M-C-M

The M-C-M’ diagram is a fundamental concept in understanding how capitalists maintain and increase their wealth. In this formula:

• M stands for money.
• C stands for commodities (goods, labor, or materials).
• M’ represents the increased amount of money after the sale of commodities, where the goal is to end up with more money than you started with.

Here’s how it works:

A capitalist begins with M (money) and uses it to purchase C (commodities), such as raw materials, machinery, and labor. These commodities are used in the production process to create goods or services. Once the commodities have been produced, the capitalist sells them for a higher amount of M’ (money), generating profit. The difference between the initial M and the final M’ is the surplus value, which results from paying workers less than the value of what they produce.

The key idea here is that the capitalist’s wealth grows by continually reinvesting M into C (commodities) and extracting surplus value from labor. This cycle of investment and production increases their wealth as long as they continue to generate M’, or more money than they originally invested.

In summary, the capitalist maintains and increases wealth by reinvesting capital, paying workers less than the value they produce, and extracting surplus value through the sale of commodities for a profit, which leads to an ever-expanding accumulation of wealth.