Of New Things: A Fair Deal for a Gilded Age
- Tim Thorlby
- 4 hours ago
- 13 min read
We're pleased to have Tim Thorlby return to BetterCapitalism.org as this week's contributing author. The following is Tim's essay, originally published on his Beautiful Enterprise website blog, Insight (with our addition of a few images). We encourage you to sign up for Tim’s monthly blog here, where he provides in-depth analysis and reflection on business, social enterprise, and economics. We're fans. You can be also.
This blog takes the arrival of a new pope – Pope Leo XIV – as the spur to reflect on the work and times of the last Pope Leo in the late 19th Century. The blog takes a fresh look at ‘Rerum Novarum’, his letter of 1891 which addressed the urgent problems of rapid industrialisation and great political uncertainty. Are there lessons to draw from this?
You don’t have to be a Catholic, or terribly interested in popes, to recognise the striking similarities between the late 19th Century and our current economic and political challenges. The comparison provides a useful lens for our own times, and Pope Leo XIII’s letter is a helpful and insightful guide.
A new Pope, an old name
The new Pope has taken the name Leo, becoming the 14th Pope Leo. Why? Because he rates what the 13th Pope Leo did.
Although it is over a century ago, the work of the last Pope Leo may be of more relevance to today’s economic and political challenges than we perhaps realise.
Added Image Credit: St. Matthew's Catholic Community
Pope Leo XIII led the Roman Catholic Church for 25 years, from 1878 to 1903. He is best known for his landmark 1891 encyclical Rerum Novarum. An encyclical is a formal ‘open letter to the Church’. ‘Rerum Novarum’ means… ‘of new things’.
The letter was written at a time when the world was industrialising at a startling pace and revolutionary politics was in the air; socialism and communism were ripping up the political rulebook in the late 19th century.
At a time of rapid economic change and political turbulence, with a new politics overtaking the old ways, Pope Leo spoke into the heart of the issues, by addressing the rising conflict of capital and labour. As he says in the letter “at the time being, the condition of the working classes is the pressing question of the hour” (para 60). His letter went on to become one of the foundations for modern Catholic Social Teaching.
Today, the technology may be very different, but our global economy continues to change at a rapid pace, throwing up new challenges for our generation. The politics are also different – it is the populist right that is insurgent today, not the left – but the sense of turbulence and of ‘new things’ is strikingly similar.
What can we learn from a late 19th Century Pope?
1891: “all that is solid melts into air”
Imagine: it is 1891.
Queen Victoria is on the throne in the United Kingdom. The British Empire is at its height.
The April 1891 Census counts 15.6 million people in urban areas. For the first time ever, more than half of the nation live in towns and cities. The UK is urbanising fast – a completely new phenomenon.
Homes are still lit by candles and lamps. Transport is by horse. The telephone is yet to be invented. In the nascent sport of English Football, the penalty kick is yet to arrive in official games. The first story about a detective called ‘Sherlock Holmes’ is published in London.
Life expectancy for men averages 44 years (it is 82 years today). Children are still employed to do paid work from the age of 9.
Friedrich Engels’ book ‘The Condition of the Working Class in England’ is published for the first time in English in London.
Capitalism has emerged through the century as a dynamic and forceful process that is reshaping cities and countryside across the world, challenging social norms and polluting towns and countryside on an unprecedented scale.
Millions of workers and their families live in urban slums. Chimneys belch out smoke, great quarries are carved out of hillsides. And yet some families have become fantastically rich, living in mansions and feted as ‘captains of industry’.
Andrew Carnegie in the Gilded Age (Commons License)
A similar pattern is emerging in other trading nations. America is still only a generation on from its Civil War. It is also industrialising rapidly. A few businessmen achieve historically unprecedented wealth as the gulf between rich and poor accelerates. This is the ‘Gilded Age’ of Rockefeller, Carnegie and J.P. Morgan.
The pace of change was staggering, as new industries replaced old and buildings were torn down within years of being built. As Marx had commented, in the face of this violent transition: “all that is solid melts into air.”
Of new things
Rerum Novarum was written in response to the growth of the urban working class and a growing awareness of the social conditions they were experiencing – their “utter poverty” as Pope Leo XIII describes it in his letter.
Published in 1891, the letter’s subtitle - ‘On Capital and Labour’ – makes its focus clear; how are these two major forces supposed to relate to each other?
“It is no easy matter to define the relative rights and mutual duties of the rich and of the poor, of capital and of labour” (para 2).
At 64 paragraphs, it is a short pamphlet, not a book. To read it in full, you can find it here.
The concern was that the growing working classes had been left in “misery and wretchedness” because of the “unchecked competition” at work in the marketplace. The ancient guilds had withered and no-one was looking out for the workers.
There is also an element of defensiveness in the letter too – an acute concern that “crafty agitators” are intent on exploiting the misery of the workers to foment a communist revolution – and hence the letter sets out a robust affirmation of the importance of private property.
I have attempted to summarise the main points of the encyclical here, before concluding with a reflection on how this is relevant to us today.
1 – Private property, not communism, for human flourishing
This may seem rather arcane today, but in the late 19th century the emergence of new ideas about ‘socialism’, particularly in its more strident form of ‘communism’, had begun to cast doubt about whether capitalism would survive.
The letter mounts a robust defence of private property and capitalism. There are many reasons for this, but here I would just note that despite capitalism’s many problems (and I blog about these regularly), it is the ‘least worst’ system we have found so far and it has certainly proved better for human flourishing than state communism.
This is a big subject, but I think it is worth noting here that Pope Leo XIII put himself on the right side of 20th century history by defending capitalism. Our challenge is to make it work as well as we can, which is the direction of the rest of the letter.
In case anyone is wondering if Pope Leo had rose-tinted glasses on, you should be in doubt that he also viewed the operation of capitalism as woefully lacking. The letter delivers a damning indictment of the exploitation, monopolies and greed arising from the global marketplace. He likens it to slavery:
“…it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition. The mischief has been increased by rapacious usury, which is… still practiced by covetous and grasping men. To this must be added that the hiring of labour and the conduct of trade are concentrated in the hands of comparatively few; so that a small number of very rich men have been able to lay upon the teeming masses of the labouring poor a yoke little better than that of slavery itself” (para 3).
And this is why he wrote the letter. So, the question is, what is to be done?
2 – A vision of mutuality, not conflict
The letter challenges the idea that labour and capital should always and inevitably be in conflict; it calls for mutual agreement on working together for mutual benefit: “Each needs the other: capital cannot do without labour, nor labour without capital” (para 19).
To achieve this, the duties of each are listed. Not the rights, but the responsibilities that each owes to the other. How times change; today we would probably insist upon enumerating our rights first. Amongst other duties, the worker is to “fully and faithfully perform the work” and the employer is to “respect in every man his dignity as a person” (para 20).
Employers are also told not to exploit the situation of workers to hold down wages or to withhold wages unfairly:
“To defraud any one of wages that are his due is a great crime” and “the rich must religiously refrain from cutting down the workmen's earnings, whether by force, by fraud, or by usurious dealing” (para 20).
The letter is equally explicit that those who accumulate wealth are responsible for sharing it. “How must one's possessions be used? - the Church replies without hesitation …: "Man should not consider his material possessions as his own, but as common to all, so as to share them without hesitation when others are in need” (para 22).
3 – The role of the Church: working for the poor
The letter, unsurprisingly, has much to say about what the Church itself should be doing. Part of this role in society is to address the material poverty of the people.
The Church should work for the poor to “rise above poverty and wretchedness, and better their condition in life; and for this she makes a strong endeavour” (para 28) and intervening “directly on behalf of the poor” (para 29).
4 – The role of the State: working for the Common Good
The letter also outlines the proper role of government in society. This is under such strain in these Trumpian days, that this is worth quoting at length:
“The foremost duty, therefore, of the rulers of the State should be to make sure that the laws and institutions, the general character and administration of the commonwealth, shall be such as of themselves to realise public well-being and private prosperity. This is the proper scope of wise statesmanship and is the work of the rulers…. Hereby, then, it lies in the power of a ruler to benefit every class in the State, and amongst the rest to promote to the utmost the interests of the poor; and this in virtue of his office, and without being open to suspicion of undue interference - since it is the province of the commonwealth to serve the common good. And the more that is done for the benefit of the working classes by the general laws of the country, the less need will there be to seek for special means to relieve them.
Added Image: The New Gilded Age at Trump’s 2025 Inauguration
© AP Photo/Julia Demaree Nikhinson, Pool via The Times Leader
There is another and deeper consideration which must not be lost sight of. As regards the State, the interests of all, whether high or low, are equal. The members of the working classes are citizens by nature and by the same right as the rich… Among the many and grave duties of rulers who would do their best for the people, the first and chief is to act with strict justice - with that justice which is called distributive - toward each and every class alike” (from paras 32 and 33).
An example of the State’s work was in the regulation of working hours. There should be limits to work:
“to save unfortunate working people from the cruelty of men of greed, who use human beings as mere instruments for money-making. It is neither just nor human so to grind men down with excessive labour as to stupefy their minds and wear out their bodies…Daily labour, therefore, should be so regulated as not to be protracted over longer hours than strength admits” (para 42).
The letter also advocated giving people the day off on Sunday for rest and worship.
5 – The role of employers: working for society
The letter spells out that an employer’s responsibility to their workers is not limited to the payment of whatever wages they can persuade workers to agree to; some workers are in situations that can be easily exploited for gain. All employers therefore have a responsibility to agree a wage that is sufficient to enable a family life:
“there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice” (para 45).
The mindset of an employer was not to be ‘as little as I can get away with’ but ‘enough for my workers and their families to live on’. This sees the worker as far more than a ‘factor of production’ but as a human being to whom responsibilities are owed. Employers are encouraged to take an interest in their workers’ welfare.
The letter paints a vision of mutual benefit between employer and workers, which, if made possible, contributes to the welfare and wealth of all. There was an explicit recognition that a motivated worker with a stake in the national economy is more likely to work hard and play a constructive role in that economy and national life.
The fear of communities ‘being left behind’ was very real and the consequences, at the time, seemed politically alarming. Our present challenges of poverty and populism are not new. Here the Pope himself is pleading with governments and employers to play their role in making sure workers had a stake…
6 – The role of workers: mutual support
In addition to expecting workers to work hard and be responsible towards their employers, the letter provides a robust encouragement to workers to organise and establish ‘workers’ associations’ – rather like unions, in fact.
There is no sense in which workers are to be passive - they are to organise together for their mutual benefit – whether this is working hours, or wages or support for those facing difficulties.
Conclusion: A new Gilded Age?
I am increasingly struck by the similarities between the late 19th Century and today.
The last days of the 19th Century witnessed a vigorous global capitalism, rapid technological change, the rise of a small number of extravagantly wealthy businessmen and accelerating social inequality, with millions of workers working for low wages and in grim conditions. Established political leaders struggled to adapt. Governments were slow to respond. Into this distressed space came a new politics. In the UK, the Labour Party was born out of this maelstrom, politics was permanently disrupted and the country moved in a new direction.
Today, we see a similarly vigorous global capitalism, with weakly regulated flows of capital sloshing between countries and rapid technological change. The last 40 years has seen the dismantling of the post-war economic consensus, the growth of social inequality, the stagnation of wages for most and the rise of a new set of ‘robber barons’ with unimaginable wealth. In the UK, this time it is right-wing populism and the figure of Nigel Farage which now benefits from the uncertainty and fear that feeds our politics. In the USA, Trump is the King of Disruption.
Despite some of the striking similarities in circumstances, I want to be clear that these political disruptions – a century apart – are very different. The late 19th Century rise of organised labour emerged in order to improve the lives of millions of workers – and it did. The early 21st Century rise of right-wing populists is rather less constructive, primarily seeking to further the interests of wealthy capitalists through programmes of tax cuts.
My point here is that yawning social inequalities create political spaces which are ripe for disruption. Sometimes this can lead to good outcomes, but not always. European history teaches us to be deeply wary of populist right-wing leaders.
In fact, in the late 19th Century, a socially constructive politics finally emerged. In the USA, President Teddy Roosevelt took on the ‘robber barons’ with bold trust-busting action, recognising that industrial monopolies were undermining the economy and social order. He sought to deliver ‘a square deal’ for everyone. In the UK, Lloyd George delivered the ‘People’s Budget’ in 1909, effectively creating the beginnings of the modern welfare state. Extreme political positions were seen off in both countries by robust action to tackle social inequality.
Mark Twain noted that ‘history doesn’t repeat itself, but it often rhymes’. Our situation today is not the same as it was in 1891, but neither is it a world apart. Is it possible that Rerum Novarum has lessons for us today in this new Gilded Age?
Rerum Novarum envisioned an approach to managing politics and economics which placed mutuality at the heart of the employer-employee relationship, advocated for unions and mutual associations, challenged the Church to work for the poor and saw a positive role for the state in delivering ‘the common good’. The letter – rightly – foresaw that the widening divide between rich and poor was at the root of a great social and political instability.
Added Image Credit: Catholic Agency for Overseas Development
I think there are three urgent messages we can, and should, take from Rerum Novarum for our present age:
The root of our present political instability is the widening social inequality we see between rich and poor. We need to build political coalitions to address this robustly, with governments dismantling monopolies and ensuring that workers receive a fair reward from their work. A fair square deal for everyone. The growth of the ‘Billionaire Class’ must come to an end.
There remains a strong role for union organising, providing mutual protection at work.
Employers, regardless of what governments do, should be taking responsibility for the welfare of their workers, because it’s the right thing to do and also because it’s the smart thing to do. As someone who used to run a Living Wage business, I know that investing in workers is the best way to deliver the best services.
I don’t know how Pope Leo XIV will fare in the years to come, but his choice of name is a good start.
If we can find ways to reweave our mutual bonds as a nation, even in the marketplace, then I believe we can see off the more extreme politicians who thrive on fear and offer further division. We cannot remake history but the future is still up for grabs.
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