Income redistribution

Role in economic systems

Different types of economic systems feature varying degrees of interventionism aimed at redistributing income, depending on how unequal their initial distributions are. Free-market capitalist economies tend to feature high degrees of income redistribution. However, Japan's government engages in much less redistribution because its initial wage distribution is much more equal than Western economies. Likewise, the socialist planned economies of the former Soviet Union and Eastern bloc featured very little income redistribution because private capital and land income were restricted as most enterprises were state ownership and wage rates were set by central planners. In theoretical market socialist systems, redistribution wouldn't be required because the major drivers of wealth and income inequality under capitalist economies, the private ownership of firms and private capital income, would be replaced by collective or public ownership. This would effectively be a model of predistribution.