DISTRIBUTION. The distribution of wealth or prosperity is to be sharply distin guished from the circulation of goods. The latter refers to the physical movement of goods from place to place and from hand to hand. It is a part of the process of exchange. Dis tribution, however, refers to the relative well being or prosperity of the various individuals or groups of individuals who perform various parts of the great and complex task of provid ing for the needs of the community.
The problem of distribution, like that of exchange, grows out of the division of labor. In a primitive, self-sufficing system of economy, where every one produced everything which he consumed, there would, of course, be no ex changing. Neither would there be any problem of distribution, because every one would con sume his own products and his prosperity would be an individual and not a social problem. But in an economic system where each worker does that for which he is best fitted, instead of pro ducing everything which he needs, it is of course necessary that goods and services should be exchanged. As the result of this process of specialized production and exchanging, each one finds himself, at the end of the process, in pos session of ai,greater or a smaller quantity of goods. Distribution has to do with this final result, that is, with the quantity of goods which each worker or group of workers gets as a reward for his or their part in the complicated work of production. The reward of the differ ent participants in the work of supplying the needs of the community determines their rela tive prosperity.
Production and exchange are processes, but distribution is a result. Prosperity is, in a sense, the end and purpose of all production and exchange. Not all prosper alike in any economic system except pure communism. The relative prosperity of different classes, or the differences in prosperity and the causes of those differences are the problems of distribution.
Division of labor is of several kinds, the more important of which are territorial, tem poral and occupational. Territorial division of labor, of which international division of labor is one phase, is a system under which consider able regions, such as the cotton belt, the corn belt, the mining regions, etc., specialize on cer tain products, shipping their surplus out to other regions, and shipping in the specialized products of those other regions. Temporal
division of labor is a system under which the same substance is worked upon at differ ent times by different industrial groups. Wheat, for example, is produced by one in dustrial group, ground into flour by another and baked into bread by still another. Hides, likewise, are grown by one group, tanned by another and made into shoes by still another. Occupational division of labor is a system under which, in the same industrial group, such as the milling, baking, tanning or shoe-making groups, various kinds of skill have to be combined in order to get the best results.
Each of these kinds of division of labor has its own peculiar problems of distribution. Un der the territorial division of labor, one region may prosper and another not. Under the tem poral division of labor, one industrial group may get a large and another a small share of the total value of the finished product. In the same industrial group, they who follow one occupation, or supply one of the factors of pro duction, may get a large and others a small share of the value created by the work of the groups. The causes of these inequalities are the problems of distribution, and they are the most important problems in the whole field of economics.
Inequalities in the territorial distribution of wealth or prosperity are not so very difficult to explain. If cotton, for example, is produced in excessive quantities, it helps the other regions which buy cotton, but it impoverishes the cotton belt which has cotton to sell. Other regions can get plenty of cotton in exchange for small quantities of their own special products, while the cotton belt, at the same time, gets small quantities of other things in exchange for large quantities of cotton. Vice-versa when cotton is undersupplied, provided it be not because of crop failure or other disaster, the cotton belt becomes prosperous and other regions rela tively unprosperous. They who have cotton to sell can get large quantities of other goods for the proceeds of the sale of small quantities of cotton. The same principle applies to corn, wheat, coal or any other special territorial product.