In Capital, Marx explains that under capitalism, the value of commodities has three elements. Use value concerns the ways in which commodities are useful: a chair can be sat on, a tomato can be eaten, a work of art can be admired. Socially necessary labor time is the amount of labor time that it takes to make the product. Market value is the price of the commodity when sold on the open market. In the absence of one of these, the commodity has no value. So if something is useless, no one would want it; if something is useful, but does not require labor to produce it, no one would buy it (air is a good example of this); and if something has use, and requires labor, but is not brought to the market, then it is outside of capitalism (for example, if you eat tomatoes that you have grown yourself).

The second half of the term concerns fetishes. A fetish is something with a magical, supernatural or generally unexpected power; a religious idol for example.

Putting the terms together, Marx observes that under capitalism, commodities are seen as having powers that they do not actually possess. This is because the value of a commodity is generally understood to reside in the commodity itself. A lump of gold is worth $100, so people would assume, because gold is simply a valuable thing. In this case, the market value dominates our understanding of value and we fail to take into account the human labor that was necessary in the production of the commodity. Commodity fetishism allows people to forget that for the gold to have value, humans need to dig it out of the ground and refine it. A lump of gold deep underground does not have value since it cannot be used or sold.

Marx’s point is that under capitalism, consumers can obsess over commodities while failing to see the human labor that has gone into them. We therefore ignore the exploitation of other humans that is an intrinsic part of production under capitalism.