Karl Marx was born on 5 May 1818, the son of the lawyer Heinrich Marx and Henriette Pressburg. His father was descended from an old family of Jewish rabbis, but was himself a liberal admirer of the Enlightenment and not religious. He converted to Protestantism a few years before Karl was born to escape restrictions still imposed upon Jews in Prussia. His mother was of Dutch-Jewish origin.
Outside his specific economic theories, Marx’s main contribution to the social sciences has been his theory of historical materialism. Its starting point is anthropological. Human beings cannot survive without social organisation.
A general appraisal of Marx’s method of economic analysis is called for prior to an outline of his main economic theories (theses and hypotheses). Marx is distinct from most important economists of the 19th and 20th centuries in that he does not consider himself at all an ’economist’ pure and simple.
As an economist, Marx is generally situated in the continuity of the great classical school of Adam Smith and Ricardo. He obviously owes a lot to Ricardo, and conducts a running dialogue with that master in most of his mature economic writings.
The labour theory of value defines value as the socially necessary quantity of labour determined by the average productivity of labour of each given sector of production. But these values are not mathematically fixed data. They are simply the expression of a process going on in real life, under capitalist commodity production. So this average is only ascertained in the course of a certain time-span.
In the same way as his theory of rent, Marx’s theory of money is a straightforward application of the labour theory of value. As value is but the embodiment of socially necessary labour, commodities exchange with each other in proportion to the labour quanta they contain. This is true for the exchange of iron against wheat, as it is true for the exchange of iron against gold or silver.
Marx himself considered his theory of surplus-value his most important contribution to the progress of economic analysis (Marx, letter to Engels of 24 August 1867). It is through this theory that the wide scope of his sociological and historical thought enables him simultaneously to place the capitalist mode of production in his historical context, and to find the root of its inner economic contradictions and its laws of motion in the specific relations of production on which it is based.
If Marx’s theory of surplus-value is his most revolutionary contribution to economic science, his discovery of the basic long-term ‘laws of motion’ (development trends) of the capitalist mode of production constitutes undoubtedly his most impressive scientific achievement.
Marx did not write a systematic treatise on capitalist crises. His major comments on the subject are spread around his major economic writings, as well as his articles for the New York Daily Tribune. The longest treatment of the subject is in his Theorien über den Mehrwert, subpart on Ricardo.
Marx was disinclined to comment at length about how a socialist or communist economy would operate. He thought such comments to be essentially speculative. Nevertheless, in his major works, especially the Grundrisse and Das Kapital, there are some sparse comments on the subject.