On the second place there is the order of the whole towards the parts, to which corresponds the order of that which belongs to the community in relation to each single person. This order is directed by distributive justice, which distributes common goods proportionately.
Saint Thomas Aquinas, Summa Theologiae II-II. Q61. A1. co.
All people of good-will agree that stealing and cheating, usury and exploitation, are examples of economic injustice, which the law must prevent. The state must defend property rights and the rights of workers. But preventing individuals from hurting each other (i.e. “commutative justice”) is not enough to support the common good. We also need a God-fearing government which can regulate the economy and distribute public resources to its citizens, especially the poor. “Economic life undoubtedly requires contracts, in order to regulate relations of exchange between goods of equivalent value. But it also needs just laws and forms of redistribution governed by politics…” (Caritas in Veritate § 37 ⁋ 2) This is what Saint Thomas calls “distributive justice” and today is often referred to as “economic planning.”
The most urgent duty of distributive justice is wealth redistribution. Redistribution is usually only necessary when human sin or natural disasters have caused dramatic inequality. Unlike in capitalism, a well-ordered society requires less frequent redistribution, because a) families and communities have productive ownership and can supply for their own needs and b) religious charities, local communities, and personal responsibility perform the works of mercy for those who are in need. Modern examples of redistribution include unemployment benefits, food stamps, child allowances, subsidized housing, and other Welfare State programs, which are paid for by progressive taxes (taxes which are higher on wealthier citizens). Land reform or reparations can act as one-time redistributions. Ancient and medieval societies used similar forms of redistribution, such as jubilees and “civic euergetism”.
Distributive justice doesn’t only mean relieving inequality and suffering. It also means active economic planning for the common good. The most direct form of planning is the public sector, in which the government provides both jobs and public services to its citizens. In this arrangement, the state acts as a direct employer. The principle of subsidiarity means that this “public sector” can operate on the local or city level, and not only through the national government. Subsidiarity also requires that not all industries are “nationalized” (placed in the public sector).
The indirect form of planning is the regulation of the private sector. “The concept of indirect employer is applicable to every society, and in the first place to the State. For it is the State that must conduct a just labour policy” (Laborem Exercens § 17 ⁋ 2). Health and safety, moral, environmental, and wage regulation may set requirements on the private sector to respect the rights of workers. Examples include blue laws, child labor laws, minimum wages, limits on the length of the working day, and bans on dumping toxic chemicals. To provide representation to workers and their unions, lawmakers can include them in corporatist legal bodies. Regulations can also be upheld through the maintenance of local customs, rather than government bureaucracies.
No society can enjoy lasting peace if it lacks these various forms of distributive justice.
In order to meet the danger of unemployment and to ensure employment for all, the agents defined here as “indirect employer” must make provision for overall planning with regard to the different kinds of work by which not only the economic life but also the cultural life of a given society is shaped; they must also give attention to organizing that work in a correct and rational way. In the final analysis this overall concern weighs on the shoulders of the State, but it cannot mean onesided centralization by the public authorities. Instead, what is in question is a just and rational coordination…
Laborem Exercens § 18 ⁋ 2