"Spontaneous" representation of the social relations of production, which bind people and classes, in the form of relations between equivalent commodities, i.e. relations between social objects equalized in their exchange value.
Origin of commodity fetishism
The exchange of commodities in the market is by definition an exchange of equivalents. Equivalents in exchange value, that is, in abstract social labor. Value, which is a social relationship between people organized in classes, then blurs its nature by representing itself as a social relationship between things, between goods -be they tangible or intangible- that are found in the market.
Where, then, does the enigmatic character of the product of labor come from, as soon as it assumes the form of a commodity? Obviously, from that very form. The equality of human labors takes the material form of the equal objectivity of value of the products of labor; the measure of the expenditure of human labor power by its duration takes the form of the magnitude of value of the products of labor; finally, the relations between the producers, in which the social determinations of their labors are made effective, take the form of a social relation between the products of labor.
The mysterious character of the commodity form consists, then, simply in the fact that it reflects back to men the social character of their own labor as objective characters inherent in the products of labor, as natural social properties of those things, and therefore also reflects the social relation between the producers and the total labor as a social relation between objects, existing apart from the producers. (...)
The commodity form, and the value relation between the products of labor in which that form is represented, have absolutely nothing to do with their physical nature or with the material relations arising from that nature. What here takes on, for men, the phantasmagoric form of a relation between things is only the definite social relation between men themselves.
Hence, in order to find a fitting analogy, we must take refuge in the misty realm of the religious world. There the products of the human mind appear as autonomous figures, endowed with a life of their own, entering into relations with one another and with men. So it is in the world of commodities with the products of men's hands. This I call the fetishism that attaches itself to the products of labor as soon as they are produced as commodities, and which is inseparable from commodity production.
Karl Marx. Capital, 1867
Commodity fetishism as a specifically capitalist form of alienation
The fracture of the human community into classes with antagonistic interests marked the beginning of alienation: the human, the social, present themselves as alien to the human; they flee to the heavens of ideology in order to hold together in the fantasies of the intellect what is antagonistic in the material social world. Alienation is nothing more than the imaginary separation of the species from the very relations that define its social organization.
However, unlike the exploiting classes that preceded it, capitalist exploitation is completely "economic". The feudal lord took a piece of production and of social labor "by right", within the framework of a personal, concrete relationship with his serfs. There is no fetishism whatsoever in what is in reality nothing more than an extra-economic levy.
The natural form of labor, its particularity, and not, as on the basis of commodity production, its generality, is what here constitutes its directly social form. Servile corvée labor is measured by time, just like commodity-producing labor, but no serf is unaware that what is involved is a definite quantity of his own personal labor power, expended by him in the service of his lord. The tithe he hands over to the priest is more transparent than the priest's blessing.
Whatever judgment we may make of the masks that men wear here in playing their respective roles, the fact is that the social relations between persons in their labor appear as their own personal relations, and are not disguised as social relations between things, between the products of labor.
Karl Marx. Capital, 1867
The leap from concrete personal labor to abstract social labor in the relationship of exploitation makes commodity fetishism a qualitative leap in the process of abstraction proper to every form of alienation. It is its specifically capitalist and completely abstract form. While slave-owners and feudal lords had to found their exploitation on the external will of the gods, the commodity makes social relations appear by themselves as relations between things, between social objects alien to those who produced them, in the same way that surplus value appears as a spontaneous result of human labor when it is sold as a commodity in the form of labor power.