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Distributive justice is one of the economic goals that societies strive to achieve, and it is an essential component of economic systems
Economic growth and economic efficiency are linked to distributive justice, because of its effects on ethical, social, and economic aspects of society in general, and ignoring the issue of distributive justice will disrupt economic efficiency and development.
Different economic systems have differing views on the process of income distribution, and this is due to the different intellectual, ideological, and theoretical foundations on which each of these economic systems is built, whether it’s the Islamic economy, capitalism, or socialist economics.
We’ll show ways economic systems have achieved distributive justice in this article.
The Relationship of Distributive Justice to the National Income
National income and distributive justice are important for economists and politicians, as the national income is a general indicator of the economy’s strength, and it also reflects the level of well-being of the individual and society, so the national income is an important metric of the economy’s health.
The Relationship of Distributive Justice to the National Income
What is the income distribution method?
The measurement of income distribution is calculated by dividing the ‘Gross Domestic Product (GDP)’ by the nation’s population, with the GDP being a measure of the market value for all goods and services produced. This measure is commonly used to get an estimate of the economic performance of the nation.
Income Distribution Concept
It’s a reflection of how the system works and how the elements of production are related economically and socially.
National income distribution is the way the economic system determines the share of each production component based on how much it contributes to production.
A country’s average national income can be calculated by dividing its total national income by its population.
The smaller the population, the higher the per capita national income, so the subject of average national income gets special attention since it reflects the purchasing power of each individual if inflation stays the same.
It’s important to note, however, that average per capita national income doesn’t tell you much about what people are doing in society unless you factor in buying power.
Meanwhile, it must be tied to the equitable distribution of income and wealth. For example, the Italian economist Barreto pointed out that 20% of the population owns 80% of the country.
Income Distribution Concept
Let’s see how the different economic systems handled the issue of income distribution:
First: The Capitalist Economic System
Capitalists see income inequality as a natural and acceptable issue. Some even see it as a necessity in the global competitive environment and a necessary condition for competition.
This is the process of distributing the total product among the elements of production in which it participated, which is divided into wages, profits, rents, and interest. Income is this kind of job distribution. When income is distributed based on the contribution each element makes to the production process without considering the condition of everyone.
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Principles of Distribution in the Capitalist System
In this system, income is distributed according to “private ownership of the means of production,” which means the income goes to the direct producers. The national income is split like this:
Employees: who have put in work in production deserve a raise.
Landowners: are entitled to rent, and it means the return on their investment.
The owners: of cash capital and their share of interest, i.e. conditions and guarantees.
The organizers mix and supervise the elements of production, bear the risk and get the profit.
Also, the capitalist economic system distributes the national income functionally, according to each person’s participation in the productive process without regard to achieving distributive justice.
Second: The Socialist Economic System
According to socialism, society’s resources and productive capacities are mobilized to serve the interests of the group, and those following a socialist economic system see that the distribution of wealth is in the interest of the production elements and since the production elements belong to the community.
In other words, distribution of wealth must be in the interests of society, and the distribution of production returns must be fair, reflecting the effort each unit of production makes.
So, the incomes of each layer merge and the differences between them dissolve.
From each according to his ability, to each according to his needs.
This goes in harmony with the socialist ideology that is based on the collective ownership of the elements of production and proceeds from the idea of “From each according to his ability, to each according to his needs” where the work alone is the basis of distribution and therefore the direct producers’ “employees” will receive all the returns.
The Socialists say
Many in society suffer from misery and deprivation because of private property and misallocation of wealth.
As far as distributive justice is concerned, the Socialists believe that equality between people and the development of their physical and mental skills are impossible if private property exists, and if the wealth the majority contributes to production goes to the minority.
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Third: The Islamic Economic System
Islam’s economic system is different because it tries to achieve distributive justice with a unique distributive system, where the distribution system in Islam is divided into three stages: the primary distribution stage, the functional distribution stage, the redistribution stage, and each stage has its own controls.
Stages of Income Distribution
Stages of Income Distribution
First: The Primary Distribution Stage
In the primary distribution, we examine the underlying causes of individual ownership, and the Islamic economy has put in place a set of provisions and controls to control it.
For example, the Prophet, peace be upon him, wrote that legalizing work was one of the reasons for establishing property.
In other words, if a person cultivates the uncultivated land, it becomes his property, and then he ties the continuation of property to its cultivation. The Prophet, peace be upon him, says: “and there is no keeper who has the right to keep a land that has not been cultivated for more than three years.”
According to the Prophet, peace be upon him: “and no keeper has the right to keep land he hasn’t farmed for more than three years.”.
May God’s prayers and peace be upon the Prophet:
“If anyone brings barren land into cultivation, it belongs to him.”
“And no keeper has the right to keep land which he has not cultivated for more than three years.”
Furthermore, this made a group of resources no longer be considered private property, the Prophet, peace and blessings be upon him, says: “The Muslims are partners in three things: water, pasture, and fire.” Also, the Islamic economic system prohibited all methods of appropriating money through force. Prestige is like putting your hands on the ground.
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Second: The Functional Distribution Stage
Jobs are distributed according to the elements of production, which include work, land, and capital in the Islamic economy.
The Work
A worker in the Islamic economy is either waged labor, Muharib labor, or risk labor, and wage labor is someone who offers their skill and deserves a known and guaranteed wage for it.
Or it’s Muharib labor, whereby the employee enters a Modaraba contract, where the capital is provided on the one hand, and the work on the other, and the loss is split between the parties, and the profit is split.
And risk labor is when the employee bears all the risk and gets the full pay in a capitalist economy.
The Land
It’s possible to share land in the Islamic economy through several contracts, such as a sharecropping agreement, where the land is provided one hand and the work to cultivate it is done on the other hand, and the result is divided between them accordingly.
Sharecropping means providing wooded land on the one hand, care for trees by pruning, watering, and following up on the other hand, and then sharing the proceeds as agreed upon.
The Capital
The capital reward in the Islamic economy is different from the interest in the capitalist system. A percentage of capital is not guaranteed in the Islamic economy, so interest is forbidden. The return on capital in the Islamic economy is determined by the result of economic activity and bearing risk. One gets a share of the expected profit, and if it’s a loss, the capital bears the loss.
Third: The Redistribution Stage
The redistribution stage is where social justice is evident, and income redistribution refers to a process that happens after the distribution according to non-functional bases, where some people own part of the production output despite not participating.
It’s done by the Zakat Mechanism in Islamic economies, which is a periodic financial obligation that is in the Muslim’s money. It’s a mechanism that redistributes income based on the need to be done annually, by transferring money from surplus categories to shortage categories.
Finally, we see that the different economic systems strive for distributive justice. Do you think one economic system is fairer than another?
What does functional distribution of income mean?
Distributing the total product among the production elements in which it participated, such as wages, profits, rents, and interest.
What does it mean to re-distribute income?
A process that comes after distribution, where some people own part of the production process, even though they are not involved.
What is distributive justice in Islam?
A distinctive aspect of the Islamic economic system is that it aims to achieve distributive justice through a different distribution system. The distribution system is divided into three stages: the primary distribution stage, the functional distribution stage, and the redistribution stage, and each stage has its own controls.
Source: The Boomoney
