The Big Picture
A remarkable transformation is underway in the shifting sands of global economics. The traditional financial economy, focusing on GDP growth, stock markets, and fiscal policies, is gradually receding into the background. In its place emerges a novel paradigm based not on impersonal market forces but on the intimate bonds of extended families and communities.
This burgeoning economy operates on a different wavelength, eschewing conventional metrics of wealth and prosperity. Instead, it thrives on reciprocity, trust, and shared resources within tight-knit kinship networks. In this economy, the measure of wealth lies not in the accumulation of capital but in the strength of familial ties, the resilience of local communities, and the well-being of its members.
At its core, this new economic model challenges the very notion of growth as defined by traditional financial systems. It embraces sustainability and equilibrium instead of perpetuating a relentless pursuit of endless expansion. It recognises that true prosperity is not solely determined by material wealth but by the richness of social connections and the fulfilment of human needs.
One of the hallmarks of this emerging economy is its resistance to quantification. Unlike the financial economy, which relies heavily on numerical indicators and monetary valuations, this alternative system defies easy measurement. Its value is intangible, woven into the fabric of everyday life and expressed through shared experiences, mutual support, and collective resilience.
As this familial economy gains traction, the contours of global commerce are shifting. The once-dominant financial institutions find themselves increasingly marginalised, their influence waning in the face of a grassroots resurgence of community-driven initiatives. Local markets thrive as people prioritise proximity over profit, opting for goods and services that support their neighbours rather than multinational corporations.
However, with the rise of this new economic order comes a parallel phenomenon: the expansion of the black market. In a world where traditional financial structures no longer predominate, illicit transactions flourish in the shadows. Yet, unlike the clandestine activities of the past, this black market operates not as a subversive force but as an organic outgrowth of localism.
Without top-down regulation and oversight, informal networks fill the void, facilitating the exchange of goods and services beyond government scrutiny. While some may view this development with trepidation, fearing a descent into lawlessness, others see it as a natural consequence of localism and self-reliance.
In this brave new world, the boundaries between legality and illegality blur as communities redefine the parameters of acceptable behaviour according to their norms and values. What may be deemed illegal in the eyes of the state becomes normalised within the context of local customs and traditions.
As the financial economy shrinks, its influence wanes in the face of this emerging familial economy. While the transition may be fraught with uncertainty and disruption, it also promises a more equitable and sustainable future in which human relationships take precedence over profit margins, and community well-being supersedes economic growth at any cost.
So, what will happen to the traditional financial economy? How will it shrink?
As the real economy shrinks, businesses large and small will cease trading.
One notable aspect of this phenomenon is the proportion of businesses that close their doors without leaving any outstanding debt. This scenario sheds light on various facets of entrepreneurship, financial management, and economic health.
Business closures are common in the United Kingdom, as in many other economies. However, the absence of lingering debt sets apart a significant portion of these closures. This phenomenon speaks volumes about the resilience and prudence of many business owners and the regulatory environment and financial structures in place.
Statistics on the exact percentage of UK businesses that cease trading without debt can vary over time and across sectors. However, many closures fall into this category, highlighting a fundamental truth: not all business failures result from financial mismanagement or insolvency. Many closures stem from strategic decisions, market shifts, or personal circumstances that render continued operation unfeasible.
One significant factor contributing to this phenomenon is the prevalence of small and medium-sized enterprises (SMEs) in the UK. These businesses often operate on lean budgets and are more agile in responding to market changes. When faced with challenges threatening their viability, some SME owners wind down operations gracefully, ensuring that all financial obligations are settled before closure.
Moreover, the UK’s robust legal and regulatory framework allows businesses to address debt responsibly. Bankruptcy laws, insolvency procedures, and debt restructuring mechanisms support struggling companies, allowing them to manage their financial affairs while minimising the impact on creditors. Through these mechanisms, businesses can navigate difficult times and may emerge debt-free upon closure.
Another contributing factor to the prevalence of debt-free closures is the increasing emphasis on financial literacy and responsible business practices. Business owners are becoming more adept at managing finances, monitoring cash flows, and planning for contingencies. As a result, they are better equipped to recognise when it’s time to close a business without leaving a financial burden behind.
Furthermore, the evolving nature of entrepreneurship in the digital age has reshaped traditional notions of business success and failure. The rise of online ventures, freelance work, and gig economy platforms has introduced new work and income generation paradigms. For many individuals engaged in these forms of entrepreneurship, the ability to pivot, adapt, and gracefully exit a venture without incurring debt is integral to their long-term financial well-being.
Despite the positive implications of businesses ceasing trading without debt, it’s essential to acknowledge that not all closures follow this pattern.
As the economy shrinks, unexpected disruptions and systemic challenges can lead to insolvency and debt accumulation for some businesses. Nevertheless, the prevalence of debt-free closures underscores the resilience and adaptability of the UK business community.
The percentage of UK businesses that cease trading without leaving any debt is a testament to the country’s prudent financial management, regulatory support, and evolving entrepreneurial landscape.
The financial economy will shrink due to declining business and public sector activities and businesses ceasing trading with no outstanding debts. The shrinkage will not occur because businesses cease trading; they will cease trading because the economy is shrinking.
Businesses and public sector organisations that fail, leaving no debts, can be seen as reductions in the assets that make up the total economy, which is how the economy shrinks. Those who fail with debts will pass the debts on to their successors, with no effect on the size of the economy.
The Culture
Localism is already established. It has yet to be recognised for what it is because it doesn’t fit into the majority view.
Localism is a culture deeply rooted in the essence of community autonomy and identity, which naturally evolves towards a more ecological future. This evolution is propelled by recognising the finite nature of fossil fuels and the unavoidable shrinkage of the global economy.
At its core, localism opposes the imposition of uniform standards or centralised control, advocating instead the organic development of independent communities according to their unique strengths and values. In this natural evolution, the emphasis shifts towards sustainability, with communities increasingly harnessing local resources and fostering self-sufficiency.
The decline of fossil fuels catalyses this shift, prompting communities to reevaluate their reliance on non-renewable energy sources and explore alternative, more environmentally friendly solutions. A transition towards renewable energy sources mitigates ecological impact and fosters resilience in declining global energy markets.
Furthermore, as local economies prioritise the production and consumption of goods and services within their boundaries – developing their local economies – the carbon footprint of transportation and logistics is simultaneously reduced. This localisation of economies contributes to reducing greenhouse gas emissions and environmental degradation.
In tandem with the ecological benefits, localism also fits into the shrinkage of the global economy.
Localist areas, at the grassroots, will become less dependent on the top-down activities of the public sector and commercial activities, which develop and depend on the shrinking national economy,
Also, by prioritising local production and consumption, communities become less vulnerable to the fluctuations of distant markets and more resilient in economic uncertainty. And can see a positive future.
This natural progression towards a more ecological environment and reduced global economic footprint underscores the transformative potential of localism. As communities develop and embrace their unique identities and strengths, they pave the way for a more sustainable world where the well-being of people and the planet are prioritised above all else.
Localism will be a diverse tapestry of neighbourhoods without the standardisation sought in the industrial era. How each area develops will depend on each location’s leadership and geographic and geological characteristics. Happenstance will prevail.
Localisation
The development of localism can be seen as localisation, which entails concentrating all kinds of activity on local resources, production, and consumption. It departs from the globalised economic model that heavily relies on long-distance transportation and centralised production.
One of the primary drivers behind localisation is recognising the finite nature of fossil fuels and the environmental consequences of their extraction and consumption. As fossil fuel reserves dwindle and concerns over climate change escalate, there’s a growing imperative to transition towards more sustainable and resilient economic systems.
In a localist economy, communities can harness their local resources, whether renewable energy, agricultural land, or skilled labour. This decentralised approach bolsters local economies and fosters a sense of connection and stewardship towards the environment.
Furthermore, localisation can revitalise local cultures and traditions by prioritising regionally distinctive products and services. It encourages consumers to appreciate the uniqueness of their local environment and support indigenous industries.
Transitioning towards a localised economy is not without challenges. It requires reconfiguring supply chains, incentivising local production, and reimagining consumer behaviours. Additionally, there may be resistance from entrenched interests accustomed to the so-called efficiencies of globalised trade.
Nevertheless, numerous initiatives worldwide demonstrate the feasibility and benefits of localisation. From community-supported agriculture to renewable energy cooperatives, there’s a growing movement towards localising economic activity and fostering sustainable, resilient communities.
Localisation represents a transformative response to the challenges posed by a shrinking economy and diminishing fossil fuel energy availability. Prioritising local resources, production, and consumption offers a pathway towards greater sustainability, resilience, and community well-being.
Localist Economies
Localism is a fundamental element of the future as the global economy grapples with the repercussions of shrinking fossil fuel availability. The reliance on traditional economic models fueled by non-renewable resources is no longer sustainable, necessitating a fundamental shift towards resilient, community-centric economies. In this context, the development of localist economies will emerge as a beacon of hope, offering pathways to navigate the challenges posed by diminishing energy resources while fostering inclusive growth and sustainability.
At the heart of localist economies lies the principle of self-reliance and interconnectedness. Rather than depending on external forces and global markets, communities leverage their inherent strengths and resources to meet their needs. This shift towards localisation encompasses aspects of economic activity, including food production, manufacturing, energy generation, and service provision.
One key pillar of localist economies is the promotion of small-scale agriculture and localised food systems. By prioritising local food production over long-distance transportation, communities reduce their dependence on fossil fuels while enhancing food security and resilience to external shocks. Community-supported agriculture (CSA) schemes, farmers’ markets, and urban farming initiatives empower individuals to actively participate in food production, forging stronger connections between producers and consumers.
Furthermore, fostering a vibrant ecosystem of small businesses and cooperatives amplifies the resilience of local economies. From artisanal crafts to renewable energy startups, these enterprises contribute to job creation, skill development, and the circulation of wealth within the community. By prioritising ethical and sustainable practices, such as fair trade and resource conservation, these businesses align economic objectives with social and environmental values, laying the groundwork for a more equitable and regenerative economy.
In parallel, the transition to renewable energy sources is pivotal in reshaping localist economies. By harnessing the abundant sun, wind, and water resources, communities reduce their reliance on fossil fuels while mitigating the impacts of climate change. Through rooftop solar panels, small wind turbines, and micro-hydro systems, distributed energy generation empowers communities to take control of their energy future, fostering energy independence and resilience in volatile global energy markets.
Moreover, energy efficiency and conservation investments yield significant dividends for local economies, reducing energy costs, enhancing productivity, and creating employment opportunities in the construction, retrofitting, and green technology sectors. Energy-efficient housing and infrastructure lower residents’ utility bills and contribute to communities’ overall sustainability and livability.
However, the transition to local community economies is not without its challenges. Structural barriers, entrenched interests, and institutional inertia often impede progress towards localisation, reinforcing the status quo of centralised, extractive economic systems. Overcoming these obstacles requires a concerted effort from policymakers, businesses, civil society, and individuals to create an enabling environment for community-led initiatives and decentralised decision-making.
Policy interventions, such as local procurement preferences, community land trusts, and cooperative ownership models, can provide the necessary support and incentives for local businesses to thrive. Likewise, investment in education and capacity-building initiatives equips community members with the knowledge and skills to participate actively in the transition to local economies, fostering a culture of innovation, resilience, and collaboration.
A fundamental difference between the old and new ways is that the old ways assumed growth assisted by borrowing, whereas economic shrinkage will underlie localism. This implies that incomes and associated wage rates will generally decline. Outstanding loans must not burden individuals and families setting up and running new businesses. Currently, charges for services in the UK are at least £35 per hour. New companies should plan for service charges below £15 per hour. As the economy shrinks, personal incomes will decline. Less in the future.
Moving to cheaper housing and paying outstanding mortgages will be essential for family survival. Failure to do so will then involve moving again.
Old-style discretionary spending will no longer be a part of daily life.
Local community economies offer a compelling vision for a more equitable, sustainable, and resilient future in the face of shrinking fossil fuel availability and economic contraction. By harnessing the power of local resources, knowledge, and collective action, communities can chart a path towards prosperity that prioritises people and the planet over profit. As we confront the interconnected challenges of climate change, economic inequality, and resource depletion, the imperative to embrace localisation becomes ever more pressing. In the words of the African proverb, “If you want to go fast, go alone. If you want to go far, go together.” Through collective endeavour and solidarity, we can build thriving, resilient communities that endure the test of time.
