The Money Circuit of Capital


The following will form the basis for many of the posts, or at least the initial ones since a basic understanding of how workers are treated as things or means for employers’ ends is essential for a critical understanding of our lives and experiences in this world.

Immanuel Kant, a German philosopher, argued that, in order to act ethically, it is necessary to treat people never as means only but as ends in themselves: “For, all rational beings stand under the law that each of them is to treat himself and all others never merely as means but always at the same time as ends in themselves” (Groundwork of the Metaphysics of Morals. New York: Cambridge University Press, page 41). Human beings need to be treated as ends and not as means. To treat human beings as ends in themselves, it is necessary to have those who engage in realizing the ends also engaged in participating in the formulation of the ends. John Dewey, one of the greatest philosophers of education of the twentieth century, flushes out what this means socially:

In a search for the conditions under which the inchoate public now extant may function democratically we may proceed from a statement of the nature of the democratic idea in its generic social sense. From the standpoint of the individual, it consists in having a responsible share according to capacity in forming and directing the activities of the groups to which one belongs and in participating according to need in the values which the groups sustain. From the standpoint of the groups, it demands liberation of the potentialities of members of a group in harmony with the interests and goods which are common. (The Public and its Problems. Denver: Swallow, 1927/1954, page 147).

Democracy as a way of life and not as formal government is what is required: the right to participate in forming and directing (realizing) the goals of the organizations to which individuals belong and for such organizations to use the potentialities of its members because of such participation in mutual goal-setting and directing activities. The use of potentialities, to be justified, requires that the individuals whose potentialities are being used have the right to participate in goal formulation, in their execution and in reaping the consequences (values) of their activities.

This view of agency is not what workers experience in a capitalist context. Consider the following description of the economic process of a typical employer in the private sector (which I used to organize a geography course I taught to grade ten French-immersion geography students). It is the money circuit of capital, and it is described by Karl Marx in chapter one of volume two of Capital: A Critique of Political Economy. The private sector will first be considered and then the public sector.

The Private Sector


An employer enters the market by means of the use of money by purchasing the elements for workers to work. In the brewery where I worked, for instance, Carling O’Keefe (and later Molson) purchased machines, such as the soaker, the filler and the labeler. It also purchased the soap that was used to ensure that the beer bottles moved smoothly along the line. This exchange process can be represented by a dash -.
An employer who is a capitalist, of course, does not just purchase the conditions for producing something. The employer hires workers. What is exchanged, or the elements of exchange, can be represented by M1 (the money invested and used to purchase the machines and so forth as well as to hire workers), and the commodities purchased can be represented by C1. The exchange process, from the side of purchase, then, can be represented by M1-C1.


The capitalist, once he has purchased the machines, building, raw material and other material required to produce a commodity such as beer, and hired workers in sufficient quantity and quality, then sets the workers to work. The workers then produce a commodity, such as beer, which is then sold for money. We can represent the production process as … P …, where P represents the capitalist production process, and the three dots indicate an interruption or break in the exchange process (the process of buying and selling).

In general, what is produced is different from what was purchased or hired. We can represent the beer, for example, by C2 to distinguish it from the commodities purchased and hired at the beginning of the process. We then have: P…C2.


Of course, the purpose of the whole process is to obtain more money at the end of the process than at the beginning. The whole process would have no purpose if the money that the capitalist receives at the end of the process were the same quantity as at the beginning of the process; the capitalist system would not last very long. The continued existence of the capitalist system, then, requires that the money at the end of the process, generally, be greater than at the beginning. Where the surplus money comes from does not concern us in this essay, though.
We can represent the sale (of the beer) as C2-M2.

The commodity produced—the beer or C2–is a different commodity from C1 (the commodities purchased and used for its production). M2 is more money than M1. The beer (C2) is exchanged for (-) more money (M2) than originally invested (M1).

The Whole Process of Purchase, Production and Sale

The whole process can then be represented as: M1-C1 (purchase) … P… (production) C2-M2 (sale, with M2 being more money than M1), or M1-C1…P…C2-M2. This process tends towards infinity since, although the return (M2) on investment (M1) is greater, the return immediately becomes only a definite sum of money, which is a limited amount of money. To become money capital again, it must be reinvested–and so on.

Workers as Means for Obtaining More Money in a Society Dominated by Employers

If we ignore the exchange process, we have the following: M1 … P … M2. Here, it is clearly seen that the production process is a means for obtaining more money. Since workers are part of the production process, they too are means for obtaining more money—even if they are organized collectively and act militantly. Being used as a means so that others can obtain more money is not an expression of a just and moral society, where human beings are free agents who control their own social structures and relations. Rather, it expresses a society that treats human beings as things to be used for the benefit of others who obtain more money. It expresses a kind of society where the results of the workers’ own work (expressed as money, as machines and so forth) dominates them rather than vice versa.

The Public Sector

Some may argue that the money capital process is accurate for the private sector but not for the public sector. However, the public sector should not be idealized either. The public sector has the advantage of not requiring consumers of services paying out money directly for such services. A teacher, for example, is not paid by the parents to teacher her/his child. In the public sector, the purpose or end of the work process is not directly more money. However, given the predominance of that goal in the total work process of society as a whole, such a goal is bound to have a major impact on the power of employers in the public sector (through, for example, the level of revenue in the form of taxes flowing to the government).


Apart from this indirect influence, public sector workers are still employees, and they are hired on a market for workers, just like workers in the private sector. The first part of the money circuit of capital still applies to them: M-C1.


The production process, though, is not capitalist. It is, however, a process that the workers not only do not control (nannies work as domestics for the personal consumption of the employer and are subject to the control of the employer, but for purposes of personal consumption) but is an impersonal process similar to the process characteristic of capitalist production (the owners of capital do not personally consume all that is produced). Public sector workers are collectively subject to the power of employers, and they do not formulate the goals of the organization to which they belong.

The Whole Process of Purchase, Production and Use or Consumption

The result or the consequence of the production or work process in the public sector does not result in a commodity (a product or service for sale) but is consumed. If U represents the use value produced (the service that is consumed), then we have: M-C …P…U. The consequence of their work is consumed without the intervention of exchange. On the other hand, since the beginning and the end process lack the same form, if that process is to continue, money must come from a process external to that process (from the capitalist economy or the private sector).

Public-Sector Workers as an Impersonal Means for Realizing the External Goals of Government Bureaucrats and Government Employers

Here P is not a capitalist production process but, nevertheless, it is an impersonal process the purpose of which the workers have no say. If we abstract from the initial exchange, we have: M…P…U. Production, or P, still functions as a means for ends external to the persons who constitute P. In other words, the people who work in the public sector still function as means for external goals; they cannot, democratically, participate in the formulation of those goals but have those goals imposed on them as employees.

Geert Reuten, in his work The Unity of the Capitalist Economy and State: A Systematic-Dialectical Exposition of the Capitalist System, points out that workers in the public sector are exploited (page 390):

There is no reason to assume that civil servants are less (or more) exploited than privately employed labourers in physical terms, even if we have no proper measure to account for it. Assuming that state labour is equally productive as the labour employed by enterprises, it is likely that it contains a surplus component, whence ‘the value’ of GCOL would be underrated in the System of National Accounts. Even if the labour product of civil servants were to (implicitly) contain a surplus component (i.e. the difference between the wage and the net product of, e.g., legislation or policing), this surplus is in fact distributed for free over production enterprises, financial enterprises and households (collective goods and services).

Mr. Reuten defines GCOL as follows (page 389):

In monetary terms the product of the state’s labour is a set of collective goods and services (GCOL).