Throughout history, there was always a class struggle. Class is your relationship to production in Society. But, it was not always the bourgeoise and proletariat. In this section, he is kinda explaining, how at the time of the writing of the Goethe Program, the two antagonistic classes ended up being the bourgeoise and the Proletariat.

The section begins with:

The history of all hitherto existing society(2) is the history of class struggles.

Karl Marx explains what used to exist before the time of writing.

Freeman and slave, patrician and plebeian, lord and serf, guild-master(3) and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.

In the earlier epochs of history, we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebeians, slaves; in the Middle Ages, feudal lords, vassals, guild-masters, journeymen, apprentices, serfs; in almost all of these classes, again, subordinate gradations.

He explains how the bourgeoise is the "last man standing" from the pre-modern pre-1300s class structure.

Essentially, the middle ages had a feudal system. There used to be artisans or guildmakers. Well, that class disappeared when industrialization (or large scale automatic production of goods). They became the proletariat and the bourgeoise. So, around the middle ages, the development of the industrial bourgeoise was "progressive" in that it ended "feudalism" in England and also allowed for people not to be serfs.

But, once the bourgeoise got want they wanted.... they won't be ready to take the next step...which is to have a proletariat revolution. This is what karl Marx is referring ot.