M-C-M’ is a model that explains how capitalists maintain and increase their wealth. It stands for “Money-Commodity-More Money,” and refers to the process by which capitalists invest money in a commodity, sell that commodity for a profit, and then use that profit to reinvest in more commodities.

Here is how the process works:

1. Money: A capitalist starts with a certain amount of money, which they use to purchase a commodity.
2. Commodity: The capitalist buys the commodity with the intention of selling it for a profit. The value of the commodity is determined by the market, and the capitalist hopes to sell it for more than they paid for it.
3. More Money: The capitalist then sells the commodity for a profit, which is the difference between the price they paid for it and the price they sold it for. The profit is the capitalist’s reward for taking on the risk of investing in the commodity.

This process can be repeated indefinitely, as long as the capitalist is able to continue buying and selling commodities for a profit. By doing this, capitalists are able to maintain and increase their wealth over time.

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 is a formula that Marx used make up the capitalist system. M-C-M stands for money-commodity-money. With this form the way the capitalist would maintain and increase their wealth is because they would have an item in its raw state such as wood. They would not sell the wood even though the wood have value of its own but rather hire people that would turn the wood into something such as furniture or paper, etc and obtain surplus value plus the profit of selling the item. So the idea is you start off with money that you use to buy a commodity which is the raw material, then you sell it back for more money.

M-C-M

Money-Commodity-Money. This equation is a representational makeup of the capitalist system. As Marx says “Owning only money, this person must first acquire commodity–the weavers’ cloth for example–not for personal consumption but for resale.” that is how capitalists start. By using the money they own they are able to acquire workers to do the labor that would provide them with a finished product or creation they can repurpose for more money or surplus value. By investing their money into making a finished product rather than doing it themselves they save time on labor and products for the market. This allows them to grow their capital. By continuously hiring people to do the labor at an inexpensive amount they can market their products at a luxury level. An example would be the now overly famous clothing company, Shein. Their employees work up to twelve hours a day and receive less than a thousand dollars a month. Shein employs workers that produce over 35,000 items a day and has a daily update of “new arrivals” which consists of 6,000 new products. Their ability to abuse labor and neglect work laws has allowed them to become a billionaire company. In 2021 alone they received more downloads than amazon and are already in competition with brands such as Zara and H&M who have been around for years.

Credit:

• Dressed To Kill
• Shein Statistics

1. M-C-M is defined as Money-Commodities-Money. It is a concept found by the marxist theory that serves as a formula that defines most of the landscape of capitalism. In simple terms money (m) is used to obtain commodities (c) such as labor power and basic materials in order to therefore be exchanged into more money (m). One example to support this would be if a capitalist were to have to have 100 bottles of water bought at $100, and then each sold for $2, he would now have $100 dollars in profit.

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.

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)

1. In the past the commerce was based between two people that make things. One used to sell what he makes and get money and buy what the other makes or what he needs. They will get money from their labor, this is considered as the Commodity – Money-Commodity. Now the wealthy comes to play the role of intermediary between creators and buyers. They used this strategy to stay wealthy or to make more money. With their money they buy what the creators make and resell it more than what they primarily bought, and this is considered as Money-Commodity-Money + Profit. But they are able to play this role just because they have money. They are able to buy what the artisan makes for less than what their value is, and to sell them for more and this is how they become richer. They transform themselves into manufacturers and industrialists in buying the means of production with their money such as, buildings, raw materials, equipment necessary for their business. etc. Money keeps come and go and unlimited. For the capitalist system to remain the worker has to work more than what is getting paid. Therefore, they work for height hours and get paid for 4 hours. The additional four is for them to produce extra units or goods. The extra unpaid hours that the working class produce extra goods in is considered as surplus labor which will generate more profit to the boss. This extra labor surplus will then give birth to the surplus value, a big profit, more than 100% of the real value of the good in some capitalist system.

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. (hint: your answer should weave a summary that includes what you reviewed in the self-assessment exercise question 1-7)  

Capitalist remains wealthy because they already have money they can use to buy products to create more products and sell them for more money. Something that explained that in the article was “the owners of capital can always put their money back into circulation and repeat their operations as often and as quickly as possible: buying to sell, starting with money to acquire more money, which thus enables them to increase their capital. This shows a reason of why they stay wealthy. Business owners can’t create wealth or profit without labor power. They make a profit off what they sell since they sell it for more than what it’s actually worth this is called surplus value which is all the extra money that goes into the owner’s money, not the worker’s. MCM’ The first M stands for money which is used to create commodities which is C. Then C is the amount of work/labor that it took in order to produce the final product and lastly M’ is money at the end of the transaction it is not the same as the first M it has a greater value.

Discussion 5.2

Entrepreneurs can continue to amass wealth because they already have money to spend on goods to produce more goods and sell them for more money. If the owners of capital can always reinvest their funds and carry out their transactions as frequently and swiftly as possible buying to sell, beginning with money to acquire more money this aids in the development of their capital. This shows why they have remained wealthy over time. Without work, business owners cannot generate wealth or profit. Surplus value, or all the additional money that goes into the owner’s pocket instead of the worker’s, is how they make money off what they sell since they sell it for more than it is actually worth. MCM’ The first M represents the currency that is utilized to produce the commodity, which is C. The quantity of work/labor required to make the finished goods is represented by C, and the money at the end of the transaction, M’, has a higher value than the first M. This is what Karl Marx argues that workers are worth more than they are paid.

Capitalists maintain and increase their wealth by using M-C-M. One should know that the terms Commodity ( C ) and Money ( M ) are M-C-M which is a process where M stands for the transformation of money, C stands for the transformation into commodities and lastly, the second M defines the change of commodities back into money which is then the changed value. M’ is more significant than just M independently. M’ is defined as M plus m, where m is typically called the gain or profit, which is referred to as surplus value. Wealthy people remain wealthy as a class because of the way money is transformed into capital. Thus, surplus value capitalists can not survive without making their interests to seek to increase it by either playing on relative or absolute surplus value which is how they remain wealthy as a class.

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) 

According to reading 5.1, the small-scale commodity production is called C-M-C, or commodity- money- commodity. To put it simply, at this stage people are exchanging a commodity for money, which then gets exchanged for another commodity. For example, peasants used to sell vegetables and later bought cloth with the money they got for the vegetables, while weavers sold their cloth to be able to purchase vegetables. We sell these commodities in order to buy more things where money is used as a middleman. The value of the commodities remains constant in the first and last stage of C-M-C. However, this money becomes transformed in this new stage M-C-M (money-commodity-money). This is the formula for capital in which the person initially only has money and must figure out how to get the commodity they are looking for. For example, the very same weavers do not personally use the cloth they make but make it to sell or resell it. In this instance we are buying with the intention of selling where money is capital. Therefore, in the first phase you would be turning money into a commodity, but the second would be turning the commodity into money. 

The money at the beginning and end of an M-C-M transaction is substantially different because a capitalist would not buy something without the expectation of getting more money in return. Thus, the final M’ is greater than the initial M, plus small m which is the excess money, profit, or surplus value. The capitalists can only obtain the surplus value if those who make the commodities sell them for much less value than they are worth. The people who make the commodities decide to give them to capitalists, even though they are massively undervalued, because of their desperate need for customers.  

Additionally, in the formula M-C-M, or capital formula, M’ is much larger than M due to the work the factories put in to make that commodity. The machines, raw materials, and labor power that the capitalists bought for the smaller sum is turned into a product with much greater value because of the production process it takes to manufacture that product while still in the factory. As a result, the formula for this is M’= M plus m. The small m is the value created by the manufacturing process brought on by a specific commodity, and once it’s bought and put on the market can create the surplus value for the capitalist. This commodity is known as labor power. How much labor power people offer is up to the particular person. It can either be more or less extreme. The capitalist is responsible for purchasing that worker’s labor power, and the worker decides to sell their labor power to the capitalist. The capitalist then agrees to pay the worker a wage in exchange for their labor power. This wage serves as a representation of the value of the worker’s labor power.  

When the capitalists agree to purchase the labor power of the workers, they also need to purchase the materials to use their labor power successfully. Consequently, each capitalist is transforming money into capital by providing tools, equipment, machinery, raw materials, and any additional provisions, and purchasing labor power. Each worker is able to transform every commodity into the value it should be in order for the product to sell, and the capitalist to make a profit. Money isn’t capital because it is not considered a productive resource. However, money is sometimes used to purchase capital. It’s the capital good, such as the equipment provided that is used to make those goods and services. For this system to work, a worker must work longer than it takes to make their product valuable for what it called necessary labor time, or what is required to replicate their labor power. For example, maybe it takes four hours of someone’s labor power to produce everything needed for one day. If they work a 9 AM to 5 PM shift, they have spent what they are worth by 1 PM., four hours later. However, they still must work till 5 PM so their employer gets an extra four hours of labor out of their worker. This is called surplus labor. This is the extra labor a worker must do their job far beyond just earning a living for themselves. This is generally unpaid labor. Anything the worker does at that point belongs to the employer capitalist. They sell the products their workers make for a profit and keep that profit for themselves.