Part Two: the goal of each circuit
The circuit C-M-C describes an interaction in which a person sells a commodity in order to buy a commodity. I exchange x commodity A for y dollars, and then I exchange y dollars for z commodity B. All other things being equal, we can assume from any transaction of this form that x commodity A has the same exchange-value (is worth as much) as z commodity B. This is given by their equation with an identical quantity of money.
Although it is rational to assume that the quantity of exchange-value is preserved in this transaction, the same does not hold true when we consider the qualitative traits of the commodities. No rational person intentionally sells a gallon of gasoline in order to use the money immediately to buy a gallon of gasoline. He takes the money and uses it to buy something he did not already have. Therefore, while the actors participating in C-M-C aim to realize identical exchange-values across their transaction, what they do makes no sense unless the first C and the second C are different sorts of things.
C-M-C is a process conditioned by consumption—the use and using up of things that satisfy wants and needs. One participates in C-M-C only in order to consume. The first C enters circulation and becomes the property of the buyer. From there it is either consumed, sold, or used to create more value. But the second C necessarily drops out of circulation. C-M-C is a form of circulation that necessarily terminates in something other than circulation. Its entire aim and reason for existence is consumption.
The circuit M-C-M describes an interaction in which one person buys a commodity in order to sell a commodity. I exchange x dollars for y commodity A, and then I exchange y commodity A for z dollars. Whereas the extremes in C-M-C were qualitatively different use-values, in M-C-M the extremes are identical use-values. One dollar is as good as the rest. Yet while it made sense to assume exchange-value was preserved over C-M-C, it makes no sense to assume the same for M-C-M. All other things being equal, I need do nothing more than hold on to my $100 in order to preserve its exchange-value. The only reason to throw $100 into circulation is if I hope to have more on the other side. Therefore, M-C-M is really M-C-M’ where M’ = M + DM. Marx calls DM “surplus-value”.
Unlike C-M-C which aims for the realization of use-value, the purpose of M-C-M is to increase exchange-value. One participates in the interaction M-C-M in order to make more money. Yet unlike commodities, we do not consume money (except by wearing it out). Unlike food, medicine, or even a yacht, money serves no purpose outside the sphere of exchange. Therefore, M-C-M is not conditioned by consumption the way C-M-C was. Its only purpose is the expansion or realization [Verwertung] of value.
Next: the class characteristics of each circuit