Schumpeter’s published lecture, delivered on 8 December 1928, examines the composition and probable development of German society through five sections: conceptual foundations, rural classes, artisans, industry and commerce, and the emerging salaried middle stratum. Its central argument is that capitalist transformation does not simply polarize society into owners and workers. Older classes survive through adaptation, organized labour acquires interests in economic continuity, and employees and officials become an increasingly independent power. Subject to major external disruptions, Schumpeter anticipates gradual accommodation rather than revolutionary rupture.
The opening distinguishes social structure from both political institutions and economic organization. Their discrepancies matter as much as their connections: economic change can preserve an existing social order rather than overturn it. Schumpeter defines social structure through classes, but locates class membership in familial continuity, social standing, shared dispositions, and mutual recognition—not merely occupation or ownership. Occupational and business censuses provide indispensable evidence, yet changing enumeration methods and the mismatch between statistical categories and social relationships require interpretation.
Sodann aber besteht diese Pyramide nicht aus einem einheitlichen Material, ist sie nicht nach einem einheitlichen Strukturprinzip gebaut. So ragen in unsere moderne Welt verschiedene Stücke von Feudalismus hinein, die weder ökonomisch noch sozial in dieser Welt entstanden wären, gleichwohl aber ein sehr wichtiges Element in ihr bilden.
English translation: Moreover, this pyramid does not consist of a uniform material; it is not built according to a uniform structural principle. Thus various pieces of feudalism project into our modern world which would have arisen in this world neither economically nor socially, yet nevertheless constitute a very important element within it.
The inadequate “pyramid” metaphor introduces a society composed of historically heterogeneous layers. This coexistence explains why modernization neither establishes a simple hierarchy nor erases inherited distinctions.
Rural society supplies the principal example. Schumpeter attributes urbanization to industrial profitability and higher wages, together with labour-saving agricultural technique. Resettlement schemes cannot reverse these forces, although their momentum may diminish. Agriculture’s declining population does not imply the destruction of peasant independence: much of the decline concerns hired labour, while the distribution of holdings remains comparatively stable and small farms increasingly mechanize. The landed nobility loses influence through indebtedness and exclusion from administrative careers; the peasantry, having secured its position against landlords and large-scale farming, becomes a durable conservative force. Its demographic surplus also supplies recruits to other occupations. Schumpeter consequently sees rural antagonisms as substantially moderated, without claiming that all agricultural interests are identical.
Artisans survive through a different accommodation. Their nineteenth-century struggle against factory production has been lost, but industrial society generates subsidiary functions that sustain small enterprises.
Der gewerbliche Kleinbetrieb von heute setzt den industriellen Betrieb voraus und schließt sich dienend an ihn an. Eben diesem Umstand verdankt es der moderne Handwerkerstand, daß er weiterlebt und keine Tendenz zum Verschwinden zeigt.
English translation: Today’s small commercial enterprise presupposes the industrial enterprise and attaches itself to it in a serving capacity. It is precisely to this circumstance that the modern artisan class owes its continued existence and its lack of any tendency to disappear.
Survival therefore involves a change of function, not the preservation of the old productive order. Shared interests increasingly replace hostility to industry, encouraging artisans toward bourgeois political alignments. Schumpeter also warns that movement into larger statistical size categories can indicate flourishing businesses rather than the disappearance of craft production.
The fourth section complicates the supposed unity of capital. Small retailers, industrialists, financiers, and investors occupy different positions; sharp economic conflicts need not produce separate classes where social dispositions remain similar. Industrial concentration continues, but census labels exaggerate the prevalence of genuinely large enterprises. More fundamentally, entrepreneurial leadership is unstable across generations.
Der Unternehmer steigt in die „Kapitalistenklasse“ nur insofern, als er Vermögen erwirbt, gehört ihr aber nicht als Unternehmer an. Und dieses Vermögen oder doch die Position, die es gewährt, pflegt schnell zu zerrinnen.
English translation: The entrepreneur rises into the “capitalist class” only insofar as he acquires wealth, but does not belong to it as an entrepreneur. And this wealth, or at least the position it confers, generally dissipates quickly.
Entrepreneurship is a function; durable family position is the basis of class formation. Rapid turnover selects technical and commercial ability while preventing industrial leaders from establishing a lasting governing tradition. Schumpeter presents parts of this argument as hypotheses requiring systematic investigation.
Organized workers, meanwhile, possess a power no other class can match. Yet responsibility, accumulated gains, and the prospect of secure living standards can make that power protective rather than revolutionary. This expectation depends on renewed economic success and wider opportunities for advancement. The very small proportion of university students from workers’ and lower officials’ families exposes an important remaining obstacle.
The concluding section identifies the most consequential development as the growth and convergence of private employees, public officials, and the professions. Their postwar adoption of collective bargaining and union organization accelerates tendencies already present before the war.
Ist auch noch nicht eine einheitliche Klasse zu standgekommen, so doch ein klassenähnlicher Machtfaktor. Und dieser gewinnt stetig an Bedeutung: Immer mehr Funktionen, die früher vom Unternehmer erfüllt wurden, fallen in die Hände von Angestellten.
English translation: Even if a unified class has not yet come into being, a class-like power factor nevertheless has. And this steadily gains in importance: ever more functions formerly performed by the entrepreneur fall into the hands of employees.
Schumpeter expects this “new middle class” to pursue its own course rather than simply reinforce labour or property owners. Expanding administration gives bureaucratic dispositions growing influence over society. His prognosis remains conditional: destructive wars could overturn existing tendencies. Otherwise, entrenched groups and mutual constraints favour stability and gradual compromise. The lecture’s distinctive contribution is to separate economic function from social belonging, making adaptation, mobility, and bureaucratization central to an account of capitalism’s changing class structure.
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