Over the past four decades, a pervasive pessimism has taken hold on the Left regarding the prospects for meaningful redistribution within capitalist economies. This pessimism has been shared not only by centrist social democratic parties but also by more radical democratic socialists, many of whom have come to regard redistributive reform as either futile or self‑defeating.

At the core of this outlook lies a belief that capitalism imposes tight structural constraints on democratic politics — constraints that sharply limit how far governments can push redistribution or regulate markets without triggering capital flight, investment strikes, or economic crisis. In other words, people have come to believe that the capitalist system will not tolerate any greater interventions into its operation. The good news is that we have not found any good evidence that this is true.

The belief that we are near the limits of reform is often justified by appeal to what has become known as the structural dependence thesis (SDT): the idea that because capitalists control investment decisions, states are structurally dependent on their confidence and therefore cannot substantially shift income shares in favor of labor for more than brief periods. In its strongest form, SDT implies that any attempt to push redistribution beyond a narrow corridor will inevitably be punished by markets, leading to unemployment, stagnation, and political backlash. In this view, the apparent exhaustion of social democracy is not contingent or political; it is structural and unavoidable.