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Money and Commodity Circulatory Processes
Common characteristics and differences in C-M-C and M-C-M
Marx realized that problems existed amid commodities circulation. He then approached this dilemma by classifying the two ways that commodities could possibly circulate namely C-M-C and M-C-M. The difference and similarities between money that is just money and capitalized money appear only in the mode of circulation.
The circuit M-C-M is when money is circulated as capital and is also referred to as the capitalists circulation. In this circuit, M is money meant to purchase the commodity that is traded again for M (money). On the contrary, the monetary flow also known as the simple commodities circulation can be illustrated via the C-M-C circuit.
In this circuit, commodities are traded to get money. This money is then used to purchase different commodities. In capitalists circulation, M-C-M, individuals buy commodities with the intention of selling them. The main aim in the simple circulation is to attain the utility values. However, the capitalists circulation is categorically aimed at obtaining the exchange values that must be higher than the originally presented money (M).
The simplest commodities circulation form C-M-C entails purchasing commodities only after some commodities have been sold. The product is altered into cash, and this cash is once more changed back to a product.
Conversely, M-C-M circulation occurs when sales take place because of the purchases made. That cash is altered into product which is afterward changed back into cash. In the last circulatory process, the transformed money materializes as the potential capital. A close examination of the M-C-M circuit shows that it is made of two adversative phases.
Phase one comprises of the purchase or the M-C where money becomes transformed into commodities. The second phase entails the sale or C-M. It includes transforming the commodities back into monetary form. When these two phases are combined, they make a solitary flow where money becomes traded for commodities and similar commodities are traded for money. In this circulation, the process M-M that involves exchanging money usually varnishes in the end.
Both these circulations are composed of two similar segments namely the purchases phase (M-C) and the sales phase (C-M). In fact, a retailer, a purchaser, money and commodities that have similar economic characteristics are bound to face each other. The two similar opposing phases are unified by each circuit. In all cases, the unison comes as a result of the involvement of three contracting parties. One of the parties must be a buyer while the other party has to be a seller, and the third party should both be a seller and a buyer.
The M-C-M is distinguished from C-M-C by the inverted progression arrangement between the two segments. For instance, in the monetary circulation (M-C-M), the circuit ends with sales and commences with purchases. In the simple commodities circuit (C-M-C), the process ends with purchases and instigates with sales.
Furthermore, in C-M-C circuit, the circulation process goals and commencement points are made of commodities while in M-C-M, the goals and starting points are comprised of money. In the second circulation process (M-C-M), the commodity intervention brings about the movement whereas in the first circuit (C-M-C) the intervening movement comes because of the commodities.
What Marx meant
Money and commodity circulatory processes: M-C-M
To both Marx and society, the essential category in any societal affiliation is the generated profit or the derived value from trade. In fact, Marx was intrigued by the proceeds and value reality. The main aim in the circulation processes was to derive value from the possessed resources namely the commodities and money.
In the M-C-M circuit, money hardly serves its use value. This is because when it is finally converted, it does not become a commodity. In reality, buyers act as sellers by laying out their money with the intention of recovering that capital. However, the aim is to get greater value attached to it.
The buyers purchased the commodities by investing throwing their money into the exchange process. This enabled them to extract it later through selling similar commodities. They let their money go into the circulation process although with justified sly intent to have it back. This money is neither spent nor totally converted into commodities, but it is its value that is augmented.
In conclusion, labor products in the circulatory process which, in this case are the commodities become values. The commodities are produced in the capital relations framework where money becomes the initial form. Besides, money in the M-C-M circuit has value that essentially makes itself apparent in monetary form. Thus, money acts as the equivalence of value by manifesting itself in the excellent capital form, and could be termed as capital.
However, commodities can only be bought using money, but money used to purchase commodities is expected to generate greater returns in the future. Hence, commodities represent capital in the same way money represents capital. Whichever way, money is transformed into commodities or changes its appearance.
The intent is to increase its final value and this also increases capital. Money is hardly lost in the circulation process as it self-expands its value by sequentially assuming different forms. It just becomes an active character which, Marx called capital.
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