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.

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

In Pierre Jalee’s “How Capitalism Works” M (Money) -C (Commodity)-M (Money), he states “the formula M-C-M must thus be regarded as the general formula of capital.” M-C-M is a cycle where money is needed to by commodity to establish more money. An example of M-C-M are those who own multiple homes as an investments and rent them out for more than what the monthly mortgage is asking to make a larger profit. The last M in M-C-M is the excess profit and is the surplus value that capitalist make, it is of greater value the M. The capitalist buys the labor power from the worker at its value and pays the worker a wage. The capitalist sells the goods produced by the labor for more than its original value. The worker who has to work longer hours to “create a value equal to that of his or her daily requirement”, makes value for themselves and then a surplus value for the capitalist.

I understand that one is to sell in order to buy and one is to buy in order to sell. Also the M-is the money if they could not resell the product the capitalist would not accept it. The greater M is referred to as the surplus value because the consumer will buy the product and sell it at a lower cost. M is called the grain or profit which is referred to as surplus value.

1. You have an amount of money you started with, that M comes first, then you have C, commodity, which is used in production. M again comes at the end and basically signifies that while you are making things, you attempt to keep the same level of money. Basically, they start with a certain amount, they then produce products, or invest in something and then get that money back, basically profit so much from it that it doesn’t take away from what you started at.

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)