The income in an economy is distributed among the individuals in the society according to the role they play in the economic relationships that have been established and according to the sectors and industries that they operate in.
What is income?
Income, in economics, is profit, wage, interest, rent, and any others which, typically, the Income Tax Department would want to take a share of.
If you are a worker or an employee, you get a wage.
If you set up your own business, if it is successfully run, you get, at the end of the day, a profit. This profit from your business is accrued to the capital you put into the business - on top of the salary which you might pay for yourself if you are a working director actively managing the business.
You may have a partner in your business whose "capital resource" is, shall we say, in the field of "business development" - the ability to get deals or contracts. This could be an important part of your business, especially when the government has a lot of money to spend - particularly in developing economies where development is often associated with urbanisation.
In an urban environment, location becomes an important element in the pricing of a property. An urban centre is nothing but an artificial construct. In old towns or cities, the urban centre grew as a result of the need for commerce. In new urban centres, the environment is always created out of the mind of an architect or a group of architects.
The payment for use of the position is called rent.
Rent, in economics, is generally used to denote a charge for having a monopoly of a strategic position.
Corruption is a form of rent - a payment in return for improved effectiveness and efficiency in an environment where none exist, that is, for making a decision in favour of you regardless of other considerations.
If you are in a position of power and authority and you insist that you will be paid, outside your normal salary and remuneration, in cash or kind, then you are a rent-seekers or, in simple English, you are corrupt.
Sitting there doing nothing but still insisting on being paid or else you will create trouble - this is rent-seeking - the business of gangsters.
Licensing can becoming rent-seeking when it is restrictive. Licensing, as by the local authorities, is a good way to collect some rent to pay councillors so that they can organise and regulate businesses. But when the whole society is being prevented from going into a type of business except for a handful, then that restriction in the form of such things as Approved Permits creates rent to the AP holders.
Interest is a concept invented by a rich man for lending money to a business in order to take the first cut after a certain period regardless of how the business is doing. This is true when money is scarce.
In the Islamic world, interest is not encouraged for it is not compassionate especially when the business is not doing well. The concept of sharing the profit and the loss arises, and it is akin to venture capital or equity financing.
You will see that the people in an urban economy - the banker, the landlord, the businessman, the worker, the politician, the civil servant, the gangster - have a relationship with each other and their incomes are determined by the roles they play.
In the rural environment, there is only nature to determine the income of the farmer and his skill in farming. That skill is important. If his skill is restricted to the traditional method, then he is likely to stay where he is or where his ancestors had been. If the farmer wishes to improve his income, then he will have to use a better method of farming and using a larger tract of land in order to enjoy the economies of scale.
As farming is a slow and steady activity which needs close cooperation from nature, the rural economy is often likely to lag behind the urban environment where, in modern times, the monetary authorities with a switch of the tap drown the urbanites happily with monetary liquidity.
In other words, if income is to be measured in money terms, it is far better to be in the city than in the village if one wants to have a higher income - as a result of the very nature of the economic structure and organisation.
If one were to compare the relative incomes of all the people in the society, you will find that the incomes of the society will be distributed more to the people in town than to the people in the rural economy.
The distribution of income is skewed towards the urban centres.
Within the urban environment, you will find the relative incomes of the different operators to fluctuate according to the state of the economy -between those on a fixed rate return and those with a more flexible renumeration.
In a slow economy, the banker and the landlord and the worker (if he can find a job) will be happy while the businessman will struggle.
In a fast economy, the businessman will be the happiest as things are going his way, while the fixed-rate workers will be complaining of the high cost of living.
In the rural economy, the farmer loses out to the plantations - because of technology and scale and the level of organisation.
But the farmer likes to be a farmer probably because of a more wholesome way of life and because he can identify with his ancestors and his roots and has a better sense of belonging.
The urbanites, however, may be richer but with a suicidal bend.
Income in society, therefore, is distributed according to the way of life of individuals.