Question

The Laws of Motion for Capitalism

According to Marx, prior to the development of capitalism, the circulation of the commodity could be represented by C-M-C.

However, in the capitalist system the circulation can be represented by M-C-M.

a) Explain in your own words what he means with this argument.

b) Provide an example where you have observed M-C-M in the Canadian Economy.

c) Provide an example where you have observed C--M-C in the Canadian Economy

Answer 1

A. Marx described the coming of capitalism was due to to changing roles of money. Money was considered a medium of exchange . By medium of exchange, he argued , as the trade and exchange across the world grew , to provide a homogeneous medium of exchange ( which was earlier barter system , which was not homogeneous) , money was introduced. By C-M-C chain, he means commodity is being circulated in the market , in order to get money , which can further be used to buy other commodity.

Gradually the power of money went up from transectionary motive and started to be held because now it was having hold value. This means money itself starting having value with the coming of capitalism . This value was extracted out of the banking institutions, stock market institutions etc. Making holding money fetch interest rate , solve speculative and precautionary motive etc. Capitalism encouraged to use money , not just in circulation , but use money to make more money. Now , as holding money becomes a trend with capitalism , money is used to make commodities which are sold to get more money, that is why the pattern M- C-M. Still the process of production is important key in discussion , as money is invested in commodities which is further sold to make more money.

The next stage to this cycle , with boom of stock markets , was money making more money , ie.M-M' , M' > M.

2. Example of M-C- M in Canadian market can be the competitive markets like movies , which put in lot of money in production of movie and then the commodity , film is made, which is then sold in order to get money back with profits.

3. Example of C-M-C can be a pawn shop. A pawn shop takes commodity with value, gives equal value money in exchange and that money can further be used to buy commodities from market. Here commodity sold is making money to buy other commodity.