Capitalism Can Sustain Much Greater Wealth Redistribution Than Currently Believed
Source: Carlo V. Fiorio. "Capitalism Has a Lot of Room to Redistribute Wealth Right Now." March 19, 2026. jacobin.com
The Gist
The authors argue that capitalism can handle much more wealth redistribution than people think. They point to history showing that when workers had more power through unions and governments taxed the rich more, the economy still grew well. The current high inequality isn't because we've hit economic limits, but because political power shifted away from workers.
Conclusion
Contemporary capitalist democracies are not near the feasible limits of redistribution or state intervention, and much greater wealth redistribution is possible within capitalism today
Premises
- Historical data shows capitalist economies have sustained far wider ranges of distributive outcomes than structural dependence theory predicts
- The postwar 'golden age' featured high redistribution, strong welfare states, and progressive taxation while delivering rapid growth and shared prosperity
- Income shares vary substantially over long periods and are closely associated with shifts in class power, institutions, and political choices rather than fixed economic laws
- Union density shows robust long-term correlation with workers' wage share, demonstrating that class power durably affects income distribution
- The transition from postwar redistribution to neoliberalism was driven by deliberate political choices and power shifts, not immutable economic constraints
- Current inequality levels and weak redistributive policies represent a political retreat from previous achievements, not hitting natural economic limits
Assumptions
- The structural dependence thesis in its strong form is empirically false
- Political power and class struggle are primary determinants of income distribution within capitalism
- Markets operate within institutional frameworks that can be politically reshaped
- Historical precedents of successful redistribution remain relevant to contemporary possibilities