Over the last four decades, widespread pessimism has dominated on the Left — both among mainstream parties and more radical organizations and movements — concerning the possibility of obtaining a major redistribution of income in favor of labor. This is explained, in part, by skepticism concerning the workings of the political system. But the theoretical foundations of this paralyzing belief largely rest on a particularly popular version of the so-called structural dependence thesis (henceforth SDT), according to which any attempt to increase the share of income going to labor — either via government intervention or at the bargaining table — is doomed to fail because of the inner logic of capitalism.

There are two versions of SDT, a weak and a strong one. According to the weak SDT, the labor movement and socialist governments cannot freely set the distribution of national income within a capitalist economy. This weak version of SDT is hardly disputable; the economic logic of capitalism imposes some relevant limits on the attainable values of the wage share and the profit share. It is certainly true, for example, that the wage share cannot be pushed below a level that does not guarantee the physical subsistence of the labor force for any sustained period of time. A profit rate (and thus profit share) equal to or below zero is incompatible (except possibly for a very short period) with the functioning of a capitalist economy. Nonetheless, the weak SDT is in principle consistent with a wide range of distributions of income between classes. Thus it has limited explanatory power, and it does not impose severe constraints on the actions of socialist and social democratic parties or the labor movement more generally.

The strong SDT has much more stringent implications. It postulates that there exists a distribution of national income that emerges in equilibrium from the inner working of capitalism and any attempt to increase the wage share above its equilibrium value — thus reducing the profit share — leads to an investment strike on the part of capitalists that causes an economic downturn. If the increase in the wage share is the product of a redistributive attempt by a left-wing government, this provokes widespread dissatisfaction in the electorate and a quick reversal in policy, as highlighted by a large literature comprising both neopluralist and neo-Marxist authors.¹ This is