The political relationship between government, capitalists, and workers is outlined. A transactions matrix is used as a vehicle to explain the structure of production. This same format is used to explain the core and periphery of the economy. A wage-profit curve is introduced and then used to explain how wages and profits are affected by a change in the social structure of accumulation. Part II starts off with an explanation of socially necessary consumption.
Household consumption is explained in terms of a hierarchy of needs.
In the discussion on cost, the importance of work intensity and its relation to work efficiency is introduced. Most firms are price setters and use mark-up pricing. The size of the mark-up is a function of the firm's degree of monopoly power. Firms are always trying to manipulate the demand for their product, while at the same time continually competing with each other. This competition is closely tied to the process of capital accumulation.