The real divisions, Schumpeter says, lie within the new industrial order. “The differences between a tycoon and a medium factory owner are so big that one might speak of two different classes.” Nevertheless, though these two groups seldom recognize it, they have one important thing in common: their social position is more unstable than that of any other class.

In the new economy, business families rise and fall so quickly that it becomes difficult to speak of them as social classes at all. In “the fast change in the position of families in the upper classes,” Schumpeter says, “there is clearly taking place a very democratic and effective selection of brains.” The economy had entered the realm of meritocracy, which is inherently hostile to hereditary class. Entrepreneurship had become a function, not a marker of class.

In the case of workers, a similar division had evolved. “Maybe it is not even appropriate to speak, in theMarxist tradition, of contemporary social battles as between labor and capital; maybe it is more a battle between different categories of labor”—skilled versus unskilled. The number of industrial employees will continue to grow, but in the meantime it is simply inaccurate “to say that the worker is the exploited proletarian who is just a tool in someone else’s hand, who can never gain his own living space. In fact, the worker today is the biggest stakeholder of the capitalist economy.”

In the new high-wage industrial system, skilled and even many unskilled workers can live a bourgeois life. “This is exactly what is despised by both socialists and intellectual visionaries,” says Schumpeter. “It is utmost rubbish to argue that the worker is barred from any social advancement. One should never forget that today’s entrepreneurs very often are themselves former workers and sons of workers.”

Thus, “the work force is no homogeneous mass. The united proletarian conscience of class is only a utopian idea, with little connection to reality.” Skilled and unskilled workers think in very different ways, and skilled workers in particular have a real stake in the new social and economic order. It is the untrained laborer who is more likely to become politically radical and whose future attitude is least predictable.