Industrialization remains comparatively sluggish, a large administrative apparatus continues to tighten its empire-wide grip, with nationality conflicts in the multi-ethnic state coming to a head.
The capital city of Vienna, which in 1900 has more than 2 million inhabitants, has become a cultural melting pot, because it is here that Central Europe's economic and intellectual elite congregates.
Jewish writers, composers, actors and scientists, men such as Karl Kraus, Arthur Schnitzler, Gustav Mahler, Arnold Schoenberg and Alfred Polgar, play important roles in science and the arts.
In an atmosphere characterized by conservative pomp on the one hand, and the pursuit of progress on the other, artists turn their attention away from naturalism and begin to focus on the inner world and on the psyche.
The literary critic and author Hermann Bahr regularly commutes between Berlin and Vienna, thus subjecting himself to relentless change as a result of being exposed to ever newer ideas.
For the implementation of the ideas of Viennese Modernism (as opposed to architectural and literary historicism) the year 1897, with the founding of the Vienna Secession, proved decisive.
Adolf Loos, the influential architect, was substantially informed by, and throughout his life remained true to, the impressions he gathered during his stay in America from 1893 to 1896, especially in Chicago and New York.
The most notable literary grouping of this period was the Young Vienna movement, a society of "coffeehouse literati" centred on the writer and critic Hermann Bahr.
He was influenced in this by developments in French literature, notably symbolism, which he had encountered while studying in France (1888–1890) where he had come to know the works of avant-garde writers such as Joris-Karl Huysmans, Paul Bourget and Maurice Barrès.
Other members of the group included Arthur Schnitzler, Peter Altenberg, Felix Salten, and Stefan Zweig, all of whom, though disparate in styles and interests, demonstrate different facets of the character of the Wiener Moderne in their writing.
Schnitzler created one of the earliest examples of modernist stream of consciousness writing in Lieutenant Gustl (1900), and his most famous work, Reigen (La Ronde) (1897), is typical of the fin de siècle interest in sexuality.
Hofmannsthal's early poems show the influence of the French symbolists and Stefan George's aestheticism, whilst his work as a librettist for Richard Strauss reflects the interpenetration of the different branches of the arts typical of the epoch.
Salten, best known nowadays for his later children's books, is widely regarded as the author of the infamous pornographic novel Josephine Mutzenbacher, a sign arguably of the decadence that was associated with the period.