Distribution, in Political Economy, refers to the method in which the products of industry are shared among the people concerned. The methods of distribution have varied and do vary in accordance with the state of social development. They depend on legal as well as on economic conditions. They depend mainly on the ideas and institutions which prevail with reference to property in the three requisites of production—viz. land, labour, and capital. In countries where slavery prevailed, the slaveholder, as the owner alike of land, labour, and capital, disposed at his pleasure of the entire product of industry. Under the feudal system, by which the cultivator was attached to the soil and had a fixed interest in it, he was obliged to render to his superiors dues in labour, in kind, and latterly in money, which were fixed by custom or authority. Where the system prevails of cultivators owning the soil, as it does in America, and among the peasant proprietors of the European continent, the owner, inasmuch as he unites in his own person land, labour, and capital, disposes of the entire product, except such portion as may be claimed by the money-lender. In cases where the state owns the land, the cultivator pays a rent or tax to the government, and retains the remainder. The metayer system still exists in Italy, the owner advancing the land and stock (in whole or in part), and receiving from the cultivator a fixed share of the produce, generally one-half.
In Great Britain, and to a large extent in other countries with a highly developed industry, land, labour, and capital are supplied respectively by three different classes of persons, and their share in the produce is determined by free competition. The classical political economy of England may be defined as a description and analysis of such an economic condition of society. It claims to be a science only in so far as the competitive system prevails. The landlord's share in the produce thus determined is called rent; that of the capitalist and employer is designated as interest, profit, earnings of management, &c.; the labourer's share is wages. It should be pointed out that under such a system the central function in distribution, as well as in production, rests with the employer. As he originates and controls the productive process, so in the distributive process he settles with landlord and labourer, and then disposes of the produce. If the employer operates in whole or in part with borrowed capital, interest on that capital must also be deducted from his share of the produce. All these claims satisfied, the amount of his share will depend on his success in disposing of the product.
Whatever the arrangements regarding property and the distribution of the fruits of industry may be, account must be taken of the share claimed by the government in the form of taxes, for the maintenance of army and navy and other means of defence, for justice and police, and for education, &c. Some sections of the so-called professional classes are from this source paid for services rendered to the state. But the clerical and teaching professions derive their income more or less from corporate property, while the legal and medical professions obtain their share of the distribution mostly from the services they render to private individuals.
It is now admitted that economists have bestowed excessive attention on production, to the neglect of the problem of distribution. But the reproach has a much wider application than to economists merely, for it may generally be said that while modern communities have enormously increased their productive forces, they have not yet solved the problem of distribution. The enormous inequalities of distribution are a danger felt by all thinking men. It is a question which is more and more challenging the attention of statesmen and economists. An economic system can be satisfactory only when a high standard of production finds its complement in a reasonable and equitable distribution, supplying to the mass of the citizens the means for their due physical, intellectual, and moral development. Merchants, wholesale and retail, are said to effect the distribution of manufactured products, acting as middlemen between the manufacturer and consumer. For a special method of seeking to secure the equitable distribution of profits amongst those who earn them, see CO-OPERATION.