Henry James lived from 1843 to 1916, a period of significant worldwide social and political unrest. Two things that occurred in particular in 1848, when he was still a child, were that the Woman's Rights Convention was held in New York City, and Karl Marx and Friedrich Engels published Manifesto of the Communist Party, which were both major calls for critical social reforms. The Woman's Rights Convention was of course part of the women's rights movement and a call for women to start being treated equal to men (PBS, "A Henry James Timeline: World Events"). The Manifesto of the Communist Party argues that capitalism creates class struggles between the working class and the business-owning class, which will result in inevitable war between the two classes. The Manifesto also promotes communism and is thought to have instigated revolutions in multiple countries all over Europe, all taking place in the spring of 1848 ("The Communist Manifesto"). Hence, when we use New Historicism to see how Henry James's own time period influenced The Turn of a Screw and specifically look for social dynamics within the novella, we can focus on major social revolutions that took place like those above.
To analyze the social dynamics within the novella, we need to explore the social relationships and see how they reflect on James's historical times. One fascinating relationship is the relationship between the deceased governess and the deceased valet. In Chapter VII, Mrs. Grose clearly discloses that the governess and valet were not of equal social standing yet still had an intimate relationship, which would have been deemed improper. As Mrs. Grove states, the late Miss Jessel "was a lady," while Mr. Quint was "so dreadfully below." However, as the publishing of Manifesto of the Communist Party shows, James was living in a time in which social class structures and barriers were not only being questioned but being demolished through the birth of communism. What's also interesting is that the ghosts in James's novella who had an improper relationship are also believed to be causing significant harm. Hence, James's reference to improper social relationships through the ghosts can be seen as a means of questioning communism's ridicule of social class structures.
What's also very fascinating is that it's the two women in the novella, the current governess and Mrs. Grose, who are responsible for all of the action in the novella, particularly all of the protecting. The most important male character, the children's uncle, remains very far removed from the story. James's creation of two such dominant female characters can be related to the influence of the women's rights movement.