- As we learned thus far, the capitalist class consists of people who own wealth, as well as the means of production in American society. An important question in understanding how this class works is to ask: how does a capitalist remain wealthy? The answer to this question depends largely on understanding the diagram M-C-M’. So, let’s practice by explaining what happens in this diagram in our own words (but basing our ideas on Reading 5.1). Respond to the following question: Explain M-C-M’ to show how capitalists maintain and increase their wealth. (hint: your answer should weave a summary that includes what you reviewed in the self-assessment exercise question 1-7)
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The M-C-M’ diagram outlines a key process in capitalism where capitalists maintain and grow their wealth. Starting with money (M) accumulated from investments or profits, they purchase commodities (C) like raw materials or labor to initiate production. After selling these commodities, they aim to generate more money (M’) than they initially invested, representing profit. This cycle illustrates the capitalist goal of profit maximization. By reinvesting profits, capitalists can purchase more commodities, expand production, and accumulate wealth over time. The process involves converting money into commodities, adding value through labor, and realizing profits upon sale. This highlights how capitalists exploit surplus value from workers to enhance their wealth and solidify their economic position. Overall, the M-C-M’ process emphasizes the relationship between labor, value creation, and wealth accumulation in capitalist economies.