Rerum Novarum Revisited: Economy Should Serve Humanity

By Jason Scott – There is a thread that runs consistently through every papacy for over a century: the Church’s condemnation of unfettered capitalism. Their critique of the system goes back to a landmark papal document written 134 years ago.

On May 15, 1891, Pope Leo XIII issued the encyclical Rerum Novarum, addressing the social and economic challenges faced by the working class during the Industrial Revolution. As we commemorate its anniversary, we reflect on its call for a just and humane economic order, embracing the Church’s vision of unity.

Rerum Novarum (Of New Things or Of Revolutionary Change), was written amidst the industrial revolution’s transformation, which had led to widespread poverty and exploitation. Pope Leo sought to address the divide between capital and labour, advocating for workers’ rights and employers’ responsibilities. He condemned both socialism and unrestrained capitalism, proposing an economic justice rooted in Catholic social teaching.

He wrote: “The elements of the conflict now raging are unmistakable, in the vast expansion of industrial pursuits and the marvellous discoveries of science; in the changed relations between masters and workmen; in the enormous fortunes of some few individuals, and the utter poverty of the masses.” In short, Pope Leo was calling for a reevaluation of failing economic systems.

The Church’s Vision of Economic Justice

The Church’s commitment to economic justice emphasises human dignity and the common good. Rerum Novarum laid the groundwork for subsequent papal teachings, such as Pope Pius XI’s Quadragesimo Anno (1931), which further developed the concept of a just economic order. Written to mark the 40th anniversary of Rerum Novarum, Pius XI wrote: “Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces.”

This vision aligns with the Church’s advocacy for corporatism, endorsed by various popes and Catholic thinkers. Pope Pius XI praised corporatism in Quadragesimo Anno, stating, “The aim of social legislation must be the re-establishment of the vocational group, for it is the most natural and effective means of promoting the interests of the workers.”

What is Corporatism?

Corporatism, distinct from corporationism, balances the interests of workers, employers and the state for the common good, promoting cooperation over adversarial relationships. It contrasts with communism’s collectivist and atheistic principles, which the Church condemns.

Historically, Catholic and Christian societies implemented corporatism through guilds and professional associations. Medieval guilds in economic powerhouse cities like Florence, Bruges and Lübeck regulated trade, ensured fair wages and maintained labour dignity, fostering community and mutual support. In the 20th century, countries like Austria and Ireland developed corporatist models, such as Austria’s post-World War II social partnership, which achieved social harmony and economic stability.

Beyond the Protestant Work Ethic

The Protestant work ethic, which the German social scientist Max Weber argued provided the basis for capitalism, emphasises hard work, thrift and individual responsibility. Rerum Novarum challenges us to consider broader social implications.

Pope Leo XIII acknowledged the right to private property. “The first and most fundamental principle, therefore, if one would undertake to alleviate the condition of the masses, must be the inviolability of private property.” However, he stressed that private property must be used for the common good, contrasting with the Protestant work ethic’s focus on personal achievement.

“Man’s needs do not consist in the possession of external things, but in the enjoyment of spiritual goods, and in the use of created things which is in conformity with the laws of God,” Pope Leo wrote. This call prioritises spiritual and moral values over material wealth, urging us to consider labour’s deeper purpose.

The Church’s Vision of Corporatism

Rerum Novarum laid the foundation for advocating a corporatist economic system. Pope Leo XIII called for professional associations or guilds to represent workers and employers. “The most important of all are working men’s unions, for these virtually include all the rest. History attests what excellent results were brought about by the artificers’ guilds of olden times.” These associations foster dialogue and collaboration, ensuring fair distribution of labour’s fruits and upholding work’s dignity.

Pope Leo emphasised, “If the members of the working classes were to form associations among themselves, and not merely to increase their numbers, but to make them a real power, they would soon find that they had gained a position of greater security and influence.” This vision empowers the working class to shape their economic future, respecting private property and individual initiative.

The Relevance of Rerum Novarum Today

In today’s globalised economy, Rerum Novarum’s principles remain relevant. It reminds us that the economy should serve humanity, not the other way around.

Pope St John Paul II in Centesimus Annus warned against systems focused solely on economic success: “A striking example of artificial consumption contrary to the health and dignity of the human person, and certainly not easy to control, is the use of drugs. Widespread drug use is a sign of a serious malfunction in the social system; it also implies a materialistic and, in a certain sense, destructive ‘reading’ of human needs. In this way, the innovative capacity of a free economy is brought to a one-sided and inadequate conclusion. Drugs, as well as pornography and other forms of consumerism which exploit the frailty of the weak, tend to fill the resulting spiritual void.”

On this anniversary of Rerum Novarum, we must recommit to Catholic social teaching and embrace an economics that values human dignity and the common good.