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-assesment exercise question 1-7)
Capitalists remains wealthy by counting to make profits and investing in stocks and bonds. With M-C-M meaning for Money Commodity Money, capitalists use their very own money to buy resources such as machines, fuel to be able to provide their employees to labor. Capitalists continue to invest into business and profits that they know they would benefit from and many capitalists already are wealthy from being born into the family wealth.
Your explanation of how capitalists remain wealthy touches on key elements of the M-C-M’ (Money-Commodity-Money’) process. The M-C-M’ formula represents how capitalists use their initial capital (M) to purchase commodities (C), such as machinery, fuel, and labor. These commodities are then used in the production process to create new goods or services, which are sold for a higher amount of money (M’), generating profit. This cycle allows capitalists to continually increase their wealth by reinvesting the profits (M’) into new business ventures, stocks, and other income-generating activities.
Moreover, as you pointed out, many capitalists begin with inherited wealth, which gives them a significant advantage in maintaining and expanding their resources. Through smart investments and strategic use of their capital, they continue to generate profits, ensuring that their wealth grows over time. The M-C-M’ process highlights how capital accumulation is central to the capitalist system, enabling capitalists to stay wealthy and further increase their economic influence.