This phase would be called "Socialism."
This is the phase that the current U.S. government is going through. The Obama administration has already taken control of the banks, the auto makers, and the student loan program. With its health care law, it is now in position to start demanding ownership of the hospitals and doctors. With the financial reform law, the administration can begin putting its boot of ever-increasing weight on the necks of business.
All of this is being done to cater to the lower class. It gives politicians a populist talking point and a way of getting reelected. One of the biggest stated reasons for passing health care: 30 million are uninsured. The opinions of the other 280 million citizens don't matter, nor should they, since their opinions are tainted by "greed" (the single biggest sin of the bourgeoisie). The reason for seizing the auto makers: to bail out "working class families" who again are said to be struggling against "greed." The reason for financial reform: to alleviate the "reckless practices" of that place which were caused by "greed." Same goes for the student loan program. Same goes for almost everything this government is doing.
The byproduct of this Socialization is the shrinking of the middle class. When you punish people for working hard, those people will stop working so hard. When you reward people for doing nothing, then you're going to have more people sitting around doing nothing. It's simple logic.