll still get at least 7.

I also use this 40-70 rep scheme to add sets (up to a max of 10) if I do fall short. Basically, if I’m failing to hit my 12 reps per set, I continue doing sets until either I hit 40 reps total OR 10 sets total.

However, the last set is special. More on that further down

EXCEPTION: I do 3×12 as my target for squats and deadlifts. Because I hate them, and find doing more to be excessively fatiguing and terribly demotivating.

Trait #3: A/B workouts

This is the most recent change. For a while, I was just doing the same full body routine 3 days a week (ideally). But, I realized that I kind of wanted to do both rows AND pullups – both back exercises. But, I didn’t really want to do more than 6 exercises in a single workout. So, I alternate between these now:

Workout A: Dumbbell Floor Presses, Dumbbell Squats, Lateral Raises, One-Arm Dumbbell Rows, Standing Tricep Extensions (though I do a dumbbell in each hand to force the two arms to work independently), Dumbbell Bicep Curls

Workout B: Dumbbell Flyes, Stiff-Legged Dumbbell Deadlifts, Dumbbell Shoulder Presses , Pull-ups, Lying Tricep Extensions, Hammer Curl

Trait #4: Autoregulatory Progression

Progression is a key element of an effective routine. I’m of the opinion that a reasonable progression scheme can cover up a number of other errors – in particular about “how much to lift” when you start out. There are lots of ways to do this, but I finally came across something I like: Autoregulatory Progressive Resistance.

I mentioned above that I target 6 x 12. Now, often, I will fall short of this. That’s fine. But, on the weeks that I manage to get 12 reps in each of the first 5 sets, I do as many reps as I can in the 6th set. This determines if I progress the weight. If I get 13 or fewer in that set, I keep the weight the same. If I get 14-17, I increase weight by ~5%, if possible (for curls, for example, I’m lifting so little that I can’t really increase by less than 10%). If I get 18 or more, I increase weight by ~10%.

In the event that I don’t hit 12 reps per set, then I just try to do better the next time, with no strict progression scheme except that I want to improve the first set that fell short of 12 reps by at least one rep next time around.

“The Science”

Based on this article which summarizes research from others, cited there.


Marx’s Capital Volume III – Chapter 6 – Effect of Price Fluctuations

~420 words, ~3 min reading time

Summary

In this chapter, Marx considers the effects of variations in various prices on the rate of profit. First, raw materials. As one might expect, there is an inverse relationship between raw material prices and the rate of profit. Thus, low material prices are important to capitalists maintaining profit levels. Marx explains that this is true, even though changes in the prices of raw materials tend to be reflected in the price of the product. Because of competition, the change in cost is typically not fully reflected in the price of the final good. In the case of wages, higher wages tend to decrease both the rate of surplus value (which decreases the rate of profit), and also tend to decrease the capitalist’s scope of production – further decreasing profit. One of the more interesting observations Marx makes in this chapter is that there is a tendency in capitalism for the growth of the stock of machinery to run ahead of the ability of nature to produce nature-given factors (like agricultural goods, for example), and this creates imbalances that lead to cyclical fluctuations. Marx specifically considers cotton markets, showing how there was a repeated boom and bust in that industry in England through the mid-1800s.

Why It Matters

In this chapter, Marx hints that a good part of the instability of the capitalist system that he will explain later rests on the relationship between the prices of the factors of production and the rate of profit.

Where Marx Goes Wrong

From a modern mainstream or Austrian perspective, Marx’s analysis here isn’t “wrong” in one sense – but is wrong in another. On the one hand, from an individual firm’s perspective, Marx’s analysis of the effect of prices of factors on the rate of profit is fairly sound. But, from the perspective of the economy as a whole, we have the problem that the prices of factors of production are not exogenous. They depend on the (expected) price of the product. Value is then imputed back from the product to the factors that produce it. In mainstream terms, the demand for the factors of production is “derived” from the demand for the product. So, the causal analysis, if we’re trying to analyze the system as a whole, is backwards – UNLESS we’re considering cases where the price is changing because of a change in availability of the goods under consideration, but Marx isn’t very clear about that (though there are certainly places where he considers these cases).

Fitness Friday – Trying The 5/2 Diet

~700 words, ~3 min reading time

So, I’m in the midst of a “cut”, and I’m trying a new technique: the 5/2 diet. Let me compare it with what I’ve done in the past.

Previously, I followed the Kinobody cutting diet. So, five days per week, I’d eat in a calorie deficit, and two days per week, I’d eat at a slight surplus. After some experimenting, I’ve found that 1600 calories on my low-calorie days and 2500 on my high-calorie days was about right to hit my weight loss goals. This approach basically has “diet breaks” built in on those two high-calorie days per week, and diet breaks have been shown to have positive effects on things like maintaining lean body mass and metabolism. Greg O’Gallagher at Kinobody also suggests taking explicit diet breaks whenever weight-loss stalls.

The 5/2 diet, though, reverses things. Rather than five days of deficit and two days of surplus, you eat five days at maintenance and two days at a very sharp deficit. After doing the calculations, that means I’m eating 2300 calories per day five days per week, and 800 calories per day two days per week. Yes, 800 calories is VERY little – but it is fairly easy to hit simply by fasting for most of the day, and just eating a reasonable dinner. (Note: the original Fast Diet – which the 5/2 diet comes from – says to eat “normally” – that is, don’t bother tracking – for 5 days, and to eat 500-600 calories for two days of the week. I’m following the modified version that I linked above.)

In terms of weekly calorie intake, the two diets are very similar. 1600×5 + 2500×2 = 13,000 calories per week. 2300×5 + 800×2 = 13,100.

The big difference is in the eating pattern. For me, the 5/2 diet has been significantly easier, because I don’t feel like I have to track quite as closely. On maintenance days, I keep track of what I eat, try not to go overboard, and then make sure I hit fairly close to my calories by adjusting my evening snacks after the kids are in bed. In contrast, during my 5 low-calorie days per week under my previous diet scheme, I had to pay a lot more attention to what I was eating each meal to make sure that I was (1) not using up too many of my calories, but also (2) hitting protein goals along the way. That was a lot of attention having to be paid to what I was eating. The 5/2 diet reduces that significantly.

Another big benefit that I’ve found for the 5/2 diet is that I can keep doing it – or something close to it – even when I’m traveling. On my previous diet, I would simply abandon the diet if I went on a trip, simply because it’s too hard to control food intake. I figured 7 days wouldn’t do any permanent damage – and this is correct, as far as that goes. But, it does set you back a bit. But, I’m out of town this week for a seminar – and I’m mostly sticking to the 5/2 diet despite that, even though I’m not tracking calories exactly. 5 days, I’m eating “normally” more or less (so, probably near, but slightly above maintenance, I would guess), and two days, I’m just eating dinner and maybe a smaller snack. In any case, not eating until dinner time basically ensures that I won’t be eating maintenance-level calories those days. So, while I may lose some ground from not tracking calories precisely, I don’t expect I’ll lose much ground – and that’s something.

One downside, though: I am definitely hungry on my 800 calories days – where I hadn’t really experienced that as much on the 1600/2500 split. But, it’s not that big a deal. Drinking lots of water helps, and you do get used to it on some level. Plus, it’s just one day – then I know I get a couple days eating normally.

Naturally, there are some people who absolutely should not do this – it’s particularly dangerous for diabetics. Children and pregnant or nursing mothers should also do something else, most likely. But, it seems to be going okay for me so far – sadly, it’s too early to report results.

Marx’s Capital Volume III – Chapter 5 – Economy in Employment of Constant Capital

~700 words, ~ 4 min reading time

Summary

Since workers create surplus value, it makes sense for capitalists to minimize how much they spend, relatively, on non-labor. (That is “constant capital” in Marx’s terminology.) In general, they can do this by increasing working hours. Since the same building can operate for 8 hours or 24 hours, a greater profit margin will be attained if work happens for more hours. In addition, capitalists look for ways to use the “excretions of production” – that is, by-products or “waste”.

Marx goes a bit deeper on a couple of examples. He discusses savings on labor conditions – pointing out that capitalists can decrease their expenses by tolerating unsafe or uncomfortable working conditions, and presents data showing that disease and mortality are more common among workers in industries where conditions are particularly bad. Marx also observes that large-scale production is encouraged, in part, by the way that power works in industrial machinery. It is often more economical to operate one large plant than multiple smaller ones. These economies of scale (to use the modern phrase) allow capitalists to economize on constant capital. Marx goes a bit deeper into the “excretions of production”. Strangely, he criticizes capitalism for not putting human feces on fields to use as manure. Finally, Marx observes that new inventions are often not economical – so that the first to buy a new product end up paying far more than when the product gets more developed.

Why It Matters

Here we’re getting much more to the practical criticism of the capitalist system that Marx provides. The most important part here is the criticism regarding requiring long working hours and the one about unsafe and unhealthy working conditions. These are the two activities that look the most like “exploitation”, and, I would suggest, are often at the heart of criticisms of a market system.

Where Marx Goes Wrong

Here, Marx’s wage theory is what creates the biggest problems. Since Marx buys into the classicals’ iron law of wages – that is that wages will stay at the level of subsistence – Marx misses the actual dynamics of what is happening. For example, people will trade off wages against other features of a job. So, for example, people may be willing to accept worse conditions – but they only do so if they are compensated for it financially. Conversely, it can sometimes be cost-saving for a company to offer more benefits but pay less – in fact, Marx himself points out a case where a business ended up saving money by installing safety equipment. Marx’s argument then, in this section, relies on the existence of two “irrationalities” – one of which Marx is explicit about, the other of which is missing from the explicit argument, as it is ruled out by Marx’s wage theory. The first irrationality: that capitalists habitually seek to avoid certain kinds of costs – specifically for safety devices. Marx reported one case where a group of manufacturers spent more paying lawyers to fight the imposition of safety regulations than it would have cost to simply implement the regulations themselves. A second is that workers care only about wages and pay no attention to the conditions of production. But these are unlikely to be true. There are systematic differences in certain wages which are explained by differences in job characteristics – sometimes explicitly. This makes perfect sense – people would be willing to be paid less for safe, comfortable jobs, other things equal – but doesn’t fit the iron law of wages which suggests that wages will fall to subsistence levels. In addition, employers take this fact into account when making decisions about safety procedures and the like. Do they get things wrong sometimes? Of course. But, it hardly seems accurate to suggest that employers regularly, irrationally avoid measures that are actually cost-saving – in a competitive world, such decisions put you at a disadvantage compared to your competitors. Which brings us back to a central issue with Marx – for Marx, competition between competitors seems to exist sometimes, but is not worked into the logic consistently. So, competition keeps prices of products in check – but doesn’t let wages rise above subsistence. Competition leads to capitalists being cost-minimizers – but they do so very poorly.

Marx’s Capital Volume III – Chapter 4 – The Effect of the Turnover on the Rate of Profit

~300 words, ~2 min reading time

Summary

The previous chapters were considering the rate of profit for a single “turnover” of capital – effectively a single productive period. In this chapter, Marx broadens the analysis to examine the annual rate of profit if there are multiple turnovers of capital in one year. For example, if I advance $100 in wages at the beginning of the year for wages, and workers make a product I can sell for $110 at the end of the week, then I can “turnover” the $100 from my revenue to pay for wages in the next week. As a result, the same $100 can be spent on wages 52 times over the course of the year, resulting in a profit of $520, while I only had to advance $100 – a 520% return. Marx shows that the annual rate of profit is simply the rate of profit for a single turnover multiplied by the number of turnovers in a year.

Why It Matters

If you’ve read his previous volumes, you’ll know that Marx is a bit obsessed with the idea of “turnover” with capital. The reason is simple: it is what makes capital self-replicating in the Marxian system. So, it makes sense that, as Marx is turning to questions of profit, that he would consider how profit is affected by turnover.

Where Marx Goes Wrong

Marx’s devotion to the labor theory of value muddies his analysis because his price theory is a bit goofy. Sensibly, if a particular set of labor and materials allows for twice as high a turnover, and therefore twice the rate of profit, it seems obvious that entrepreneurs would bid up the wages and material prices, which, in turn, lowers the per-turnover rate of profit. Marx’s system doesn’t seem to allow for this, because it is bound by the labor theory of value.