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Social classes are categories that define where one stands in society, and with whom one shares common goals and interests.
In Marxist theory, social class is determined by one's material relation to the means of production. Since ancient times, most societies have contained two broad classes: a class which lives through the means of production and a class which doesn't. The class which lives through the means of production exploits the class which doesn't, essentially living off its labour.
Non-Marxist sociologists have used various other criteria to determine class. Two of the most common are wealth, and perception (how one is perceived by oneself or by others).
The conflicting material interests of Social classes gives rise to Class struggle and the coercive nature of the state in Class society as a tool of oppression.
Marxist theory of class
Marx considered that in all societies in which there is a surplus (that is, where technique is advanced enough so that labourers can produce more than what they need merely to survive) two broad classes exist, a lower class which does the work and an upper class which exploits the lower class by taking some or all of the surplus. In capitalism these two classes are bourgeoisie and proletariat; in feudalism they were aristocrat and serf; and in ancient slave societies they were master and slave. The common feature is that there is a transfer of wealth produced by the lower class to the upper class. There is inevitable conflict in this set up; the lower class always has an incentive to break out of the existing relations and the upper class has an incentive to enforce them. Marxist classes are antagonistic. But Marx believed that we would someday see the end of classes – in a society in which the means of production would be democratically controlled by all and there would be no exploitation.
Marxists see the struggle between the classes as being a fundamental feature of all class-divided societies, and one of the main driving forces of history. ( Technological development is another important driver.)
Class in different modes of production
Pre-Industrial society
Slave society
In ancient slave societies, the two principal classes were slave-owner and slave. The slave-owners controlled the means of production and lived off the unpaid, forced labour of the slaves.
It is thought that one factor that led to the decline of slave society in antiquity was the exponential need for more slaves as time went on. Slave societies needed to procure slaves from somewhere (which led ancient Rome to their large conquests), as slave owners were in competition with one another and always looking to expand their operations. More slaves also require more logistics and infrastructure, which translates into more labour.
Feudal society
In feudal society, particularly taking the example of the European Middle Ages, two dominant social classes existed: the serf and the noble. Serfs were tied to their lord's land possessions (the noble). For the privilege of being allowed to work the soil, they had to provide their lord with a fraction of their harvest or regular free labour (the corvée). It is important to note that serfs owned the means of production, that is the soil, the animals and the tools they used.
Renaissance society
Around the time of the Renaissance in Europe, a new social class emerged: the bourgeoisie (used here as a pre-Marxian term, not to be confused with the capitalist bourgeoisie). These new land owners opened businesses in free cities, free from any lord or clergy. As their existence was in contradiction to the class of the nobility, this created various clashes in history, some perhaps best exemplified by the European wars of religion. Since an exploitative class needs another to exploit, the bourgeoisie naturally created the free workers, or journeymen, who were free in the sense that they did not belong to a lord, but had to sell their labour to the bourgeoisie by the day to survive. These citizens, the bourgeoisie, formed guilds with which to consolidate their power and wealth.
Industrial societies
Industrial Revolution
The Industrial Revolution, generally considered to have taken place between 1760 and 1840, saw the arrival of the first semi-automated or automated machines, and marked the transition from hand-production to machine-production. These major shifts in the means of production meant that the relations of production would change as well. As manufactures developed, they became the first factories: a place where many workers are concentrated and work for the benefit of their employer, with the large amounts of surplus value thus created being seized by the manufacture owner.
During this time, the bourgeoisie of the Renaissance started acquiring land (often forcefully and violently) and opening their own manufactures, and the former journeymen became manufacturing workers. This would mark the beginning of the modern proletariat, though not entirely realized at this stage.
As technology improved and productivity soared, the first factories opened and the manufacture owners turned to capitalists and modern bourgeoisie. The proletariat started becoming a class of its own along the same lines, i.e. being pulled into existence by the transformation of material conditions taking place. It is around this time that free market principles started being enacted, building on Enlightenment ideals, because it is only in this way that big industry can expand and exist.
The proletariat has nothing to sell but their labour-power (their capacity to work). The bourgeois owns so much capital that he does not need to work to survive. Yet their existence is only possible by exploiting the labour of the proletariat.
Modern capitalism
In modern times, capitalism remains the dominant mode of production in the world though the relations to the means of production have somewhat changed from the industrial revolution in the imperial core (the most developed capitalist nations). In exploited countries, we see other classes and relations to the means of production operating.
The modern proletariat in the imperial core may be different from the proletariat of the 1840s, but their relation to the means of production has not changed much: modern workers in wealthy countries do not own means of production and must sell their labour power which is then exploited by their boss (the bourgeois) for their surplus value. It is thanks to the labour struggles of the past that proletarians today enjoy privileges which their ancestors did not such as vacation time, paid sick leave, etc. Though usually, these privileges were awarded to stave off a proletarian revolution and usually came accompanied by other restrictions (such as the dissolution of unions).
We see today the petty bourgeois class emerging in most capitalist countries; this is the class of people that own means of production, but must still work alongside their employees to survive. While this class has more in common with the proletariat (as they still perform labour and are subject to competition from the more powerful bourgeois class), we see that their class interests align with the bourgeoisie, as they hope to become full-fledged bourgeois rather than go back to being a proletarian.
Imperialised countries
In imperialised countries -- countries suffering from imperialism at the hand of the imperial core -- we see a new class emerging: the comprador class, composed of local bourgeois subservient to their imperial masters. While their interests are often aligned towards realizing sovereignty (liberating their country from imperialism), they remain bourgeois and hope that through national liberation, they will be able to exploit without being exploited. In some socialist revolutions, such as Cuba or Vietnam, the comprador class was used because their interest in sovereignty was aligned with the proletariat. They were then disbanded as a class (dispossessed of their private property) when the new government took office.