CHAPTER III THE DISTRIBUTION OF INCOME
§ 1 the Nature of Distribution Under Liberalism and Socialism
The issue of income distribution is very important in Socialism, which aims to create a fair way to share resources. In Socialism, the focus is on how goods and services are distributed, while in Capitalism, incomes are mostly determined when products are made. In a capitalist economy, people earn income through market transactions linked to production, so distribution is more of an idea than a real process. However, in Socialism, distribution is an actual process that needs to be addressed. Traditional economic terms don’t always reflect these differences clearly, making it easy to misunderstand how distribution works in Socialist and Capitalist systems.
§ 2 the Social Dividend
In a socialist society, only goods that can be used right away can be shared, while goods needed for production stay with the community. The main part that can be shared is called the net social dividend, which includes all first-order consumable goods. Some of these goods are set aside for public use, similar to how public services work in capitalism to keep things running smoothly and secure. Public services like parks and libraries are usually paid for through taxes, not through socialist principles. Socialism does not mean giving everyone individual copies of every product, but rather providing access to shared resources like books and schools. The money spent on these public services is part of the social dividend, and they can be distributed differently based on the specific needs of those services, rather than following the usual rules for sharing consumable goods.
§ 3 the Principles of Distribution
In a socialist system, how resources are given out is different from capitalism. There is no connection between what someone produces and what they receive. People get what they need regardless of the value of their work, making it hard to measure contributions fairly. Socialists often overlook this issue, which suggests that traditional ideas like wages, profits, and rents don't fit into socialism.
There are four main ideas for how resources can be distributed under socialism: equal distribution, distribution based on service, distribution according to needs, and distribution based on merit. Equal distribution means everyone gets the same, but this idea can be unreasonable if it doesn't consider differences like age, health, or effort. It only makes sense when combined with the other principles.
Using service rendered as a basis for distribution has its difficulties because the value of different tasks can vary greatly based on context and quality. The principle of distribution according to needs also faces challenges. In reality, not all needs can be met because people still must work to produce resources. Even in a community, the total output limits what each person can receive.
Finally, basing distribution on merit is tricky because it raises questions about how to judge someone’s merit. This could lead to unfair treatment. In the end, no matter which principle is used, each person gets resources based on how productive their community is, which determines their access to goods and services.
§ 4 the Process of Distribution
In the process of distribution, individuals do not have to consume everything allotted to them. They can choose to waste it, give it away, store it for later, or exchange it for something else. For example, someone who prefers beer might trade away a drink they don't enjoy for more beer. This type of exchange can also apply to different types of commodities but does not extend to producers' goods, which are not part of the exchange.
Money plays a crucial role in this exchange by facilitating transactions, just like in a free economy. However, its significance is narrower in a socialist system since it only applies to consumers' goods and does not accommodate producers' goods, which means establishing money prices for these goods is impossible. The administration must consider established exchange relationships when distributing goods, ensuring fairness.
If certain goods are not distributed equally, the administration needs to adjust the ratios based on established values or risk unfair treatment. Additionally, while the labor theory of value suggests all workers receive an equal share for their work, it fails in practice due to qualitative differences in labor and products. Simply put, not all labor is the same, leading to different values. Though the community can decide on worker compensation, it cannot allow individuals to freely choose what to consume based solely on labor time, as material costs also impact product value.
§ 5 the Costs of Distribution
Critics of capitalism often highlight the high costs of distribution, which includes expenses from government institutions, military spending, and the effects of free competition. These costs come from things like advertising and the efforts of businesses to stay independent rather than merge or form alliances, which could lower production costs. There is a belief that socialism would eliminate these unnecessary expenses. However, socialism would still require a system to enforce rules, which would also have its own costs. In capitalism, the costs of distribution aren't only about moving goods; competition plays a big role in production too. Thus, comparing the distribution costs of capitalism and socialism misses important factors, especially regarding productivity.
§ 1 the Nature of Distribution Under Liberalism and Socialism
The issue of income distribution is very important in Socialism, which aims to create a fair way to share resources. In Socialism, the focus is on how goods and services are distributed, while in Capitalism, incomes are mostly determined when products are made. In a capitalist economy, people earn income through market transactions linked to production, so distribution is more of an idea than a real process. However, in Socialism, distribution is an actual process that needs to be addressed. Traditional economic terms don’t always reflect these differences clearly, making it easy to misunderstand how distribution works in Socialist and Capitalist systems.
§ 2 the Social Dividend
In a socialist society, only goods that can be used right away can be shared, while goods needed for production stay with the community. The main part that can be shared is called the net social dividend, which includes all first-order consumable goods. Some of these goods are set aside for public use, similar to how public services work in capitalism to keep things running smoothly and secure. Public services like parks and libraries are usually paid for through taxes, not through socialist principles. Socialism does not mean giving everyone individual copies of every product, but rather providing access to shared resources like books and schools. The money spent on these public services is part of the social dividend, and they can be distributed differently based on the specific needs of those services, rather than following the usual rules for sharing consumable goods.
§ 3 the Principles of Distribution
In a socialist system, how resources are given out is different from capitalism. There is no connection between what someone produces and what they receive. People get what they need regardless of the value of their work, making it hard to measure contributions fairly. Socialists often overlook this issue, which suggests that traditional ideas like wages, profits, and rents don't fit into socialism.
There are four main ideas for how resources can be distributed under socialism: equal distribution, distribution based on service, distribution according to needs, and distribution based on merit. Equal distribution means everyone gets the same, but this idea can be unreasonable if it doesn't consider differences like age, health, or effort. It only makes sense when combined with the other principles.
Using service rendered as a basis for distribution has its difficulties because the value of different tasks can vary greatly based on context and quality. The principle of distribution according to needs also faces challenges. In reality, not all needs can be met because people still must work to produce resources. Even in a community, the total output limits what each person can receive.
Finally, basing distribution on merit is tricky because it raises questions about how to judge someone’s merit. This could lead to unfair treatment. In the end, no matter which principle is used, each person gets resources based on how productive their community is, which determines their access to goods and services.
§ 4 the Process of Distribution
In the process of distribution, individuals do not have to consume everything allotted to them. They can choose to waste it, give it away, store it for later, or exchange it for something else. For example, someone who prefers beer might trade away a drink they don't enjoy for more beer. This type of exchange can also apply to different types of commodities but does not extend to producers' goods, which are not part of the exchange.
Money plays a crucial role in this exchange by facilitating transactions, just like in a free economy. However, its significance is narrower in a socialist system since it only applies to consumers' goods and does not accommodate producers' goods, which means establishing money prices for these goods is impossible. The administration must consider established exchange relationships when distributing goods, ensuring fairness.
If certain goods are not distributed equally, the administration needs to adjust the ratios based on established values or risk unfair treatment. Additionally, while the labor theory of value suggests all workers receive an equal share for their work, it fails in practice due to qualitative differences in labor and products. Simply put, not all labor is the same, leading to different values. Though the community can decide on worker compensation, it cannot allow individuals to freely choose what to consume based solely on labor time, as material costs also impact product value.
§ 5 the Costs of Distribution
Critics of capitalism often highlight the high costs of distribution, which includes expenses from government institutions, military spending, and the effects of free competition. These costs come from things like advertising and the efforts of businesses to stay independent rather than merge or form alliances, which could lower production costs. There is a belief that socialism would eliminate these unnecessary expenses. However, socialism would still require a system to enforce rules, which would also have its own costs. In capitalism, the costs of distribution aren't only about moving goods; competition plays a big role in production too. Thus, comparing the distribution costs of capitalism and socialism misses important factors, especially regarding productivity.