False consciousness is the Marxist hypothesis that material and institutional processes in capitalist society mislead the proletariat — and perhaps the other classes — over the nature of capitalism.

The concept flows from the theory of commodity fetishism — that people experience social relationships as value relations between things, e.g. between the cash in their wage packet and the shirt they want. The cash and the shirt appear to conduct social relations independently of the humans involved, determining who gets what by their in-built values. This leaves the person who earned the cash and the people who made the shirt ignorant of and alienated from their social relationship with each other.

Although Marx frequently denounced ideology in general, there is no evidence that he ever actually used the phrase "false consciousness". It appears to have been used — at least, in print — only by Friedrich Engels. (See Terry Eagleton, Ideology: An Introduction (London: Verso, 1991), p. 89.)

Engels wrote in 1893 that:

"Ideology is a process accomplished by the so-called thinker. Consciously, it is true, but with a false consciousness. The real motive forces impelling him remain unknown to him; otherwise it simply would not be an ideological process. Hence he imagines false or seeming motive forces."

False consciousness is theoretically linked with the concepts of the dominant ideology and cultural hegemony. The doctrine of false consciousness has also been used by Marxist feminists in regard to other women.

The notion of false consciousness has been a focus for some of the strongest critiques of Marxism, since in this instance high Marxist theory can appear to be implicated in the worst excesses of the Soviet experiment. Within the USSR, the state deployed the concept of false consciousness to justify authoritarian measures against the working class. Marxist critics of Stalinism, such as Trotsky and his followers, provide an account by which the theory is excused, on the basis that a corrupt regime is capable of perverting any theory.

The concept of ideology as false consciousness, even where it is accepted that Marx did not use the term, has tended to dominate interpretations of Marx's statements on Ideology, although arguably this in fact involves a misunderstanding of Marx (see, for example Joseph McCarney's essay "Ideology and False Consciousness").