Marx began his 1857 Introduction to his Critique of Political Economy (http://bit.ly/U1GGzn) with the following remarks:
The object before us, to begin with, material production.
Individuals producing in Society – hence socially determined individual production – is, of course, the point of departure. The individual and isolated hunter and fisherman, with whom Smith and Ricardo begin, belongs among the unimaginative conceits of the eighteenth-century Robinsonades,  which in no way express merely a reaction against over-sophistication and a return to a misunderstood natural life, as cultural historians imagine. As little as Rousseau’s contrat social, which brings naturally independent, autonomous subjects into relation and connection by contract, rests on such naturalism. This is the semblance, the merely aesthetic semblance, of the Robinsonades, great and small. It is, rather, the anticipation of ‘civil society’, in preparation since the sixteenth century and making giant strides towards maturity in the eighteenth. In this society of free competition, the individual appears detached from the natural bonds etc. which in earlier historical periods make him the accessory of a definite and limited human conglomerate. Smith and Ricardo still stand with both feet on the shoulders of the eighteenth-century prophets, in whose imaginations this eighteenth-century individual – the product on one side of the dissolution of the feudal forms of society, on the other side of the new forces of production developed since the sixteenth century – appears as an ideal, whose existence they project into the past. Not as a historic result but as history’s point of departure. As the Natural Individual appropriate to their notion of human nature, not arising historically, but posited by nature. This illusion has been common to each new epoch to this day. Steuart  avoided this simple-mindedness because as an aristocrat and in antithesis to the eighteenth century, he had in some respects a more historical footing.
The more deeply we go back into history, the more does the individual, and hence also the producing individual, appear as dependent, as belonging to a greater whole: in a still quite natural way in the family and in the family expanded into the clan [Stamm]; then later in the various forms of communal society arising out of the antitheses and fusions of the clan. Only in the eighteenth century, in ‘civil society’, do the various forms of social connectedness confront the individual as a mere means towards his private purposes, as external necessity. But the epoch which produces this standpoint, that of the isolated individual, is also precisely that of the hitherto most developed social (from this standpoint, general) relations. The human being is in the most literal sense a Zwon politikon  not merely a gregarious animal, but an animal which can individuate itself only in the midst of society. Production by an isolated individual outside society – a rare exception which may well occur when a civilized person in whom the social forces are already dynamically present is cast by accident into the wilderness – is as much of an absurdity as is the development of language without individuals living together and talking to each other.
 Utopias on the lines of Defoe’s Robinson Crusoe.
 Sir James Steuart (1712-80), ‘the rational exponent of the Monetary and Mercantile System’ (Marx), an adherent of the Stuart cause who went into exile in 1745 and pursued economic studies on the Continent. Author of An Inquiry into the Principles of Political Economy, London, 1767 (2 vols), Dublin, 1770 (3 vols—the edition used by Marx).
 Zoon politikon—political animal.
The following observations can be noted:
By stating that his subject matter is material production (which he immediately qualifies and narrows down to material production under specific capitalist social conditions) and material production conducted by individuals, Marx is connecting his critical study of political economy to his (and Engels’) German Ideology (1845, http://bit.ly/8DWyU); in particular, to the following seminal passages:
The premises from which we begin are not arbitrary ones, not dogmas, but real premises from which abstraction can only be made in the imagination. They are the real individuals, their activity and the material conditions under which they live, both those which they find already existing and those produced by their activity. These premises can thus be verified in a purely empirical way.
The first premise of all human history is, of course, the existence of living human individuals. Thus the first fact to be established is the physical organisation of these individuals and their consequent relation to the rest of nature. Of course, we cannot here go either into the actual physical nature of man, or into the natural conditions in which man finds himself – geological, hydrographical, climatic and so on. The writing of history must always set out from these natural bases and their modification in the course of history through the action of men.
Men can be distinguished from animals by consciousness, by religion or anything else you like. They themselves begin to distinguish themselves from animals as soon as they begin to produce their means of subsistence, a step which is conditioned by their physical organisation. By producing their means of subsistence men are indirectly producing their actual material life.
The way in which men produce their means of subsistence depends first of all on the nature of the actual means of subsistence they find in existence and have to reproduce. This mode of production must not be considered simply as being the production of the physical existence of the individuals. Rather it is a definite form of activity of these individuals, a definite form of expressing their life, a definite mode of life on their part. As individuals express their life, so they are. What they are, therefore, coincides with their production, both with what they produce and with how they produce. The nature of individuals thus depends on the material conditions determining their production.
The adjective material in the phrase material production above can be construed in two distinct ways: (1) as proposed by Gerald Cohen in his Karl Marx’s Theory of History: A Defence (1978, http://bit.ly/R1mETN), the adjective material is to be paired dialectically (not Cohen’s term, of course, who shunned dialectics) with the adjective social, as in material reproduction and social reproduction. Cohen aptly pointed out that this distinction between — on the one hand — the aspect of social life that is invariant through human history and humans can only manage, since abolishing it would entail self abolishment, and — on the other hand — the aspect of social life that humans can modify with their actions, provided they have the (productive) powers (freedom) to do so, is absolutely key in Marx’s understanding of history. Cohen also noted that this distinction, indispensable in determining the range of historical variance, goes back to the Sophist philosophers in Ancient Greece, a point that — I believe — can be found in Protagoras’ argument with Socrates, as the story is told by Plato (http://bitly.com/aVBtmA), where Protagoras contrasts the set of human powers owed to Zeus (“nature”) with those owed to Prometheus (“convention”).
And: (2) all production is material in the sense that its output is always a materially or physically transformed world. Here, the adjective material is to be paired, dialectically, with the adjective ideal. Material refers to the physical, objective existence of the premises, processes, and results of production. And ideal refers to the subjective content that humans impress upon the world as they transform it.
Thus, all wealth — the output of production or the natural resources — has a material or physical existence (not necessarily directly perceptible by our raw senses, but physical nonetheless). Also, all wealth, insofar as it is deliberately produced (or can be produced), embodies the conscious purpose inherent to all human labor. (The notion of purpose is used here in a sense akin to the concept of technology in theoretical economics, where technology is viewed as a knowledge or information set, where information means communicable knowledge, that includes (a) a description of the final product, (b) a complete list of the inputs required to produce it, and (c) a description of the process that combines the inputs and turn them into the final product.)
To sum it up: All produced (and producible) wealth is, necessarily, human ideas in a material embodiment; ideal in content and material in form.
I have noted elsewhere that a great deal of the recent chat, among conventional thinkers and leftists, about “cognitive capitalism,” the “information economy,” the “knowledge economy,” etc., i.e. the (often vaguely stated) notion that a half-plus century of technological advances has led to a radical departure in the conditions of modern capitalist societies, separating them qualitatively from those of 19th century metropolitan capitalism studied by Marx, since the very nature of products (or an increasing number of them) has been altered essentially, is profoundly mistaken. (Cf. Quah’s claims about the pure “nonrivalry” of “digital goods” in his “Digital Goods and the New Economy” [2002, http://bit.ly/SjdbpE] or Hard & Negri’s claims in Empire [2000, http://bit.ly/bCosAi] about “immaterial production.”)
Yes, of course, there are significant differences between 21-st century capitalist societies, 20th-century capitalist societies, and 19th-century capitalist societies. And, yes, these differences are intimately related to the development of technology prompted by capitalism and by socialism (the historical movement of the direct producers to replace capitalism as it has unfolded concretely, with its own mixed record of successes and failures in the field). But these differences are to be found elsewhere.
The mid-20th century digital revolution and accompanying developments led to a dramatic reduction in the (labor) costs of communications and computing, which spanned the emergence of a host of new products (and needs) and allowed for an array of production processes (or stages in them) to be automated and reorganized. If the industrial revolution introduced the mechanization of physical tasks at a mass scale, the digital revolution introduced the automation of certain mental tasks at a mass scale. And that process continues. However, the nature of wealth production in general (as the material embodiment of ideas) has not been altered qualitatively. Since humans began to reproduce their lives consciously (i.e. since they separated themselves from the rest of the animal kingdom) and for as long as the eye can see, human labor has combined and will continue to combine physical and mental tasks, their physical products have embodied their ideas, and their ideas have always existed in physical or material media (including their own brains, nervous systems, and bodies, which are also physical or material).
Back to the quotation above: It must be emphasized that Marx’s stated point of departure of his critique of political economy and, thereby, of his critique of capitalist production is individuals. Not individuals in isolation, of course, but individuals interacting with other individuals, and thus forming social relations or social structures, i.e. making society (I use the term here in the same sense in which the term “making markets” is used in finance) or forming society (a concrete society is a social formation).
At a given point in time, society (a complex set of concrete social structures) is viewed as preexistent, the product of former interactions among individuals, but it then appears to individuals as a relatively hardened object, as a power and, therefore, as a limit (since human powers are always finite) — i.e. as an objective reality they did not choose and must now depart from. As a result of their actions, which are — insofar as they affect other individuals — social interactions (and it’s difficult to conceive of individual human actions that do not impinge on other individuals, one way or another), new social structures are subsequently produced, which will then enable and constrain (in a word, condition) the future actions of individuals (the same or other individuals).
It is in this sense that Marx can be regarded as a pioneer of what I would call bounded methodological individualism, or Arrow-corrected methodological individualism, namely the approach that, although seriously attempting to explain social outcomes (from the continuous or periodic allocation of society’s productive forces to the formation of more or less permanent social structures: economic, legal, political, ethical, aesthetic, etc.) as a result of the actions undertaken by individuals, it cannot manage to avoid entirely the assumption that social structures preexist at the outset, e.g. a certain initial endowment of wealth to individuals, a given set of productive possibilities, historically conditioned preferences, a pre-formed degree of rationality in action taking, etc. Cf. Kenneth Arrow’s “Methodological Individualism and Social Knowledge,” (1994, http://bit.ly/R0hPu2).
In this important sense, Marx’s presumptions are not essentially different (nor should they be) from the general equilibrium approach (in its dynamic and stochastic versions) in economics, an abstract framework that captures essential features of social life in a highly idealized society of decentralized private markets (that includes the existence of labor markets, which implies it is an idealized capitalist economy). The chief difference lies in that, from the beginning, unlike the GE theorists, Marx is absolutely adamant and explicit about the historicity of capitalism and, more generally, of private or exclusive ownership, markets, and the ultimate foundation of inequality: the hierarchical division of labor.
This historicity is highlighted not only by comparison to old social structures that capitalist production has overthrown and replaced, but more importantly by deriving opposite conclusions (“predictions”) to those derived by the GE theorists, namely that capitalist production is expected to waste increasing amounts of human productive power, that it will prove to be grossly inefficient (relative to the higher and higher standards that accompany the development of the productive force of labor) and, hence, historically unnecessary. In fact, I contend, a plausible argument can be made that the reason why the GE conclusions are so at odds with Marx’s lies in the fact that the GE model excludes ex hypothesi absolutely essential and expanding aspects of capitalist life, which — if included — would exactly reverse the results of the model.
The GE approach (Arrow, Debreu, Koopmans, et alia) assumes the existence of individual producers and consumers who, privately or exclusively, hold wealth (natural resources, labor power, inventories of produced means of production and consumption goods) at the outset and have well-defined preferences (i.e. definite relations between different levels of wealth consumption and each individual’s sense of well-being), and then pursue the highest level of well-being that their powers (as embodied in the wealth they each hold relative to one another, in their production possibilities, and in their preferences) can yield by producing, exchanging, and consuming wealth in such proportions that they wind up equalizing the exchange rates of wealth items for wealth items in the markets to the ratios of the marginal costs of those wealth items in production and, also, to the ratios of marginal individual well-being that each of these wealth items yield in consumption. These latter results generalized previous work by Menger, Jevons, Walras, and Marshall, later systematized and streamlined by Allen, Hicks, Samuelson, and others.
(Also Engels, in Anti-Dühring, made a few remarks that can be construed as aligned with these views. But that belongs to another post.)