Excerpt from Chapter I
WHAT IS CAPITALISM?
Capitalism gets its name from “capital” and is an economic system whereby capital is invested in order to produce a commodity or service that is sold for profit – an amount in excess of the costs of production, promotion, and distribution. Capital can be distinguished from money in that capital “is self-expanding value. Money acts as capital only when it is used to generate more money.” Investment can also be in money itself (also considered a commodity), as when capital is invested in securities.
The essential characteristics of capitalism are capital, private property, and profit. Socialized labor – the system of production whereby a single product is made by multiple workers, each making a different part of the same product – has also been a feature of capitalism, but not necessarily exclusive to it. The defining characteristics of capitalism existed in some form in pre-capitalist economic systems, but, being essential to capitalist development, they were refined, inextricably entwined, and institutionalized in the process.
How Capitalism Actually Works
In theory, money is invested in productive facilities that turn out products that are sold at a profit. Part of that profit is reinvested in order to expand the productive facilities so that more product can be turned out and sold, which means even more profit – and further expansion of productive facilities. This process envisions ongoing growth of these facilities and the attendant consumption – which, as we’ll see, is an impossibility.
 Ben Fine and Alfredo Saad-Filho, Marx’s Capital, Pluto Press, London & VA, 2004, pg. 35