- The formula M-C-M’ represents the process of how capitalists maintain and grow their wealth. The first M representing money is how this cycle starts; capitalists use their money to buy commodities, C, which can be materials, machines, and, more importantly, labor, and the ability of laborers to work and produce. Once production of anything begins, the capitalist then sells the product for M’, more money than they started with. The process is cyclical, going on and on, adding more and more money into the capitalist pocket
This M’ is important to understand, it represents an extra amount of money that does not come from the materials or commodities but from the workers who are producing more value than the wages they are paid. Let’s say a capitalist pays a worker $100 in wages for a day, but the worker produces $400 worth of goods, the capitalist pockets the extra $300 as profit. That surplus is called surplus value, and it is how wealth is kept concentrated in the capitalist class. So, money becomes capital only when it is put into this cycle. By constantly reinvesting money into production, capitalists generate M’, and by repeating the cycle over and over, they maintain and expand their wealth.
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Your example of the worker getting paid $100 but producing $400 in goods was super helpful for understanding surplus value. It really simplifies the idea of where that ‘M-prime’ actually comes from. It’s wild to think that the extra $300 profit isn’t just coming out of thin air, but is essentially the value of the worker’s labor that they don’t get to keep. You made a complex formula feel a lot more grounded in reality.