Explain M-C-M’ to show how capitalists maintain and increase their wealth:

In the text “How capitalism works” Jalee explains how the capitalists increase their wealth. He simplifies it into the formula M-C-M’ , but what does this mean? Basically, M represents money, C a commodity and M’ represents money prime which is the result of a resell transaction (exchange the value of a commodity for a price). Thus, Jalee is describing with this formula how capitalist increase their wealth: they use money to acquire commodities and later resell them for a higher amount of money. Still, how do capitalist have been able to continuously increase their wealth? According to Jalee, capitalist use money to hire people in exchange of a wage in order to rent their ability to labour for them and add value to a product (labor power). However, this added value would be kept by the capitalists since they are the owners of the goods; as a result leaving creating surplus value. Once capitalist have accomplished their goal of creating more value, now they must maximize the amount of surplus value that they keep and that is how surplus labor is born. Indeed, Jalee explains “For the system to function the worker must labor for longer than it takes to create a value equal to that of his or her daily requirement of the means of subsistence, known as necessary labor time, that is what is necessary to reproduce his or her labor power” (Jalee, 27). Next, he claims: “During the second four hour period (of a labour shift) the capitalist will again supply means of production by which another value of 40 units will be transferred to the final product. But the worker’s extra four hours will not be paid for…” (Jalee, 27). In other words, in an eight hour shift capitalist will only be giving employees back four hours worth of the value they have produced with their labor. As a consequence, those four hours of extra work are supplementary, they are unpaid labor and that is what is known as surplus labor.

In a nutshell, It is pretty noticeable how capitalist have more than just figured out ways to generate value through others and keep it to themselves ( surplus value). They have also figured out ways to maximize the amount of profits without raising the wages for their employees ( surplus labor). All of it, with the help of the labor power and the continuity of the cycle of M-C-M’, which is what finally allows them to maintain and increase their wealth.

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