1.According to reading 5.1, the author uses the formula MC-M’ to explain how capitalists maintain and increase their wealth. M is currency, C is a commodity, M’ represents surplus value, M’ is greater than M: M’ is equal to M plus m, where “M” is commonly referred to as income or profit, which is called surplus value. When the price of the commodity is lower than its value, the capitalist can earn surplus value. And capitalists will buy the labor of workers, and labor will increase the value of commodities. The more labor the worker puts on the commodity, the higher the value of the commodity. The commodity is private, and the worker’s wages are only a small part of the total value, so capitalists can get a lot of benefits from it.

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.

1-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 these 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)

The diagram C-M-C would be used to fittingly describe the lives of working class people , whereby, the initial C would stand for commodity and in this manner connoting labour. The working class are always employed to provide their labour in exchange for a reward-money, which is represented by the letter M. Once these people acquire the much needed money, they can now afford to cater to the needs in their lives. They can look after their families and pay for school amongst other pending bills, and so, the last letter in this formula is C”. The C” is greater than the first C, and this C” means a greater commodity. It stands for the commodities that the working-class people often run to acquire once they receive their dues from the capitalist.

The format that represents the daily activities of the capitalist class is as follows: (M-C-C+ -M+).

M-C constitutes the capital invested and commodities that are needed to make a profit. C-C+

represents the business of the market that is open to selling. C+-M represents the new

commodities created and sold for profits. An example of M-C is a person that wants to open a

Subway restaurant. They would have to invest in the franchise, then rent the store, buy all the

material like the dough for the bread, cheese meats, condiments and hire staff. C-C is when the

commodities are sold, the dough is baked in the bread, the sandwiches are made and sold. C+M is where the investor received the gains of what he investment often doubling the amount of the

initial investment.The formula that represents the daily activities of the working class is illustrated as (C-M-C). The working class begins with (C-M) because the individual must work in order to obtain money.

LiLiu

Professor Arto Artinian

POL100 (0502): Discussion Board 5.2

June 9, 2021

1. 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.

According to Reading 5.1, the author Pierre Jalee explained that capitalists exploit the surplus value of commodities created by workers in order to maintain their wealth. The author showed the diagram M-C-M’, which is the general formula of capital. M is the money at the beginning of the deal, C is the commodity, and M’ represents surplus value. M’ is greater than M because capitalists will not buy at high prices of commodities and sell at low prices. Only when the price of the commodity is lower than its value can the capitalist achieve the goal of earning surplus value. M’ equals M plus m, and m is the gain or profit, that is surplus value and is also the source of capitalists to maintain and increase their wealth.

Surplus value accounts for most of the total value of goods created by workers, while workers’ wages account for only a small share of total value. Most of the commodity value created by workers goes into the pockets of capitalists, and they only get a small salary. Therefore, the capitalist’s means of maintaining and increasing wealth is to exploit the surplus value of goods created by the workers. Moreover, the author also explained how capitalists use relative or absolute surplus value to increase surplus value in order to seek more wealth. The author writes, “It is equally well understood that exploitation can be reinforced not only by increasing the productivity of labor(increased results with unchanged effort), but also by increasing the intensity of labor by requiring of the worker greater physical effort” (Jalee, p 29). Therefore, the means for capitalists to maintain and increase their wealth is to exploit the surplus value of the commodities created by the workers.