Unlike small-scale commodity production (C–M–C), where people sell commodities in order to buy what they need for daily consumption, capitalist production (M–C–M’) buys things in order to sell them for a profit. In C-M–C, people cannot get many profits because the money they earn has to be spent on maintaining lives. However, capitalists use their initial money(M) to buy the means of production(factories, machines, and materials) and labor power of the working class to run their business. 

During a typical 8 hour workday, a worker’s shift is divided to two parts:

Necessary labor time: For example, in the first 4 hours, the worker creates value equal to their daily wage($150), which covers their basic living subsistence.

Surplus labor time: In the remaining 4 hours, the worker continues to produce products without receiving extra pay. 

During this process, workers’ labor creates tremendous value, but they barely get paid by a small part of it. Capitalists buy their labor power based on the wages covering workers’ daily subsistence; the rest value, which is surplus value(m), is the main reason that capitalists can increase their wealth. The result in M’=M+m, where M’ is the total expanded money the capitalist receives. After this cycle, capitalists can use these profits to enter the next cycle and keep increasing their wealth.

M-C-M’ refers to the process of capitalists transforming money into more money. Before the advent of capitalism, farmers and artisans would operate on the basis of M-C-M, where they first sold the products they had created and exchanged them for money just to obtain what they needed in return. Capitalists reverse this process, thereby starting with money, making purchases of commodities, and ending up with more money in the end than before their operations. The new amount of money would be equal to M plus m, which refers to the excess value calculated by Jalée and called surplus value, so capitalists will never buy commodities with their money unless they anticipate making a profit out of such breaks-even investments.

At first, merchants used to earn money by purchasing goods such as clothes from laborers at much lower prices and reselling them in the process. Nevertheless, such transactions were limited because merchants could only operate based on what other people had already created. Thus, capitalists turned into industrialists. They invested capital into bricks and mortar, mills, equipment, raw material, and most importantly, into labor force.

The example put forward by Jalée is abundantly clear. An employee earns 60 units for working 8 hours and manages to produce a value equivalent to that wage in just four hours. This means that the rest of the time spent working non-paid surplus work means that the 60 units of value produced by the worker during that period go to the capitalist as the surplus value. After that, the capitalist sells the commodity and receives M’ as a return that exceeds the initial M.

This is the way in which capitalists sustain and augment their fortunes: they repeatedly reinvest their profits again and again in the M-C-M’ cycle that allows them to make even more profit because of workers working for free. It is possible to enhance the surplus value by lengthening the workday or making employees work faster or automating their functions. Since the initial capital investment creates infinite opportunities to repeat the process, the wealth of capitalists increases consistently while workers are paid only what is needed for them to keep coming back to work.

1. M-C-M’

M-C-M’ explains how capitalists maintain and increase their wealth. M represents the money or capital initially possessed by capitalists. Capitalists use this money to purchase C, including raw materials, machinery, factories, and workers’ labor power. Labor power is very important for workers because they create new value through their labor. Although workers receive wages, the value they create may more than the wages. The excess part is the surplus value. Later, the capitalist sells the products and obtains M’, which is more money than the initial investment of money. Therefore, M’=M + surplus value. The capitalist can use extra money to buy more materials, machines, and labor power to continue the production process. Workers create surplus value which is the part of their working time after they have produced enough value to cover their wages. All in all, M-C-M’ shows how capitalists can use money to create more money and continuously increase their wealth.

Capitalists stay rich and keep getting richer because of how the M-C-M cycle works. Back then, people like farmers would sell something to get money, then use that money to buy what they needed, so money was just a step in between. But capitalists do it backwards. They start with money, use it to buy stuff, and then sell it to get money back, but the money has to be more, and that extra bit is the profit. That extra money comes from paying workers a wage that only covers enough for basic stuff like food and rent. Like, if that wage only covers about 4 hours of the workday, but the workers work the full 8 hours, they keep making things and creating value during those extra hours without getting paid for them, and the capitalist just keeps that as profit. That is why the wealth never stops growing, because once the capitalist gets that extra money, they put it right back to buy more materials, hire more workers, make more products, and sell for even more money.

M–C–M′ explains how capitalists use money to try to make more money. The first M stands for the money an owner starts with. C stands for the commodities they buy, such as materials, equipment, and labor power. Labor power is a person’s ability to work. The last M′ means the money received after selling the finished products. The goal is for this amount to be larger than what the owner originally spent.

For example, imagine someone owns a company that makes backpacks. The owner pays for fabric, zippers, sewing machines, and workers’ labor power. The supplies and machines are part of the means of production. However, these things cannot make backpacks by themselves. Workers have to cut the fabric, sew the pieces together, and attach the zippers. Their actual work is called labor.

In Marx’s explanation, labor creates new value. Materials and machines pass their existing value into the products as they are used. Workers add new value, but they do not receive all of it in their paychecks. The value they create beyond their wages is called surplus value. This is the source of the capitalist’s profit.

As a simple example, suppose the materials and the use of equipment cost $600, and workers receive $400 in wages. The owner has spent $1,000 altogether. If the finished backpacks sell for $1,300, and those are all the costs, the owner ends up with $300 more than they started with. In this example, M is $1,000 and M′ is $1,300. The extra $300 goes to the owner rather than being added to the workers’ wages.

The owner can then put some of that extra money back into the business. They might buy more supplies, get more machines, or hire more workers. This allows the process to happen again on a larger scale. The main goal is to keep increasing the money invested. This helps explain how capitalists can maintain and grow their wealth through owning businesses and using other people’s labor. Growth is not guaranteed, though, because the products still have to sell for enough money to cover costs and leave a profit.

1. MCM’ means money, commodity and more money (surplus value). Capitalists start with money and use that money to buy what they need for their production and that includes things like materials, equipment and labor power. The workers then use their labor to produce the commodity and create value. Part of that value covers what the workers are paid, while the additional value they create becomes surplus value for those capitalists. The capitalist ends up with more money than they started with and can put it back into production to make even more. Through this system, they continuously repeat the process, maintaining and increasing their wealth.

The understanding of the capitalist class and their maintaining of the increase of their wealth, the contrast of the difference of social classes operating with the use of the economic formulas that go into detail from the reading from “How Capitalism Works”

From then up until now, everyday life follows this formula it being C-M-C (Commodity–Money–Commodity). For example, a worker brings a commodity, their labor power to the market to sell for money and they use that to purchase more commodities like food and housing that they personally need. This cycle shows the value is equal from beginning to end with the goal being survival. The capitals operates the opposing way using thus formula of M-C-M (Money–Commodity–Money). The money is what the capitalist starts with . The commodities bought for manufacturing. Instead of just trading finished goods, it explained that the capitalists realized they can’t create endless wealth from buying and selling to each other . Instead, they must become manufacturers using their money from the start (M) to buy specific commodities (C). This is the means of production (buildings, machinery and raw materials ) and the labor force. The unique role of labor shows these elements being brought together, the physical means of production are transferred with their value towards the new products . The human labor and exercising of the labor force is active and transformative, leading to labor being the sole source of new economic value. Money prime and the surplus value are the capitalist buying labor power at the market value which in turn generates a higher amount of the actual labor during production, the workers gain more value instead of wages. The capitalist sells the final products for a higher sum of money (M). This mathematical relationship is M’=M+m leading m to be the gain, profit, or surplus value. Capitalists maintain and increase their wealth by reinvesting over and over again M’ back into that cycle to grow steadily with their means of ownership while capturing the surplus value that comes from the working class.

M -C – M means a capitalists starts with money that being the M. Uses that money to buy commodities that being C which can be materials, equipment, and labor power. The last M would stand for more money after they sell the product. The extra money that comes is called the surplus value created by workers. It allows capitalists to make profit, reinvest their money, and then continue to increase their wealth.

M-C-M’ shows how a capitalist starts with money and uses it to make more money. The first M is the money they already have. C is the use of the money to buy things needed for production such as materials, equipment, and labor power. The workers then create a product using their labor. The product is sold for more than what the capitalist originally spent. That extra amount is the surplus value. M’ is the money they are left with after making a profit. The profit is then used to repeat the process and continue building their wealth.