Question

Commodity exchange is supposedly premised on the equivalence or equality of values (as in the formula...

Commodity exchange is supposedly premised on the equivalence or equality of values (as in the formula C-M-C). Yet, M-C-M’ is based on a capitalist starting a process with a sum of money and creating more money. Where does the extra M’ come from in the formula M-C-M’. How is M’ generated? What are the various options capitalists have to generate more M’?

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Answer #1
  • In commodity Exchange Model, C-M-C refers to Commodity-Money - Commodity. Commodity is sold out and money is received. Further, money is used for buying other commodities.
  • M-C-M' refers to the Money -Commodity - More money. Here, Money is invested in commodities to earn profits.
  • Extra M' comes from investment and profit generated.
  • Capitalists have various options to generate M'. Capitalists invest in commodities, financial assets and trading activities to generate more money out of limited money at their disposal.
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