In Karl Marx's critique of political economy, commodity fetishism is the perception of the social relationships involved in production not as relationships among people, but as economic relationships among the money and commodities exchanged in market trade. As such, commodity fetishism transforms the subjective, abstract aspects of economic value into objective, real things that people believe have intrinsic value.
The theory of commodity fetishism is presented in the first chapter of Das Kapital (English: Capital. Critique of Political Economy) (1867), at the conclusion of the analysis of the value-form of commodities, to explain that the social organization of labor is mediated through market exchange, the buying and the selling of commodities (goods and services). Hence, in a capitalist society, social relations between people—who makes what, who works for whom, the production-time for a commodity, et cetera—are perceived as economic relations among objects, that is, how valuable a given commodity is when compared to another commodity. Therefore, the market exchange of commodities obscures the true economic character of the human relations of production, between the worker and the capitalist, the intrinsic value of what is exchanged, irrespective of its status relative to other commodities.
Marx explained the philosophic concepts underlying commodity fetishism thus:
As against this, the commodity-form, and the value-relation of the products of labour within which it appears, have absolutely no connection with the physical nature of the commodity and the material relations arising out of this. It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things. In order, therefore, to find an analogy we must take flight into the misty realm of religion. There the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men's hands. I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities, and is therefore inseparable from the production of commodities.
Commodity fetishism signifies the personification of things and economic categories. It is the objectification of production relations between people under the conditions of commodity production based on private ownership; and is seen when the element of social relations dominating people appears outwardly as domination by certain things. Capital as a production relation is personified in the capitalist, while hired labour is embodied in the worker. Fetishism permeates all the economic categories of capitalist society; an example is the exploitation of man by man, which is masked by the payment of wages. The acquisition of money and material goods is the highest manifestation of commodity fetishism.