In the previous chapter, we familiarized ourselves with some introductory methodological issues that will help us in understanding Marx's economic theory. We understood how Marx came to the study of political economy via his engagement, as a journalist, with issues of what he called ‘material interest’. We saw how his lifelong study of economics could be divided into two phases: 1843–47 and 1850–83. In the first phase of his studies, he engaged not only with political economy but also with classical German philosophy and French socialist ideas. From this engagement emerged a coherent and integral worldview – a critical synthesis of British political economy, classical German philosophy and French socialism – that later came to be called Marxism. Two key ideas developed by Marx during the first phase of his studies were the dialectical method and historical materialism. When Marx was able to resume his studies in 1850, these two ideas remained his guiding posts. But during this second phase of his studies, the focus was almost singular – his intellectual energies were devoted to the study of only political economy.

By the late 1850s, Marx had more or less completed his studies of political economy and his mature ideas about economics had taken concrete shape. In the backdrop of the economic crisis of 1857, Marx started experimenting with the best form to present his ideas to the wider public. It would take him almost another decade to finalize the structure and content of his work on economics in terms of the three volumes of Capital, as we have seen in the previous chapter. While Marx managed to finalize and publish the first volume – not one but several editions – he only left notes for the other two volumes. It was left to his lifelong friend and comrade, Frederich Engels, to work through the notes and publish them. It is the body of work available in the three volumes of Capital which will be the object of study in this and the following two chapters.

In this chapter, we begin the study of Marx's political economy of capitalism by working through the details of the argument in Volume 1 of Capital (Marx, 1992).