- 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)
M-C-M stands for Money- Commodity- Money and is the general formula of capital. In M-C-M the seller gets their money back again and the money is not spent, but rather increased. The owners of capital maintain and increase their wealth by putting their money back into circulation, buying to sell, and starting more money to acquire more. The surplus value doesn’t go to the worker but to the capitalist, they can sell the commodities produced for a greater amount than that paid to the worker in the form of wages. This makes it possible for capitalists to benefit from profit.