Three Models of a Supply Side Socially Oriented Political Economy to Recover a National Identity of the Workers and Small Business Middle Class Under Parliamentarian Democracy—Schumpeter, Rathenau, and Hilferding

The paper discusses the three contributions to the socialization debate of Schumpeter, Rathenau and Hilferding. While Schumpeter’s 1918 paper on the Crisis of the tax state argued that this model of state was close to a crisis because its parasitic redistributive functions were inconsistent with a market economy system and as a reaction a supply side model of a managed economy would emerge dominated by a few big private and public enterprises accompanied by a managerial democracy, Rathenau proposed, as a remedy to the crisis of the fiscal state, a corporativist model market economy oriented to socialization with social democracy, to recover the national identity of the masses and of the middle class lost because of the war and post war losses human lives and savings. On the other hand, Hilferding theorized that the solution would be the control of the unions on the big financial banks who would finance the large industrial companies as it was already happening. All three models are relevant in the contemporary economy because managerial capitalism and a presidential model of managerial democracy, do exist both in US and France, while the neo-corporatist principles are adopted in the dual system of governance of the big companies in Germany and in China there is a financial market economy capitalism controlled by the political party.