Examining Financial Justice: Understanding the Dichotomy of Restorative and Distributive Justice

October 13, 2023

The two types of justice in finance: Distributive and Procedural

Finance is a field that intersects with many aspects of society, including politics, economics, and ethics. When it comes to justice in finance, there are two fundamental concepts that guide our understanding: distributive justice and procedural justice. These two types of justice play a crucial role in determining the fairness and legitimacy of financial systems and practices. In this article, we will examine both distributive and procedural justice in the context of finance, exploring their definitions, principles, and implications.

Distributive Justice: Fair distribution of financial resources

Distributive justice, also known as economic justice, focuses on the fair distribution of financial resources, benefits, and burdens within a society. It examines how wealth, income, and opportunity are distributed among individuals and groups. The principle underlying distributive justice is that individuals should receive a fair share of the economic pie based on their contributions, needs, and deserts.
In finance, distributive justice refers to the fair distribution of financial resources such as income, wealth, and investment opportunities. It raises issues of income inequality, wealth concentration, and access to financial services. From a distributive justice perspective, a financial system that disproportionately benefits a few at the expense of the majority would be considered unjust. Policies and mechanisms that promote wealth redistribution, progressive taxation, and equal access to financial markets are often advocated as means to achieve distributive justice in finance.

Procedural justice: Fairness in financial processes and decision-making

Procedural justice, on the other hand, focuses on the fairness of the processes and procedures through which financial decisions are made. It emphasizes the importance of fair rules, transparency, and impartiality in financial transactions, institutional practices, and regulatory frameworks. Procedural justice is concerned with ensuring that individuals and organizations have equal opportunities, rights, and protections in financial transactions.
In finance, procedural justice means establishing and enforcing rules and regulations that promote fairness, accountability, and transparency. It requires mechanisms to prevent fraud, insider trading, market manipulation, and other unethical practices. In addition, procedural justice requires that individuals and businesses have access to due process, legal remedies, and avenues of redress in the event of financial disputes or grievances. By upholding procedural justice, financial systems can enhance trust, confidence and integrity, and promote a level playing field for all participants.

The Interplay of Distributive and Procedural Justice

Distributive and procedural justice are interrelated and mutually reinforcing concepts in finance. While distributive justice focuses on the outcomes or results of financial transactions, procedural justice ensures that the processes that lead to those outcomes are fair and just. Both forms of justice are essential to a well-functioning and ethical financial system.
Without distributive justice, even the most fair and transparent financial processes can lead to unjust outcomes. For example, if a financial system is characterized by extreme income inequality or barriers to entry that prevent certain groups from accessing financial opportunities, the procedural fairness of that system alone would not be sufficient to address the overall injustice. Similarly, in the absence of procedural fairness, an equitable distribution of wealth and resources may not be achievable because of corrupt practices, market manipulation, or biased decision-making.

Pursuing a Just Financial System

The pursuit of a just financial system requires a balanced approach that includes both distributive and procedural justice. Policymakers, regulators and financial institutions have a critical role to play in shaping the financial landscape in accordance with these principles. Some key considerations in achieving financial justice include

  1. Reducing income and wealth inequality: Implementing policies and measures to address income and wealth disparities, such as progressive taxation, social safety nets, and inclusive economic opportunities.

  2. Ensure access and inclusion: Promoting equal access to financial services, education and investment opportunities for individuals and businesses, especially marginalized and underrepresented groups.

  3. Promoting transparency and accountability: Establish robust regulatory frameworks, disclosure requirements and enforcement mechanisms to prevent fraud, market manipulation and unethical practices.

  4. Strengthen investor protection: Protecting the rights and interests of investors through appropriate disclosure, fiduciary duties, and recourse mechanisms in the event of misconduct or malfeasance.

  5. Promote financial literacy and consumer awareness: Empower individuals with the knowledge and skills to make informed financial decisions, understand risks, and protect themselves from predatory practices.

By embracing these principles and taking concrete actions, societies can strive for a financial system that promotes fairness, equity and justice for all participants. Recognizing the importance of both distributive and procedural justice is a critical step in creating a more equitable and sustainable financial landscape.


What are the two kinds of justice?

The two kinds of justice are distributive justice and retributive justice.

What is distributive justice?

Distributive justice refers to the fair distribution of resources, benefits, and opportunities among members of a society. It aims to ensure that individuals receive what they deserve based on principles such as equality, need, or merit.

What is retributive justice?

Retributive justice focuses on the punishment of individuals who have committed wrongdoing. It is based on the idea that offenders should be held accountable for their actions and that punishment should be proportional to the harm caused.

How does distributive justice work?

Distributive justice involves the allocation of resources, wealth, and opportunities in a society. It considers factors such as social and economic inequalities and aims to create a more equitable distribution. Various theories and principles, such as egalitarianism or utilitarianism, guide the concept of distributive justice.

How does retributive justice work?

Retributive justice operates within the legal system and deals with the punishment of individuals who have violated laws or committed crimes. It involves the determination of guilt or innocence and the imposition of penalties, such as fines, imprisonment, or community service, depending on the severity of the offense.

What are some examples of distributive justice?

Examples of distributive justice include policies that promote equal access to education, healthcare, and employment opportunities. It can also involve progressive taxation, where higher-income individuals are taxed at a higher rate to support social welfare programs and reduce income inequality.

What are some examples of retributive justice?

Examples of retributive justice include criminal trials and sentencing, where offenders are punished for their crimes. This can range from fines or probation for minor offenses to imprisonment or even capital punishment for more serious crimes, depending on the legal system and jurisdiction.