Subsidiarity is an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. Political decisions should be taken at a local level if possible, rather than by a central authority. The Oxford English Dictionary defines subsidiarity as the idea that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level.
The word subsidiarity is derived from the Latin word subsidiarius and has its origins in Catholic social teaching.
Catholic social teaching
The development of the concept of subsidiarity has roots in the natural law philosophy of Thomas Aquinas, and was mediated by the social scientific theories of Luigi Taparelli, S.J., in his 1840–43 natural law treatise on the human person in society. In that work, Taparelli established the criteria of just social order, which he referred to as "hypotactical right" and which came to be termed subsidiarity following German influences.
The term subsidiarity as employed in Catholic social thought was inspired by the teaching of Wilhelm Emmanuel von Ketteler, who served as Bishop of Mainz in the mid- to late 19th century. It is most well-known, however, from its subsequent incorporation into Pope Pius XI’s encyclical Quadragesimo anno. This encyclical’s formulation of subsidiarity is the touchstone from which further interpretations tend to depart: "Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them." As with many social encyclicals in the modern period, this one occurs in the historical context of the intensifying struggle between communist and capitalist ideologies, exactly forty years—hence the title—after the Vatican's first public stance on the issue in Rerum novarum. Promulgated in 1931, Quadragesimo anno is a response to German National Socialism (Nazism) and Soviet communism, on one hand, and to Western European and American capitalist individualism on the other.
Gregory Beabout suggests that subsidiarity draws upon a far older concept as well: the Roman military term subsidium. He writes that “the role of the ‘subsidium’ (literally, to sit behind) is to lend help and support in case of need.” Employing Beabout's etymology, subsidiarity indicates that the higher social unit ought to “sit behind” the lower ones to lend help and support in case of need. Another etymological interpretation states that subsidiarity literally means “to ‘seat’ (‘sid’) a service down (‘sub’) as close to the need for that service as is feasible.” Either interpretation indicates a hermeneutic of subsidiarity in which the higher social body’s rights and responsibilities for action are predicated upon their assistance to and empowerment of the lower.
Francis McHugh states that in addition to the “vertical” dimension of subsidiarity, there is also a “horizontal” dimension which “calls for a diversity of semi-autonomous social, economic, and cultural spheres.” Quadragesimo anno presents these “spheres” as occupying the space between the poles of individual and State: "...things have come to such a pass through the evil of what we have termed “individualism” that, following upon the overthrow and near extinction of that rich social life which was once highly developed through associations of various kinds, there remain virtually only individuals and the State. This is to the great harm of the State itself; for, with a structure of social governance lost, and with the taking over of all the burdens which the wrecked associations once bore. the State has been overwhelmed and crushed by almost infinite tasks and duties." These associations or “lesser societies” are encouraged because they are the vehicle by which society functions most effectively and corresponds most closely with human dignity. Examples of these associations today would include the family, unions, nonprofit organizations, religious congregations, and corporations of all sizes.