Why is the general formula of capital expressed as M–C–M′ rather than C–M–C, according to Marx?

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BlackTom AI · Accepted Answer

To unpack this question, consider how Karl Marx describes the circuit of capital in a capitalist economy.
Option presented: 'Because it reflects that in capitalism, production starts from money, moves through the purchase of commodities (especially labor-power), and ends with more money, highlighting that the real goal is monetary expansion, not consumption.'
First, the sequence M–C–M′ emphasizes that capital begins with money (M), which is exchanged for commodities (C) — notably labor-power along with raw materials and means of production — to produce new goods or services. The critical twist is that the end product is not simply consumed but sold to yield a greater amount of money (M′). This framing captures the fundamental logic of capital accumulation: the aim is to increase value by turning money into more money, rather than directly satisfying immediate consumption needs.
Second, by foregrounding money as the starting point, the formula highlights the social form of capital in capitalist society: the value-creating process is driven by monetary expansion and surplus-value extraction via labor and other inputs, culminating in a higher money return (M′) after sale. This aligns with Marx’s analysis of the circuit as a process of self-expansion, where the monetary motive drives production decisions and the organization of labor, rather than a simple act of exchanging goods for goods or consuming produced goods.
Third, addressing why not C–M–C: if one started with commodities (C) and ended with commodities, the focus would be on exchange and use-values, not on capital growth. The C–M–C schema would describe mere commodity exchange and consumption cycles, lacking the explicit emphasis on accumulation inherent in capitalism. The M–C–M′ formulation signals that the essence of capital is to convert money into more money through production and sale, not to directly satisfy consumption through a purely circular commodity exchange.
Fourth, the specific mention of labor-power underscores that the source of surplus value in Marx’s critique lies in exploitation of labor within the production process, which is integral to why the end result is M′ greater than M. By making labor-power a key input in C, the circuit explains how value is created and expanded beyond the initial monetary input.
In summary, the M–C–M′ route is chosen to highlight capital’s logic of starting with money, investing in production (via commodities and especially labor-power), and ending with a greater amount of money, thereby signaling monetary expansion and accumulation rather than immediate consumption.

ECON 5080-090 Summer 2025 Week 7 - Quiz

Why is the general formula of capital expressed as M–C–M′ rather than C–M–C, according to Marx?

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