Concentration of Capital and M–C–M’

In this week’s reading, Michael Parenti explains how wealth in the U.S. is concentrated in the hands of a small capitalist class. These are people and corporations who not only own large amounts of money and property, but also control the means of production factories, businesses, land, media, and more. They maintain and grow their wealth through a constant cycle that was also discussed in Reading 5.1: the formula M–C–M’.

M–C–M’ stands for Money – Commodity – More Money. It shows how capitalists operate in a capitalist economy:

• The capitalist starts with money (M).
• They buy commodities (C), which includes both raw materials and labor power (workers’ ability to work).
• Then they use those commodities to produce goods and sell them for more money (M’) than they started with.

The key part here is the M’, which represents surplus value the extra profit gained from the labor of workers. Workers are paid less than the value they produce, and this difference becomes profit for the capitalist. For example, if a capitalist pays $100 in wages but sells the product for $300, the $200 difference is surplus value that increases their wealth.

This process helps explain how capitalists remain wealthy. They don’t stay rich just by saving money or working hard they invest money to make more money, using workers’ labor as the source of value. As Parenti points out, this cycle allows the top 1% to own more wealth than the bottom half of Americans combined. That’s why wealth inequality keeps growing.

The formula M–C–M’ is the engine of capitalism. It shows how money turns into more money through the exploitation of labor. It also explains why there is always a struggle between workers, who want fair pay, and capitalists, who want to maximize surplus value.

Understanding this cycle helps us see that wealth in the U.S. isn’t just about individual success it’s about a system that rewards ownership and control, not labor.