Imagine a big lemonade stand economy. 🍋
Capitalists (the lemonade stand owners) make lemonade each year.
Workers help make the lemonade and get paid with money (wages) to buy snacks and toys (MOS).
How it works:
At the end of the year, the owners have lemonade (C') and money (M').
They use some money (M) to buy new supplies (MOP: lemons, sugar) and pay workers (LP) for next year.
Workers spend their wages on snacks and toys (MOS), which buys back some lemonade.
Owners also use leftover money (m) to buy fancy stuff for themselves (like a new bike 🚴).
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