"Blessed are the poor"
Tolkien never uses the word "anawim" in his fiction, and we may not use it again in these essays, but it's an important concept. It's a word from the Hebrew Scriptures that has been picked up by some Catholics, as well as those in some other Christian groups, because it describes a group of people that we don't have a good term for in English.
About the closest we can get is "the poor of God." It's the concept behind Luke's "Blessed are the poor," Matthew's "Blessed are the poor in spirit," and Mary's "He has thrown down the mighty from high places and exalted the lowly" (which has many echoes of Hannah's prayer in I Samuel/I Kings). It doesn't always imply monetary poverty, although it doesn't exclude it (note the difference in wording between Luke's account and Matthew's). Its primary emphasis is on those people who know they are poor, even if the world might see them as rich. People who know that they need God. The opposite of the self-righteous that Jesus spent his strongest language on. The publican asking for mercy as opposed to the Pharisee boasting about his own goodness. The heroes of most of Jesus' parables are anawim, and so are most of the heroes in LotR.
The hobbits are the most obvious anawim in LotR, because of their physical smallness as well as their coming from a life far removed from epic events and seats of power. Tolkien said that one point of LotR was to show the "ennoblement of the humble," referring to the hobbits. But many of the seemingly great characters also fit the image of anawim, because they know that what they do they cannot do alone: Aragorn, Gandalf, Elrond, and even Galadriel when she chooses to "diminish," are all God's humble poor. The contrast between Boromir and Faramir is one of the most striking examples of the difference between one who depends on his own self-righteousness and one who realizes his own limitations and allows for action by a power that is beyond himself. There are also briefer glimpses of this in other characters, sometimes shown with a sense of humor: for example, the talkative and "ordinary" Ioreth who has to tell Gandalf the Maia about the prophecy of the king's healing hands; Gandalf shows his own humility by acknowledging the importance of what she says and acting on it, rather than dismissing "common wisdom" as the herb-master does.
What we call the "Protestant work ethic" is, specifically, the Protestant work ethic. Except for the extent to which Catholics living in predominantly Protestant countries have absorbed it from the main culture, it's a foreign concept to the Catholic mindset. One of its extreme manifestations (and as such certainly not accepted by all non-Catholic Christians), seeing financial and personal prosperity as signs of God's favor, is not only foreign but antithetical. A Catholic might look for God's help in earning enough money for daily life, but wealth? Why would God's favor lead you into temptation? Except, again, for the effect of a predominantly non-Catholic culture, such things as prosperity religion and positivity spirituality just don't fit. The summit of the spiritual life is to be able to let go of wealth, whether physical or spiritual, not to receive more of it. This doesn't mean wealthy people are necessarily bad, but wealth itself, to say nothing of excess attention paid to acquiring it, can easily become an extra obstacle along the path toward holiness. Kings and queens of past centuries who have been considered holy generally had a much different attitude toward their wealth than did those who were only nominally and/or politically Catholic. Bilbo's way of dealing with his wealth shows solid Catholic common sense, as well as the detachment he's learned from his adventures.
There's a difference of emphasis shown in two terms that are commonly used to refer to monetary giving: tithing (most often used by Protestants) and stewardship (most often used by Catholics). A tithe is one-tenth of something, and tithing dates back to the Hebrew practice of offering one-tenth of one's income (crops, flocks, etc.) to God through sacrifice or, as a substitute, through donation. Stewardship emphasizes the idea that everything we have use of belongs to God, not to us. Gandalf's statement to Denethor, "For I am also a steward. Did you not know?" is a wonderfully Catholic line, and stands in contrast to Saruman's claiming of Orthanc and Isengard as well as to Denethor's reluctance to hand the governing of the kingdom back to the king. Some years ago, the Catholic bishops of the Midwest United States explicitly extended the word stewardship to include our use of the land, which I think Tolkien would very much agree with.
This isn't to say that most Protestants if asked wouldn't agree that everything they have, not just ten percent of it, belongs to God. Or that most Catholics if asked wouldn't agree that it's a good practice to have a specific giving level in mind, with many using ten percent as their target. Again, it's more of a difference in emphasis than in basic belief. But, as Tolkien the philologist strongly believed, our concepts affect what words we use, and vice versa, so the words are worth looking at.
Most Catholics, like anyone else, have to think about financially caring for their families, although a Catholic truly attempting to lead a holy life will include simplicity, detachment, and the belief that anything I don't need belongs to someone else, in any decision-making regarding use of money and property; if this is done joyfully and with a clear purpose, the values will hopefully be passed on to the children whose lives are affected by those decisions. The Catholic Church, however, also recognizes what's called evangelical (Gospel) poverty, believing that some people are more specifically called to respond to Christ's admonition to "sell what you have and give to the poor" and follow Him. This is often done by joining a religious order, where any resources belong to the order, not the individual member. The way religious communities live this out has such a range that I won't even attempt a summary, but a Catholic following a call to the religious life would, of course, look for a community whose approach fit with how the person discerned his or her own calling - from strict (at times even rigorous) poverty to a much more relaxed method of dealing with money and property. Besides religious orders, though, the recognition of evangelical poverty has led to such things as the Catholic Worker movement, L'Arche communities, and a multiplicity of ways that individual Catholics embrace voluntary poverty of varying degrees. (Note: Diocesan priests, which includes most parish priests as well as most bishops and members of the hierarchy, don't belong to a religious order and don't take a vow of poverty. They have the same responsibility as every other Catholic, though, to live with simplicity, detachment, and generosity - more of a responsibility to do so, in fact, insofar as they're looked to for example and leadership.)
We don't have to look too hard to find examples of Gospel poverty in LotR, although none of the characters have heard the Gospel anywhere but in their hearts. Gandalf is probably the most extreme in this, living without a place to lay his head (in contrast to the story's other "angelic beings": Saruman and Sauron). We can also point to Aragorn in his earlier life and Bilbo in his later life as obvious examples.
But I've been surprised by the many people who don't seem to notice how remarkable it is for a middle-aged, settled-in, basically happy member of the landed gentry (head of a prominent family, and responsible for several tenants), to chuck it all and leave with only the pack on his back out of a sense of duty and love for the people he's leaving behind in their peace and prosperity. Not to go "there and back again," but to enter lifelong exile. Shedding not only his belongings and his comfortable future, but what's left of his good name amid rumors (which he encourages) that he has to leave because he's run through all his money. This isn't tithing. You might even make the argument - as Bilbo and the Gaffer each do later - that it isn't particularly responsible stewardship. But that depends on who you consider yourself to be steward for: the Bagginses, the tenants of Bagshot Row, or all the residents of the Shire - or of Middle-earth. Love doesn't count the cost, and is often irresponsible in the eyes of others. Denethor fails in his stewardship, in part, because he can't let go of what he's "stewarding" when he's called to. Some people who espouse "prosperity religion" tithe because they believe it will bring them more financial blessings; people practicing true stewardship would consider that to be very odd reasoning.
Spiritual poverty can't be, and isn't meant to be, separated from Catholic social teaching, which has as one of its basic tenets the "preferential option for the poor." In situations that seem to offer several good options, if one of them is more favorable to the poor (however the poor are defined in that particular situation, which may or may not be by monetary poverty), that's the one to follow. The most straight-forward look at who the poor are is probably found in Matthew 25: "What you did for one of these, you did for me." That's about as strong group as you can get! I don't always realize how ingrained into my psyche this preferential option for the poor is, until I'm surprised by someone responding to a situation in a different way - often enough in a morally good way, but without that tilt toward the poor and marginalized that I've learned to see as the norm.
Bilbo seems to act out of this idea when he gives away everything that he has. Regarding the gifts he leaves at Bag End that are specifically labeled to be given to certain recipients, we learn, "But, of course, most of the things were given where they would be wanted and welcome. The poorer hobbits, and especially those of Bagshot Row, did very well." Even the use of "of course" says something here about Tolkien's mindset. Of course Bilbo would leave most of the gifts to those in need - it's the natural, normal thing to do. I believe it's also pertinent that the tenants of Bagshot Row are included among the "poorer hobbits." All the evidence we have from LotR indicates that tenancy in Bagshot Row depended more on who needed a place to live than it did on who could afford to pay rent, a practice that seems to have been continued by Frodo.
There's another interesting "of course" in the very next paragraph: "There was plenty of everything left for Frodo. And, of course, all the chief treasures, as well as the books, pictures, and more than enough furniture, were left in his possession." By this time in the history of the characters, this is a very reasonable "of course"; Frodo is, after all, Bilbo's designated heir. But there was no "of course" involved when Bilbo so designated him. It's a truism that "grace builds upon nature" - that is, that a person's natural inclinations toward good often show the direction in which grace will lead that person even further. Bilbo's natural tendency toward generosity, which first played a part in the events recounted in The Hobbit, is "gifted and graced" in his adoption of Frodo - a generous action that has consequences more far-reaching than either of them could have imagined.
Besides the preferential option for the poor, there's a tenet of Catholic social teaching called subsidiarity: any form of control (whether governmental, financial, or otherwise) should be as close as possible to those who are affected by it. The city in which I live has a number of active "neighborhood" groups, especially in lower-income areas, that work toward better housing, jobs, businesses, schools, streets and sewers in their parts of the city; it's not at all surprising to find a disproportionate number of Catholic members in these groups. To understand subsidiarity is to understand why some popes, notably John Paul II, have given strong statements against not only communism and fascism, but also unbridled capitalism. The Shire is essentially subsidiarity in action. This is strikingly recognized by King Elessar in an event reported in Appendix B of LotR. Some years into his reign he comes to the Shire (which even the hobbits acknowledge as part of his realm), but he stops at the Brandywine Bridge and any hobbits he meets with come to him there. Shire society is taking good care of itself at that point, and there's no need for a "higher up" to come in and deal with anything. The meetings wouldn't have been any different if they'd taken place in Hobbiton or Michel Delving, but the king's decision is a definite statement to the Shirefolk that they don't need to be concerned about him taking control away from them.
This is in line with the exchange between Butterbur and Gandalf in "Homeward Bound":
[Gandalf said] '...its right name, Barliman, is Fornost Erain, Norbury of the Kings. And the King will come there again one day; and then you'll have some fair folk riding through.'
'Well, that sounds more hopeful, I'll allow,' said Butterbur. 'And it will be good for business, no doubt. So long as he lets Bree alone.'
'He will,' said Gandalf. 'He knows it and loves it.'
It's interesting - and characteristic of subsidiarity - that the sign of the king knowing and loving a place is that he leaves it alone.
Within the Shire, subsidiarity is taken down another level to that of families, which deal with most daily concerns themselves without resorting to official government. In "The Scouring of the Shire," Frodo says of Lotho: 'Well, I am glad he has dropped the Baggins at any rate. But it is evidently high time that the family dealt with him and put him in his place.' Even though Frodo has sold Bag End, he's still head of the family.
Perhaps the most important point of all this for our purposes here is to recognize that the Catholic way of looking at the world is basic to The Lord of the Rings even when it comes to systems of government and economics.
Repeating a statement from the Core Concepts page, I'm decidedly not an economist, so for a much better explanation of Tolkien's philosophy on the topic than I could ever write, see the chapter "Tolkien as Hobbit" in Joseph Pearce's Tolkien: Man and Myth. The same chapter gives an interesting historical discussion of Catholic thought (particularly English Catholic thought) on the subject that Tolkien would almost certainly have been influenced by.