In Reading 5.1, the diagram M-C-M’ translates to Money-Commodity-More Money and shows how capitalists maintain and make more money. The process begins with M (money). The capitalist begins with money that he already has and uses it not for what he wants but for investing. The capitalist uses the money to purchase C (commodities), which consist of the means of production (factories, equipment, tools, and materials) and labor power (workers’ ability to work).

After the commodities have been purchased, production starts. The workers use the means of production to produce goods or services. In the process, the workers produce more value than the wages they receive. For instance, a worker receives $120 for a day’s work but produces goods valued at $400. The value produced above the worker’s wages is known as surplus value, which is where the profit for the capitalist comes from.