Abstract
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.
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Notes
- 1.
Swedberg (1992, 89) points out that the period from 1910 to 1919 was the most successful period of his life. He published diverse important monographs and articles, he got the position of a university professor, and he was appointed to act as Minister of Finance in Austria. Being only 36 years of age, this appointment was the peak of his career. But the downswing phase followed very soon: in October 1919, only seven months since his nomination, Schumpeter was dismissed, as disloyal to the Government.
- 2.
The book was never translated into English and seems almost unknown among the British and American Economist, except for some random quotation by Keynes and Berle and Means, on the corporate responsibility versus the stakeholders, but was extensively read and studied in Italy, initially in the German edition (reviewed by Luigi Einaudi in Riforma Sociale, September–October 1918) and then in the Italian translation (“L’Economia Nuova”), by Gino Luzzatto, an outstanding professor of economic history, belonging to the liberal school, in 1919, in the Laterza editions. In this article I follow the 1st German edition of 1918.
- 3.
“The worker reproduces the value of c and creates a new value consisting of (v + s), wages and surplus value. The absolute magnitude of (v + s) depends upon the length of the working day. The shorter the working day the smaller is (v + s); and if v remains the same, the smaller is s. If working time remains the same s increases when v declines and vice versa. But this effect is offset by a change in the intensity of labour; with rising wages and a shortening of working time, the intensity of labour grows. … However important the reduction of working hours has been for the social condition of workers, and however much this achievement and the struggle for it have raised their physical and cultural level, there can be little doubt that this reduction of working time has not altered the ratio of v to s at the expense of s. It has not affected the rate of profit, and from a purely economic standpoint nothing has changed” There is only an exception which confirms the rule “However, it should be pointed out in passing that in many industries which require high standards of precision and accuracy, longer hours of work would have been impossible, and that in general the reduction of hours of work has improved the quality of work, accelerated technological progress, and increased relative surplus value” (Hilferding 1981, Chap. 24).
- 4.
Julian Marchlewski review of Rudolf Hilferding’s Finance Capital published in 1910 in one of the two main organs of the SPD left wing, the Leipziger Volkszeitung argues that unlike Hilferding’s view of economic crises as the product of disproportionalities due to unplanned investments, the reviewer suggests that underconsumption was the principal casual factor: “the overwhelming majority of the population, the proletariat, gets back only a small share of the product of its labour in the form of consumption articles of every kind”. He objects that Hilferding failed to explain either the periodicity of crises or why “they follow immediately after a period of prosperity, indeed, almost always after a period of the highest tension in the productive forces”.
References
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Forte, F. (2019). 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. In: Backhaus, J., Chaloupek, G., Frambach, H. (eds) The First Socialization Debate (1918) and Early Efforts Towards Socialization. The European Heritage in Economics and the Social Sciences, vol 23. Springer, Cham. https://doi.org/10.1007/978-3-030-15024-2_11
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