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So I do believe that Tolkien had a distinction in mind - there is "good" class structure, and "bad" class structure in the books.~Lush
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I agree, I would like to point out, Sam does become mayor and is re-elected several times after all.
There may be a hierarchy, you could even make a good argument for class. However, I wouldn't go so far as to say that there is a caste system in Middle-earth. A system where the caste you are born in (or the caste of your parents) is the caste you stay in...there is
absolutely no political, social, or economic mobility at all.
Because again if we look at Sam, he rises from a servant of Bilbo's and Frodo's to becoming the Mayor of the Shire. And while it does seem as if the Mayor is more of a figurehead that simply precides over ceremonies and such...I would definitely say that Sam did at least rise in political status. If there was a caste system this would not be possible.