Libertarians are often skeptical about the idea of class struggle. This is no surprise, given how closely associated it is with Karl Marx. However, Marx did not originate the theory of class conflict, which was actually developed by the French liberals in the 19th century. In fact, it was classical liberal intellectuals in France, England, and the United States who spearheaded the early development of class theory.
Marx, Engels, and even Lenin were well aware of the origins of class doctrine, and openly acknowledged their bourgeois influences. However, the Marxists developed their own version of the theory that was distinctly inferior to that advanced by the French.
Both sides agreed that society contained exploited and exploiting classes. However, for the liberals, society was not divided between the bourgeoisie and the proletariat, but between the productive class and the political class. The liberals recognized that there are two ways to organize human productive effort: through peaceful cooperation and trade, or through violence. Each method—peace and power—creates groups of people with distinct, conflicting interests. The former organizes individuals within the division of labor, in which each person contributes willingly to the welfare of others. The second organizes individuals into political groups that claim monopolies over coercion.
Importantly, in this view, class membership isn’t based on economic roles like laborer or entrepreneur, but on sources of income. Some members of society earn wealth through production and trade, while others acquire it through redistribution. The modern state not only institutionalizes redistribution, but creates a network of privileges for the individuals and groups it wants to support. These groups include businesses seeking to protect themselves from market competition, but also the intellectual classes, which the state relies on for support in the court of public opinion.
It is difficult to perfectly define the membership of each class. A good place to start though is by distinguishing between those who earn their net income through production and those who earn it through predation. Government redistributes wealth through several means, but its most systematic tool is taxation. Productive members of society are net tax-payers, while members of the political class survive parasitically as net tax-consumers. Taxation institutionalizes the divide between the state and its privileged groups on the one hand, and the productive classes on the other.
Sadly, Marx and Engels only partly understood the liberal view, though the theory does occasionally appear in their work. For example, Engels described American politics as follows:
Nowhere do “politicians” form a more separate and powerful section of the nation than precisely in North America (i.e. the United States). There, each of the two major parties which alternately succeed each other in power is itself in turn controlled by people who make a business of politics… It is in America that we see best how there takes place this process of the state power making itself independent in relation to society… we find two great gangs of political speculators, who alternately take possession of the state power and exploit it by the most corrupt means and for the most corrupt ends—the nation is powerless against these two great cartels of politicians who are ostensibly its servants, but in reality dominate and plunder it. (emphasis added)
Engels might as well be writing about current electoral politics. Unfortunately, Marx and his followers strayed from the liberal theory in order to develop their own approach, which remains dominant in the public mind to this day.
This discussion only scratches the surface of the classical liberal approach to class theory, which still holds tremendous research potential for young scholars in the liberal tradition. For those who want to know more, Ralph Raico has written two outstanding essays on the subject (here and here; audio here). David Hart has also done an enormous amount of research on the French liberals and their theory of class, much of which you can find on his website (here). More recently, people like Murray Rothbard and Roderick Long have refined and expanded the liberal theory.
Class analysis is just as relevant today as it was two centuries ago, if not more so. In fact, spreading it might be every bit as important for the progress of liberty as spreading the Marxist theory was for the progress of socialism.
Tragically, the message of liberalism is simple, yet so difficult to communicate: violent exploitation through politics creates destructive class conflict; peaceful cooperation through the market doesn’t.