Quadragesimo Anno was written by Pope Pius XI in 1931 forty years after Pope Leo XIII's Rerun Novarum on the Condition of Workers. He wrote this encyclical to address the ethical challenges facing workers, employers, the Church and the state as a result of end of the industrial revolution and the onset of the Great Depression.
As Pope Leo XIII noted in Rerun Novarum, as a result of the rapidly industrializing economy there were two main social classes the rich and the poor. The concentration of wealth has led to a situation where only the strongest and those who disregard their conscience prospered in the new economic reality.
His Holiness wrote Quadragesimo Anno to expand on the Church's response to challenging economic times, to advocate for Christian morals, and to respond to the rise of socialism as an economic system.
Rerun Novarum had begun a robust discussion of the rights and duties of workers and employers in society. Since 1891 the number of workers associations had grown, but did not flourish to the degree necessary to correct injustices against workers. As Pope Leo XIII did in Rerun Novarum, Pope Pius XI emphasizes the role that associations of workers can play in order to help address these injustices.
Pope Leo XIII affirmed one's right to property, but this encyclical notes that there is a distinct difference between the right to property and its use. While economics and moral values may often seem unrelated, God created economic activity for humanity - not humans to serve the economy. Moral law ought to guide activities in the economic sphere as it does elsewhere. The tendencies to become either individualistic or collectivist (socialist) ought to be avoided.
In economics people should not only consider their own interests, but also the common good. The state also must seek to work towards the common good. Both the state and its inhabitants should work towards ending strife between classes. The state should not "exhaust private wealth" through taxes, but instead provide a "friendly service" when it works for the common good.
A county's wealth comes from the very labor of its people. Individuals should use their wealth to benefit the common good and to help those less fortunate. Labor is worth as much as the products that result, and a worker ought to be paid enough to support himself and his family. Yet it is important to note that one's income beyond what is necessary for living frugally and with dignity ought to be used, as commanded by the scriptures, to help those who are less fortunate.
Pope Pius XI first articulated the idea of subsidiary in Quadragesimo Anno. The principle states that functions of government ought to remain at the smallest or most local level as possible, and that the government shouldn't complete tasks that can be best accomplished by individuals. If local governments can perform functions just as effectively as on the national level, these tasks ought to remain at the local level.
Pope Pius XI stated that a renewal of Christian spirit must occur among the workers and employers involved in economic life to achieve just results. Social justice and social charity must also play a role in shaping economic life which must be centered on Christian moderation and universal charity, and the focus must remain on everlasting life in Jesus Christ.
Link to: Quadragesimo Anno