This article examines the role of class divisions in critical social theory through Habermas’ theory of law and democracy. It begins with Hegel’s view that social freedom involves reconciliation with the modern division of labor, which in turn requires membership in ‘estates’, and his thoughts on their role in the state. While subsequent Left Hegelian thinkers reject these institutions as authoritarian, the melancholic tenor of much Frankfurt School social theory stems partly from their view that class divisions are not only entrenched, but also ‘latent’ and therefore not amenable to reconciliation through the political process that Hegel envisions. Habermas’ conception of ‘interchange roles’ between the system and the lifeworld as sites of reification, but potentially of democratic contestation, synthesizes these lines of thought, by conceptualizing how the political mediation of class-based interests can be an ongoing possibility amidst a condition of latent class conflict.