1. The M-C-M’ diagram describes how the owning class function in a capitalist society. In contrast to C-M-C, the capitalists start out with money (M). The capitalist uses this money to buy commodities (C). These commodities are the means of production and workers, who exert labor power to transform and transfer the means into the final product(s), the commodity which is sold. M’, the final step, is the money that the capitalist makes as a direct consequence of these purchases; surplus value. M’ is always greater than M. This is because the owner sells the commodities made, using the means of production and labor, for more than they cost to make. It is worth noting that this model is inherently exploitative. The capitalist makes money by under-staffing and maximizing the work they can get out of each individual employee. This always results in the worker making more money for the company than they are being paid for. Even in sales positions the worker doesn’t make the money from the sale, they make commission. If workers were really paid for everything they do, they would also be owners of the company.

Through this unending cycle (granted that it is successful), the money that the capitalist started with is transformed into capital.