In the M-C-M’ cycle, the capitalists reproduce and amplify their wealth by investing money (M) in purchasing commodities (C), such as raw materials and labor, and selling the produced goods for a greater amount of money (M’). This cycle varies from C-M-C, which dominates in the working class where satisfy personal needs and not for profit. In C-M-C, a working class member can offers their labour as a commodity (C), receive money (M), and use the money to buy another thing they need (C). The reason for this is not profit but exchange of commodities for personal consumption according to the use-value of commodities. On the other hand, M-C-M’ is a capitalist circuit precisely aimed at the production of profits, where money is invested in buying commodities and sold for more money, thus generating surplus value.
M’ in the M-C-M’ circuit represents the surplus value or profit gained by the capitalists upon selling the commodities at a higher price than the cost of production. This profit is a result of surplus labor, in which the laborers produce more value than they receive in the form of wages. From the example of FashionThreads Inc., a producer of clothes, the laborers can be paid for 40 hours of labor but end up producing the equivalent of 60 hours of labor. The extra 20 hours of unpaid work provide surplus value, which the capitalist owner keeps for himself. The profit of the capitalist is the difference between money invested (M) and money received from the sale of commodities (M’). This is how money is transformed into capital: it is invested in labor and means of production, which, through the exploitation of surplus labor, produces added value.
The creation of surplus value relies to a great degree on surplus labor, where workers expend more labor time than that required to simply reproduce their wages. For instance, workers might labor 40 hours a week in the factory but only get paid for 30 hours of work. The remaining 10 hours of work, for which they do not get paid, are the surplus value appropriated by the capitalist owner in the form of profit. This surplus labor is necessary for the capitalists to maintain and increase their wealth because it leads directly to the generation of profits, which are reinvested in the cycle. As the capitalist reinvests the profits into production—buying more materials, more labor, and increasing operations—this cycle repeats to earn more money for the capitalist, while workers remain dependent on wages to survive.
Through this continuous cycle of M-C-M’, capitalists not only maintain their wealth but even increase it over time. The accumulation of wealth comes from the continuous extraction of surplus value from workers’ labor. By investing profit in more production, the capitalists secure the continual creation of surplus value, which allows their wealth to continue expanding. Through this, the capitalist class continues its financial supremacy, while the working class has no choice but to sell its labor power to ensure survival, in effect continuing the class divide. Thus, the capitalist mode of production relies on the exploitation of labor through the extraction of surplus labor to enable the accumulation of wealth by the capitalists.