Ramchal is most explicit about the dynamics of reward and punishment in his Ma’amar HaIkkurim (“A Discourse on Fundamentals”) in the section entitled Hashgacha (“Providence”).
His first point there is that “God oversees everything He created” with an eye toward “the purpose for which it was created”. That’s to say that God is aware of everything that happens and makes sure that adjustments and alterations are made to accomplish His goal when necessary. Given that humans are the only free and independent agents whereas everything else simply follows course, it’s clear that it’s our deeds and their consequences that need to be adjusted. That’s why Ramchal then offers that “the providence that applies to humankind must be different from that of other beings”.
Given that we’re free-agents it also follows that some of what we do “results in merit”, i.e., our “good deeds”; while some “result in liability”, i.e., our “sins”; and that each is recompensed, which is to say — they’re reacted to and are either “rewarded” because they further God’s goal, or “punished” or adjusted because they don’t.
The things we do that are neither good deeds nor sins per se, however are allowed to follow the natural course of things simply because our free-agency has no bearing on them, and God just naturally makes sure they suit His goal (regardless of whether we understand how they do, or not).
And finally we’re taught that the “reward” or “punishment” is either administered in the course of one’s life or afterwards, but the point of the matter is that God is well aware of everything and is sure to see to it that everything is prearranged or adjusted retroactively to suit His goal (which, as we learned, is the revelation of His Yichud).
But there’s more, of course.
(c) 2011 Rabbi Yaakov Feldman
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Rabbi Yaakov Feldman has also translated and commented upon “The Path of the Just” and “The Duties of the Heart” (Jason Aronson Publishers).