Sam Chambers' Useful Guide through Marx's M-C-M' Formula - CAPPE University of Brighton

When I come to market with a commodity C and exchange it for another commodity C, I exchange equivalent for equivalent C-C. In this exchange we see no sign of capital.

Even when I use the intermediary of money, first selling my commodity for money C-M, and then using the money to buy the second commodity M-C, I still complete a process of equivalent exchange. The money only mediates the transfer and capital still never appears.

Marx shows, however, that the subtle fact that market commodity exchange can be broken down into 2 separate and temporally distinct paths makes it possible for markets to be used for purposes other than the exchange of equivalent commodities. Hence if I come to market with money (M) and exchange the money for a commodity (M-C) only later to sell that commodity for more money (M’) I have helped to foster the circulation of capital and not the mere exchange of equivalence.

In this latter stage, the overall movement is M-C-M but the second M cannot be the same as the first (hence the nomenclature of M’) since the entire point of the operation is to use money to get more money. Furthermore, just as money was largely beside the point in the original exchange of equivalence, so commodities are apparently beside the point in the circulation of capital. Thus, the equation of M-C-M’ reduces to M-M’ which Marx calls the general formula for capital.

Capital is the logic by which money begets more money. At the same time, money is nothing other than the form that value takes under a system in which the logic of capital preponderates.

Value, Marx says, becomes the very subject of the overall process in the sense that the logic of capital is itself a movement and growth of value – a movement that arranges other elements around it by prompting the flow of materials and the actions of individuals. This is the sense in which Marx declares that the valorization of value under the logic of capital is a self-valorization. Rearranging terms, we can say in shorthand that capitalism is the self-valorization of value.