My understanding stems from Pierre Jalee’s “How Capitalism Works,” and I’ve re-applied its principles to my own work situation to explain the M-C-M Concept in the 2024 version. Here is the context of my job as a Senior Corporate Securities Paralegal and how it applies to my law firm’s operations which helps to illustrate how capitalists maintain and grow their wealth. Here’s a breakdown using my personal example:

Initially, my law firm invests money (M) in resources, which includes my labor as a paralegal. I’m compensated at $43.27 per hour for my expertise and efforts. This is the firm’s investment in the commodity (C), which in this scenario is the legal services (specifically to onshore fund formations and keeping up with the SEC’s compliance) I provide.

When I work on client cases, my billable time is charged at $300 per hour. Once the client pays, this revenue (M) reflects a significant markup from the initial investment. The difference between what I’m paid and what the firm charges clients is the surplus value (M), stemming from the legal services sold at a price higher than the cost of production, i.e., my wage and other operating expenses.

This surplus, after deducting operating expenses, contributes to my boss’s profit. They can then reinvest part of this profit back into the firm, perhaps by hiring more staff, expanding the firm’s services, or increasing marketing efforts to attract more clients. This reinvestment is aimed at generating even more surplus value, perpetuating the cycle of M-C-M and facilitating the firm’s growth and my boss’s accumulation of wealth.

Not only do most companies favor the method of stock buybacks to reduce their corporate taxes, but business owners also often maximize their business expenses for the same reason, while those of us with W-2 income have no room to evade or lessen our taxes. Fun fact: Warren Buffett’s secretary pays more taxes than he does! This is the reality of corporate America.