Karl Marx describes alienation as an objective reality and a sense of disconnect from aspects of the self. This disconnect is brought about by the conditions of labor present in a capitalist society. Humans are first alienated from what they produce, as they sell their labor to produce not for themselves but for the capitalist. They are locked in this process to ensure their survival. They are then further alienated as they relinquish control over the means of production, which they clearly do not own. The human being is estranged from his ability to create what he desires of his own volition and is thus kept from his human potential. This, in turn, leads the human being to be alienated from his human essence as, according to Marx, labor is not only power but the essence of our species:

In taking from man the object of his production, alienated labor takes from his species-life, his actual and objective existence as a species.

On a social level, alienation further extends to labor competition existing in the capitalist workplace. Because social relations are already alienated by this lack of agency over what is produced, the process of production, and the human essence that informs labor-power, a ripple effect is created. The worker is forced the reject the nature of man as a social being, and must pit his labor against his equally alienated colleagues. The end result is forced participation in a capitalist system that is innately antagonistic.

The only way to overcome alienation is for a different mode of production to emerge, one that does away with private productive property and its negative effect on human potential and agency:

The overcoming of private property as the appropriation of human life is thus the positive overcoming of all alienation.

Marx calls this system Communism.

Alienation is both the central philosophical concept in Marx's work and one of his most original contributions to the history of philosophy. Marx follows Hegel in historicizing the human situation, in other words by treating people not as isolated individuals nor even as embedded in only their present society, but as part of an historical dynamic that shapes their consciousness. Where Marx differs from Hegel is in his realization of the importance of economic factors not just on the externalities of life, but also on the formation of ideas, social interactions, and politics.

Alienation, for Marx, is a situation in which people are deprived of their capacity for self determination in industrialized capitalist societies. As Marx observed the huge factories that sprang up in the great manufacturing cities of northern England, he saw that workers in those factories no longer functioned as humans using their own creativity and skills but almost as machines, acting in mindless obedience, in a process called "reification" (making people into things). 

In pre-capitalist society, according to Marx, craftspeople owned their tools, and produced entire objects (pottery, tapestries, the stone gargoyles on Gothic cathedrals) and could feel a connection to the products of their labor. In modern industrial societies, workers do not own the means of production, nor do they have a connection to or ownership of the final product of the production process.

Marx's solution to the problem of alienation is economic, giving workers ownership of the means of production and reducing the economic inequality in an ideal communist society in which, rather than having the very rich own the means of production and accumulate capital and the workers live in a state of alienation, wealth and labor would be distributed, in Marx's famous phrase:

From each according to his abilities, to each according to his needs.