The Question Nobody in Government Is Asking

Tim Watkins, writing in The Consciousness of Sheep on 2 November 2026, concludes his article A Matter of Taxonomy by raising what may be the most important economic question of our time.

In a world without economic growth, how should we allocate the remaining surplus energy and material resources?

It is a remarkable question because it challenges almost everything upon which modern economic and political thinking is based.

For more than two centuries, governments have assumed that economic growth would provide the means to improve living standards, finance public services, repay debts and support an expanding population.

Political arguments have largely concerned the distribution of the benefits of growth. The underlying assumption that growth would continue has seldom been questioned.

But what happens when growth ends? More importantly, what happens when the economy begins to shrink?

This is no longer simply a theoretical question. There is growing evidence that the economic arrangements developed during the industrial era are becoming increasingly difficult to maintain. Yet governments continue to behave as though another period of economic expansion is just around the corner.

The Importance of Surplus Energy

Watkins identifies surplus energy as the foundation of economic activity. Energy is not simply another commodity which can be bought and sold. It is what enables everything else to happen.

Agriculture, manufacturing, transport, construction, healthcare and communications all depend upon energy. But what matters is not merely the amount of energy available. It is the energy remaining after we have obtained, processed and delivered that energy.

This surplus is what enables a society to support activities beyond the immediate necessities of survival.

During the industrial era, enormous quantities of relatively inexpensive fossil-fuel energy made possible an extraordinary expansion of economic activity. The result was a society characterised by increasing specialisation, centralisation, technological complexity and dependence upon long supply chains.

It also enabled the development of the welfare state, modern medicine, mass education and the enormous administrative structures of government.

But as the energy cost of obtaining energy increases, the surplus available to support these activities comes under pressure. The consequences are not necessarily immediate shortages of energy. They are more likely to appear initially as rising costs, declining affordability, falling profitability and the inability to maintain existing infrastructure.

The End of the Growth Economy

Our financial arrangements were developed for an expanding economy. Businesses borrow money in the expectation that future revenues will enable them to repay their debts. Governments borrow in the expectation that future economic activity will generate sufficient taxation to meet their obligations.

Households take on mortgages and other debts on the assumption that their incomes will remain adequate. All of these arrangements become increasingly difficult when the real economy ceases to expand.

A government may still report growth in monetary terms. But higher prices and increased borrowing do not necessarily mean that more useful goods and services are being produced. Indeed, the opposite may be happening.

A shrinking economy can continue to display increasing monetary transactions while delivering declining material prosperity. This distinction is fundamental.

The question is no longer simply how to generate more money. It is how to maintain essential activities with diminishing real resources.

The Problem of Allocation

This brings us back to Watkins’ final question. Who should decide how the remaining surplus energy and material resources are allocated?

At present, much of this allocation takes place through markets, prices, borrowing and government expenditure. Those with the greatest purchasing power can generally command the largest share of available resources. But purchasing power is not necessarily related to social usefulness.

Consider the difference between maintaining a local water supply and constructing another large entertainment complex. Or between providing basic healthcare and operating an energy-intensive financial trading system. Or between producing food locally and transporting discretionary consumer goods halfway around the world.

In an expanding economy, society may be able to support all these activities simultaneously. In a shrinking economy, choices become unavoidable. Some activities will have to contract so that others can continue.

This is the central political and economic challenge of the coming decades.

Why Central Government Cannot Provide the Whole Answer

Modern governments have become accustomed to managing economic activity through taxation, borrowing, regulation and public expenditure. These mechanisms can influence the distribution of money. They cannot create additional surplus energy or physical resources.

Nor can they readily determine the particular needs and capabilities of every locality. A government department in London cannot know, in sufficient detail, the available land, water, skills, workshops, buildings and practical requirements of thousands of different communities.

Even if it possessed this information, attempting to direct every activity centrally would create an enormous administrative burden.

There is also a deeper problem. Centralised systems themselves consume substantial resources. They require offices, communications networks, transport, specialist personnel, computer systems and increasingly expensive infrastructure.

As the economy shrinks, the cost of maintaining these systems becomes a growing burden upon the productive activities they are intended to support.

The question is therefore not simply how central government should distribute diminishing resources. It is whether some of the activities presently organised centrally should instead be undertaken locally.

Localism Provides Another Approach

Localism begins with a different question. Rather than asking how a national economy can continue expanding, it asks how people within a locality can provide for their essential needs using the resources available to them.

This changes the whole approach to economic organisation. Food production, water supplies, basic repairs, personal care, education and many other activities can be organised much closer to the people who depend upon them.

The advantages are not limited to shorter transport distances. Local knowledge becomes more important. Existing buildings and equipment can be reused. Skills can be shared. People can exchange services without every activity requiring a formal employer, employee or financial intermediary.

A retired carpenter may repair a neighbour’s furniture. A gardener may exchange vegetables for help maintaining a roof. A small workshop may repair equipment which would otherwise be discarded. A local bakery may supply nearby households using ingredients produced within the locality where practical.

These activities may contribute little to conventional measurements of economic growth. Nevertheless, they provide genuine economic value. Indeed, as the formal economy becomes less affordable, such activities may become increasingly important.

A Different Understanding of Work

Another important feature of Watkins’ article is his criticism of the conventional division between employers and employees. The modern economy contains many different arrangements.

There are employees, self-employed tradespeople, small business owners, part-time workers, people combining employment with benefits, and others undertaking informal work. As the industrial economy contracts, these distinctions may become even less useful.

We may see increasing numbers of people supporting themselves through several different activities rather than depending upon a single employer. Some may grow food, undertake repairs, provide care or exchange services. Others may establish small businesses operating from their homes.

This does not mean that conventional employment will disappear. It means that employment may cease to be the principal means by which every household obtains the goods and services it needs.

The informal economy could become an increasingly important part of everyday life. Such an evolution would also challenge the existing systems of taxation, benefits and economic measurement.

Governments may find themselves attempting to regulate an economy which is becoming progressively less dependent upon the institutions they understand.

Essential and Discretionary Activities

A shrinking economy will force a distinction between essential and discretionary activities. Food, water, shelter, sanitation, basic healthcare and essential communications must receive priority.

Many other activities, however desirable, will become increasingly difficult to support. This does not mean that all discretionary activities will disappear. Rather, their scale and complexity will be determined by what society can afford after essential needs have been met.

The distinction also helps us understand why localism is likely to emerge progressively rather than through a single political decision. As centrally organised services become unaffordable or unreliable, people will seek alternatives.

Some alternatives will be commercial. Others will be cooperative or informal. What matters is that the activity continues, even if the institutional arrangements surrounding it change.

The Two Levels of Economic Organisation

Localism does not require the disappearance of national government. Certain functions will remain national because their nature demands coordination over large distances or across many localities.

Defence, major rail connections, strategic healthcare, national communications and the administration of justice are examples. But many everyday requirements can be provided locally.

The challenge is to distinguish between activities which genuinely require national organisation and those which have become centralised simply because economic growth made centralisation affordable.

This distinction could become increasingly important as resources diminish. A smaller national economy would concentrate its remaining capacity upon essential functions which cannot sensibly be provided locally.

Localities would assume greater responsibility for everyday production, services and mutual support. This would not necessarily be the result of a planned political reform. It could emerge naturally as existing arrangements become too expensive to maintain.

The Political Problem

There is a fundamental difficulty facing today’s political leaders. They have been educated, trained and elected within a system which assumes that economic growth is both desirable and achievable.

Their policies are designed to encourage investment, increase productivity, expand employment and generate additional taxation. They have little experience of governing an economy which must operate with diminishing material resources.

Acknowledging this would require a profound change in political thinking. Instead of promising more of everything, governments would have to explain why some activities could no longer be supported.

Instead of encouraging consumption, they might have to encourage conservation, repair and reuse. Instead of concentrating economic activity in ever-larger organisations, they might have to facilitate smaller and more local arrangements.

Perhaps most difficult of all, they would have to accept that national government cannot solve every problem. For politicians accustomed to announcing national programmes and ambitious targets, this would be an uncomfortable admission.

Yet the alternative may be continued promises of growth accompanied by progressive deterioration in the services and infrastructure upon which people depend.

The Evolution Towards Localism

There is another way of understanding what is happening. The industrial economy developed because the conditions necessary to support it existed.

Abundant surplus energy enabled increasingly complex economic and social arrangements. As those conditions change, the arrangements themselves must change. This is not necessarily a matter of political ideology. It is a process of adaptation.

Just as living organisms adapt to changing environmental conditions, economic and social systems must adjust to changes in the resources available to sustain them.

Some institutions will survive. Others will become smaller, simpler or disappear. New forms of cooperation and production will emerge.

Localism can be understood as one possible outcome of this process. It offers a means of reducing dependence upon costly centralised systems while making better use of the resources and capabilities available within each locality.

It is not a guarantee of prosperity or an escape from the difficulties of economic contraction. But it may provide a more practical foundation for maintaining essential living standards than continued dependence upon growth which can no longer be assumed.

The Question That Really Matters

Tim Watkins ends his article by asking how society should allocate the surplus energy and material resources remaining to it. That is surely the right question.

But perhaps it needs to be taken one stage further. Rather than asking only who should allocate these resources, we should ask at what level should the decisions be made?

Some decisions must remain national. Many others could be made within the localities where people live, work and understand their own circumstances. This is the essential argument for localism.

The industrial era encouraged us to organise economic life from the top down because abundant energy made large, complex systems possible. A shrinking economy may increasingly favour arrangements which develop from the bottom up.

The political challenge is not to design every detail of this future. It is to recognise what is happening and remove unnecessary obstacles to people organising their own essential activities.

The most important question is no longer how we can restore economic growth. It is how we can organise society to live successfully without it.

And that may be the question which finally brings localism into the centre of political debate.

Inspired by Tim Watkins, “A Matter of Taxonomy”, The Consciousness of Sheep, 2 November 2026.

For several years I have been writing about the end of economic growth and the emergence of localism. During much of that time, it has been a rather lonely occupation.

Almost everyone, from politicians and economists to business leaders and the media, has continued to assume that economic growth will return. Recessions are temporary. Financial difficulties can be overcome. New technology will create new prosperity. With the right policies, Britain can once again enjoy the rising living standards to which we have become accustomed.

I have increasingly come to believe that this entire way of thinking belongs to the past.

Economic growth has ended. What we are experiencing is not a temporary interruption to an expanding economy, but the early stages of a long period of economic contraction.

Now, importantly, I find that others are increasingly reaching similar conclusions.

Nate Hagens and the End of Growth

Nate Hagens, whose work on energy, ecology and the economy I have followed with interest, has published a discussion entitled 7 Ways Growth Ends.

Hagens has long argued that our economic system is fundamentally dependent upon energy and natural resources. Money, financial markets and government policies cannot escape the physical limits of the world in which we live.

His work, particularly through The Great Simplification, examines the consequences of humanity’s dependence upon an economic system that requires continual expansion.

The significance of his latest contribution is not simply that growth might eventually end. It is that we must confront the mechanisms through which the growth-dependent system reaches its limits.

For me, this represents an important change in perspective.

We no longer need to ask only what might happen if growth ends. We need to examine what is already happening as the foundations of growth weaken.

The Economy Is a Physical System

The central misunderstanding of modern economics is its treatment of the economy primarily as a financial system.

Governments measure economic performance through GDP. They adjust interest rates, taxation and public expenditure in the hope of encouraging investment and consumption.

Yet none of these activities creates the energy or physical resources upon which economic activity ultimately depends.

The industrial economy developed because humanity discovered how to exploit enormous quantities of concentrated energy, particularly coal, oil and natural gas.

These energy sources allowed machines to replace human and animal labour. They supported the development of factories, mechanised agriculture, global transport, modern medicine and the enormous expansion of cities.

For more than two centuries, increasing access to usable energy supported an extraordinary expansion of economic activity.

But there is a fundamental difference between the availability of energy and the availability of surplus energy.

Energy must first be expended to obtain energy. As the cost of obtaining and delivering usable energy rises, less remains available to support the wider economy.

This is the importance of the Energy Cost of Energy, or ECoE, emphasised by Tim Morgan and others.

An economy can continue to produce and consume large quantities of energy while having progressively less surplus energy available to support prosperity.

That distinction is essential to understanding what is happening today.

The Evidence Is Already Around Us

We do not have to wait for an official announcement that the era of growth is over.

The consequences are increasingly visible in everyday life.

In Britain, public services are struggling with rising costs and competing demands. Local authorities face severe financial pressures. Roads, bridges, water systems, hospitals and other essential infrastructure require investment that is increasingly difficult to finance.

Businesses are finding it harder to remain profitable. Households face continuing pressure on their disposable incomes. Discretionary activities, including hospitality, leisure and non-essential retailing, are particularly vulnerable.

The labour market is changing. Established employment arrangements are becoming less secure, while opportunities for small-scale, informal and self-employed activity may become more important.

Meanwhile, governments continue borrowing in the expectation that future economic growth will make today’s financial commitments affordable.

These developments do not individually prove that growth has permanently ended. But taken together, they are consistent with an economy encountering increasingly severe physical and financial constraints.

The mistake is to treat each problem as an isolated difficulty requiring its own solution.

I believe they are different expressions of the same underlying change.

Why Growth Cannot Simply Be Restarted

Political leaders continue to promise renewed economic growth.

They propose investment in infrastructure, new factories, artificial intelligence, renewable energy and other technologies.

Some of these developments will undoubtedly provide useful benefits. But technological progress does not automatically produce greater prosperity across the economy.

Every new factory requires materials and energy. Every data centre needs electricity, cooling and maintenance. Every new transport system must be built, operated and eventually replaced.

The question is not whether these activities are technically possible.

It is whether society can afford the resources required to sustain them.

An economy experiencing declining surplus energy cannot necessarily restore prosperity by constructing more energy-intensive infrastructure.

Nor can borrowing indefinitely overcome physical limitations.

Financial promises are claims upon future production. If that production cannot expand as expected, the promises become increasingly difficult to honour.

The result is growing pressure upon governments, businesses and households alike.

This is not a problem that can be resolved simply by electing a different government or changing economic policy.

It is a change in the physical conditions upon which the industrial economy was built.

The End of Growth Changes Everything

Once we accept that the economy is contracting, many of our assumptions about the future must change.

We can no longer assume that governments will have steadily increasing tax revenues. We cannot assume that all existing infrastructure can be maintained indefinitely. We cannot assume that every public service can continue to be delivered through increasingly large and centralised organisations.

Nor can we assume that the employment patterns of the industrial era will survive unchanged.

The implications extend far beyond economics.

They affect where people live, how food is produced, how water is supplied, how people travel, how communities organise themselves and how essential services are provided.

Above all, they challenge the belief that bigger organisations, larger markets and greater centralisation necessarily represent progress.

In a contracting economy, the opposite may increasingly be true.

Localism Is Already Beginning to Emerge

This is where my argument about localism becomes particularly important.

For years, localism has generally been discussed as a desirable alternative to excessive centralisation. I believe it is becoming something much more fundamental.

Localism is emerging as a practical response to the declining affordability of the industrial economy.

As centralised systems become increasingly expensive to maintain, people will have to find ways of meeting more of their essential needs closer to home.

Food production provides an obvious example.

The existing food system depends upon extensive transport networks, industrial agriculture, chemical fertilisers, refrigeration, packaging and large retail organisations.

It is remarkably productive, but also dependent upon energy, capital and complex supply chains.

As those systems come under increasing pressure, local food production becomes more important.

Gardens, allotments, smallholdings, orchards, local bakeries and small food-processing businesses can contribute to a more resilient food supply.

Similar changes can occur in other activities.

Small workshops can undertake repairs that would otherwise require expensive replacements. Local arrangements can provide some care and practical assistance. Informal exchanges of goods and services can supplement declining monetary incomes.

These activities will not replace the entire industrial economy. National systems will remain essential for defence, major transport links, specialised healthcare and other functions.

But the balance between national and local provision is likely to change substantially.

Instead of expecting centralised organisations to provide almost everything, localities will increasingly have to provide more for themselves.

This is not a romantic return to the past.

It is an economic response to changing circumstances.

The Importance of Recognising What Is Happening

Perhaps the greatest obstacle to preparing for this future is our continued attachment to the expectation of growth.

Governments are elected on promises of greater prosperity. Businesses borrow and invest on the assumption of expanding markets. Pension systems depend upon future income and investment returns. Property values reflect expectations about future purchasing power.

The entire financial structure of modern society has been built around expansion.

Acknowledging that this expansion has ended is therefore profoundly uncomfortable.

It challenges political promises, business plans, financial expectations and personal ambitions.

It is much easier to believe that another technological breakthrough or another economic policy will restore the familiar pattern.

But delaying recognition does not prevent the consequences.

Indeed, it may make them worse.

If governments continue investing scarce resources in infrastructure designed for an expanding economy, they risk creating further financial burdens that future generations will struggle to support.

If communities continue waiting for national solutions, they may lose valuable opportunities to develop their own capabilities.

The sooner we recognise the change, the more opportunities we have to respond constructively.

From Isolation to Recognition

I began by saying that writing about the end of growth has sometimes been a lonely occupation.

That has been particularly true because the argument is so different from the assumptions that dominate public discussion.

When almost everyone expects growth to resume, suggesting that the industrial era has reached its limits can appear unnecessarily pessimistic.

But pessimism is not the same as realism.

I do not welcome economic contraction. It will create serious difficulties, particularly for people who already have little financial security.

Nor do I imagine that localism will emerge without hardship, conflict or mistakes.

My argument is simply that we must begin with an understanding of the circumstances we actually face.

The growing contribution of thinkers such as Nate Hagens, Tim Morgan and others is important because it helps establish a different understanding of the economy.

Their analyses are not identical, and they do not all claim that permanent global economic contraction has already been demonstrated. But they share a recognition that energy, ecology and physical resources place fundamental limits upon economic expansion.

Hagens has recently described a possible future of resource-constrained economic depression, while exploring what evidence might change his assessment. natehagens.substack.com+1

For me, the evidence has become sufficiently compelling to change the question I ask.

I am no longer asking whether economic growth might end.

I am asking how society will reorganise itself now that the growth-dependent industrial economy is encountering its limits.

The Future Is Already Arriving

History rarely announces the beginning of a new era.

The changes usually become apparent gradually, through the failure of old arrangements and the emergence of new ones.

The industrial era did not begin on a particular day. Nor will its ending be marked by a single announcement.

Factories will continue operating. International trade will continue. Governments will continue promising growth. New technologies will continue appearing.

But beneath these familiar activities, the economic foundations are changing.

Increasingly, the question will not be how to expand an existing system, but how to maintain essential functions with fewer resources.

That is a very different challenge.

It calls for smaller organisations, simpler arrangements, greater cooperation and a renewed importance for the locality.

It also calls for a different understanding of prosperity.

Prosperity in the future may depend less upon the quantity of goods and services we consume and more upon our ability to meet essential needs reliably, affordably and close to home.

A productive garden, a functioning local workshop, a dependable water supply and neighbours willing to help one another may become more valuable than many of the activities currently counted as economic progress.

This is the future towards which I believe we are already moving.

The task is no longer simply to warn that the era of growth may be coming to an end.

It is to recognise that the change is under way, understand its consequences and begin building the local arrangements that will enable us to live within the resources available to us.

For me, that is what localism has always been about.

And I am increasingly encouraged that I am no longer alone in recognising the direction in which we are heading.

What KasiNomics Reveals About Localism and the Shrinking Economy

An Economy Growing Beneath the Surface

While economists, governments and financial institutions concentrate upon GDP, employment figures, investment and economic growth, another kind of economy is developing beneath the surface.

In South Africa, it is already enormous.

In his book KasiNomics Unleashed, GG Alcock describes a world of small traders, household businesses, food producers, repairers, transport operators and countless other enterprises operating outside much of the conventional corporate economy.

These businesses are not generally the products of government economic development programmes. They have emerged because people need to earn a living, obtain essential goods and provide services which conventional businesses often fail to supply.

What makes Alcock’s account particularly interesting is that it describes an economy developing from the bottom upwards.

This is remarkably close to the process which will become increasingly important as the British economy begins to shrink.

There is, however, a fundamental difference. Alcock sees the informal economy as an enormous opportunity for growth. I see similar developments as a likely consequence of the end of sustained economic growth.

The same economic behaviour may therefore arise for quite different reasons.

The Failure of Conventional Employment

For generations, economic development has been associated with the movement of people into formal employment.

People left the land, abandoned household production and entered factories, offices, shops and large organisations. Their livelihoods became increasingly dependent upon employers, wages and the wider monetary economy.

The process was made possible by abundant energy, industrialisation, mechanisation and increasingly complex systems of production and distribution.

It also created enormous dependence.

Most households in Britain today produce very little of what they consume. Food, clothing, heating, transport and almost every other necessity depend upon an elaborate network of businesses, infrastructure and public services.

Employment provides the money required to purchase these essentials.

But what happens when conventional employment becomes less available?

South Africa offers one possible answer.

People do not necessarily remain economically inactive. They find other ways of earning money, producing goods and exchanging services.

A person may repair machinery, prepare food, sell vegetables, transport goods or undertake building work without becoming an employee of a conventional business.

Some activities are registered and taxed. Others are informal or only partially recorded.

The distinction between employment and economic activity becomes increasingly important.

An economy can contain a great deal of useful work which is not adequately represented by conventional measures of employment and business activity.

What the South African Experience Reveals

Alcock describes an extraordinary variety of small enterprises.

Many require little capital. They operate from homes, backyards, roadside premises or small workshops. They serve customers who live nearby and whose requirements they understand.

Their strength lies in simplicity, flexibility and their ability to respond directly to demand.

They do not necessarily require expensive offices, elaborate management structures or extensive advertising.

Personal relationships and local knowledge are often more important.

This does not mean that such businesses are prosperous. Many provide only modest incomes and little financial security.

Nevertheless, they demonstrate something important.

Economic activity does not have to be organised through large corporations and conventional employment.

People can organise production and exchange for themselves.

That is one of the essential principles of Localism.

The Shrinking Economy Changes Everything

My argument is that the modern growth economy is approaching fundamental constraints.

Industrial civilisation developed through access to increasingly abundant and relatively inexpensive energy.

Coal, oil and natural gas made possible mechanised agriculture, mass production, motor transport, aviation, modern communications and the enormous infrastructure upon which society now depends.

But obtaining usable energy requires energy.

As the energy cost of obtaining energy rises, the surplus available to support the rest of the economy comes under pressure.

This is the importance of the Energy Cost of Energy, or ECoE.

The relationship is not simple. Technology, renewable energy, resource quality and investment all influence the outcome. Nevertheless, an economy cannot indefinitely increase its complexity without sufficient surplus energy to sustain it.

My expectation is that increasing energy and infrastructure costs, combined with debt and other resource constraints, will make sustained economic growth progressively more difficult.

The first effects will be experienced in discretionary activities.

Households struggling to afford food, energy, housing and essential services will reduce spending upon holidays, entertainment, restaurants, luxury goods and other non-essential purchases.

Businesses serving these markets will contract.

Employment opportunities will decline.

Governments will find it increasingly difficult to maintain public services and infrastructure at their present scale.

The result will not necessarily be a sudden collapse. It may be a long, uneven process of economic contraction, interrupted by temporary recoveries.

Within this process, people will have to find different ways of supporting themselves.

And this is where the South African experience becomes particularly interesting.

Localism Will Not Need to Be Invented

There is a tendency to imagine that a new economic system must be designed, legislated for and introduced by government.

I believe this misunderstands how Localism is likely to emerge.

It will develop because people find it necessary.

A redundant office worker may begin repairing household equipment.

A family with suitable land may grow vegetables for sale or exchange.

A former delivery driver may establish a small local distribution service.

A household may produce bread, preserves, clothing or furniture for neighbours.

Someone with practical skills may exchange labour for food, fuel or assistance.

Initially, these activities may supplement conventional employment.

As economic contraction continues, they could become increasingly important sources of livelihood.

There need be no grand plan.

People will respond to circumstances, using whatever resources, skills and opportunities are available to them.

That is precisely the kind of spontaneous economic organisation which Alcock describes.

Localism, in this sense, is not an ideology which must be imposed upon society.

It is a possible outcome of people adapting to changing economic conditions.

But There Is an Important Difference

South Africa’s informal economy still depends heavily upon the wider industrial economy.

A small shop may sell goods manufactured hundreds or thousands of miles away.

A local delivery business may depend upon imported vehicles, diesel, replacement parts and telecommunications.

A food trader may depend upon industrial agriculture, refrigeration and national wholesale distribution.

The enterprise is local, but much of its economic foundation is not.

This distinction becomes crucial in a shrinking economy.

If energy and transport become progressively more expensive, many existing informal businesses will face the same pressures as conventional enterprises.

Simply replacing a supermarket with a small shop does not eliminate dependence upon distant suppliers.

A more fundamental change will be necessary.

Production itself will have to become increasingly local wherever this is practical.

Food production, repair, maintenance, basic manufacturing, building materials and some forms of energy supply may need to be organised much closer to the people who use them.

The future local economy may therefore resemble the South African informal economy in its organisation, but differ considerably in the methods and resources it employs.

It may be less dependent upon manufactured goods arriving from distant factories.

It may use more human labour and less machinery.

It may make greater use of wood, water, locally available materials and equipment capable of being repaired rather than replaced.

Above all, it will have to concentrate upon essentials.

The Return of the Household Economy

One of the most important consequences may be a change in the economic role of the household.

Before industrialisation, many households were places of production as well as consumption.

Food was grown, preserved and prepared. Clothing was made and repaired. Tools and household equipment were maintained. Small workshops operated alongside domestic accommodation.

Industrialisation progressively separated employment from the home.

The household became principally a place where wages were spent rather than goods were produced.

Localism could reverse part of this process.

Homes, gardens, outbuildings and small plots of land may become economically productive once again.

This will not be possible for everyone. Many households lack land, suitable premises, equipment or the physical ability to undertake such work.

Consequently, the local economy will also need shared facilities, small workshops, communal growing areas and arrangements through which people can contribute according to their abilities.

The important change is that production and everyday life may become more closely connected.

What Happens to Government?

An expanding informal economy raises difficult questions for government.

Modern taxation and regulation have developed around identifiable employers, registered businesses, property ownership and recorded financial transactions.

An economy containing growing numbers of small, irregular and partly informal activities will be harder to administer through these arrangements.

This does not mean that taxation, safety standards or legal protections become unnecessary.

It means that the cost and complexity of applying existing systems may become increasingly difficult to justify.

Government may have to distinguish between functions which genuinely require national organisation and those which can be undertaken more simply within localities.

Defence, national communications, specialist hospitals, taxation and certain major transport systems will still require national coordination.

But much everyday economic activity may become increasingly local.

The essential task will be to allow useful grassroots enterprise to develop while maintaining proportionate safeguards.

An attempt to force every small household activity into the administrative structures designed for large businesses could discourage precisely the economic adaptation which society needs.

Will Britain Follow South Africa?

Britain is not South Africa.

The two countries have different histories, institutions, levels of wealth and social arrangements.

It would be misleading to assume that Britain’s future will simply reproduce South Africa’s present informal economy.

Nor should informal enterprise be romanticised.

Poverty, insecure incomes and the absence of social protection are serious disadvantages. The objective should not be to recreate these conditions.

Nevertheless, Alcock’s account provides an important demonstration of human adaptability.

When conventional economic arrangements fail to provide sufficient opportunities, people develop alternatives.

They make use of local knowledge, personal relationships, practical skills and modest amounts of capital.

They organise economic activity without waiting for instructions from government.

This is the process which I expect to become increasingly visible in Britain as the growth economy comes under pressure.

It may already be beginning, although changes in official employment statistics alone cannot establish that this is happening.

The Economy Beneath the Economy

Perhaps the most important lesson is that the formal economy is not the whole economy.

Economic activity is not confined to salaried employment, registered companies and transactions recorded in national accounts.

People can produce, repair, exchange and support one another through arrangements which conventional economic analysis does not always describe adequately.

In an expanding industrial economy, such activities may be regarded as marginal.

In a shrinking economy, they may become central.

The significance of KasiNomics Unleashed is therefore greater than its account of South African entrepreneurship.

It invites us to consider how economies organise themselves when conventional institutions do not provide sufficient livelihoods.

Alcock sees an enormous economic opportunity.

I see evidence of a capacity for grassroots economic adaptation which may become increasingly necessary.

The difference is one of circumstances and expectations.

What is developing alongside the conventional economy in South Africa may help us understand how a future local economy could emerge in Britain.

Localism will not necessarily arrive through government policy, economic planning or political reform.

It may arise gradually, locality by locality, as people discover that the most reliable way to obtain essential goods and services is increasingly to produce and exchange them closer to home.

The economy of the future may be smaller, simpler and less wealthy in conventional monetary terms.

But it need not be devoid of economic activity, enterprise or human ingenuity.

Indeed, the need for those qualities may become greater than ever.

And perhaps that is the most important lesson to be drawn from GG Alcock’s book.

Tim Stanley, writing in The Daily Telegraph on 19 October 2026, argues that France’s growing disorder is a warning of what may soon happen throughout Europe, including Britain. He sees the violence, political extremism and loss of social cohesion as symptoms of something much deeper: the collapse of the moral and philosophical foundations of Western society.

He may well be right about the direction of events. But there is another explanation, one that goes beyond philosophy and politics. What we are witnessing may be the early social consequences of an economic system that can no longer deliver what people have been taught to expect.

And that raises a much more important question. If the existing system is becoming unsustainable, what will replace it?

The Economic Foundations of Social Disorder

For generations, Western societies have been organised around the assumption of continuing economic growth. Governments have promised better public services, rising living standards, expanding welfare provision and greater opportunities for each succeeding generation.

These promises depended upon an expanding economy.

Growth made it possible to increase public spending without taking too much from existing taxpayers. It allowed governments to borrow against anticipated future prosperity. It supported an increasingly complicated society in which growing numbers of people worked in administration, finance, regulation and services rather than producing life’s essentials.

But the foundations of this arrangement are weakening.

The economy depends upon energy. More precisely, it depends upon the surplus energy remaining after the energy industry has met its own requirements. As the energy cost of obtaining energy (ECoE) rises, the surplus available to support the wider economy comes under pressure.

This does not mean that energy is physically running out. It means that maintaining the energy supply, and the increasingly complex systems dependent upon it, becomes more costly.

Technology may offset some of these pressures, but it cannot abolish the underlying requirement for energy and materials.

The result is an economy struggling to maintain commitments made during a period when continuing growth seemed assured.

Governments respond by borrowing more, raising taxes and attempting to preserve institutions that have become increasingly expensive to operate.

But borrowing cannot create the real resources needed to sustain an economy indefinitely. It merely transfers financial obligations into the future.

Why Young People Are Angry

Stanley attributes much of the violence in France to destructive philosophies and the loss of traditional values.

There may be something in this. But it is difficult to separate attitudes from economic circumstances.

Young people have grown up being told that education, hard work and ambition will bring prosperity. Yet many face expensive housing, insecure employment, limited prospects and public services under increasing strain.

They see older generations possessing houses and assets that they themselves may never afford.

At the same time, governments continue to promise improvements that they seem increasingly unable to deliver.

The resulting disappointment creates fertile ground for political extremism.

None of this excuses violence or the destruction of property. But simply condemning the attitudes of those involved does little to explain why discontent is spreading.

There is a deeper problem. Society continues to promise the rewards of economic expansion when the material foundations of that expansion are becoming less secure.

This contradiction cannot be resolved by changing political parties or adopting a different philosophy.

The Limits of Central Government

France and Britain have something important in common. Both have developed highly centralised systems of government.

Decisions affecting everyday life are increasingly made by institutions far removed from the communities experiencing their consequences.

National governments attempt to manage housing, education, health, transport, energy, employment and welfare through complicated administrative systems.

As economic pressures increase, these arrangements become harder to finance and maintain.

Governments then face impossible choices. Higher taxation weakens household purchasing power and businesses. Reduced expenditure provokes opposition from those who depend upon public services. Additional borrowing increases future obligations and debt-servicing costs.

Every proposed solution seems to create another problem.

Political parties offer different ways of distributing the available money, but few confront the possibility that the amount of real economic activity available to support the system may itself be contracting.

This helps explain why political dissatisfaction persists regardless of which party holds office.

The problem is becoming structural rather than simply political.

The Breakdown of Complexity

Modern Western societies have become extraordinarily complicated.

Food travels enormous distances. Energy depends upon extensive networks. Essential goods require international supply chains. Public services depend upon layers of administration and specialised technology.

All of this requires energy, materials, skilled labour and money.

Complexity is affordable when the economy generates sufficient surplus to maintain it. When that surplus contracts, complexity becomes a burden.

Infrastructure deteriorates because maintenance is postponed. Public services become less reliable. Businesses close because their costs exceed what customers can afford.

Governments struggle to maintain the systems upon which people have become dependent.

The consequences are not necessarily sudden. Economic contraction may appear first as declining quality, longer waiting times, reduced services, higher prices and increasing debt.

Only later does the underlying deterioration become unmistakable.

Social unrest may therefore be a consequence of economic shrinkage rather than its principal cause.

Localism: The Alternative to Breakdown

Towards the end of his article, Stanley suggests that people may withdraw from failing national institutions and form close communities capable of preserving social order and traditional values.

This is perhaps the most interesting part of his argument.

He is approaching, from a philosophical direction, something remarkably close to Localism.

But Localism need not be a deliberate political or religious movement. Nor does it require people to abandon society and establish isolated communities.

It can emerge naturally as economic circumstances change.

When long-distance distribution becomes more expensive, local production becomes more attractive. When large organisations can no longer afford their administrative structures, smaller arrangements become more practical. When national services become less reliable, people increasingly depend upon those living and working nearby.

Food production, maintenance, repair, care and other essential activities begin to acquire greater importance.

The distinction between economic and social life becomes less pronounced. People increasingly know those who produce their food, maintain their buildings and provide everyday services.

The locality becomes more than a place of residence. It becomes an increasingly important economic and social unit.

This does not mean that everything must become local.

Defence, telecommunications, specialist hospitals, national railways and certain other functions will continue to require national organisation.

But much of everyday economic activity could become more local because this would reduce the energy, transport and administrative costs associated with maintaining complex national and international systems.

Localism would not necessarily be chosen through political debate. It could develop because economic circumstances increasingly favour it.

The Return of Mutual Dependence

One of the greatest changes brought about by industrialisation was the separation of people from the communities upon which they had previously depended.

Employment drew people away from their families. Large organisations replaced many local arrangements. Shops and services became concentrated in distant centres. Increasing mobility made it possible to live without knowing one’s neighbours.

Economic growth made this possible.

People could purchase services that earlier generations had provided for one another.

But as household purchasing power comes under pressure, this arrangement becomes less secure.

Families may increasingly need to live closer together. Neighbours may share equipment, skills and responsibilities. Elderly people may depend more upon local networks of assistance. Small businesses and workshops may become important sources of employment.

Such developments will not eliminate hardship or conflict. Nor should we romanticise the difficulties of earlier rural and urban communities.

Nevertheless, mutual dependence can provide a stronger foundation for social cohesion than reliance upon distant institutions.

A society in which people contribute directly to the wellbeing of those around them may have less need for the elaborate administrative structures that have grown up during the age of economic expansion.

Britain May Be Next, But Not Necessarily in the Same Way

France has a long tradition of public protest and confrontation. Britain has generally expressed dissatisfaction differently.

There is no certainty that the violence seen in France will be repeated here on the same scale.

But Britain faces many of the same underlying pressures.

Public debt is enormous. Essential infrastructure requires substantial expenditure. Local authorities face financial difficulties. Housing is increasingly unaffordable for younger people. Public services are struggling to meet expectations.

Meanwhile, political debate remains dominated by arguments about how to restore economic growth.

Very little attention is given to the possibility that sustained growth may no longer be achievable in the form upon which the present system depends.

If that possibility becomes reality, the political arguments of today will increasingly lose their relevance.

The central question will no longer be how to distribute the benefits of growth.

It will be how to organise society when those benefits are no longer available.

Collapse or Evolution?

Tim Stanley’s article ends with a bleak assessment of Western civilisation.

But fiscal and societal breakdown need not mean the end of organised society.

It may mean the end of a particular form of organisation.

The highly centralised, energy-intensive and financially dependent arrangements developed during the age of industrial expansion may gradually become unaffordable.

As they contract, other arrangements will emerge.

Some will undoubtedly be difficult and disorderly. Economic shrinkage is unlikely to be painless. There will be resistance from those whose livelihoods and expectations depend upon preserving the existing system.

But there will also be opportunities to rebuild economic and social relationships on a smaller and more sustainable scale.

The danger is that governments will devote their remaining resources to maintaining institutions that can no longer be afforded, rather than allowing and supporting practical alternatives to develop.

Localism offers a different perspective.

It does not promise to restore the prosperity of the past. It recognises that a shrinking economy will require a different organisation of everyday life.

It places greater emphasis upon essential production, practical skills, local employment, mutual assistance and reduced dependence upon distant systems.

Most importantly, it recognises that the future need not be designed and imposed from above.

It can evolve from below, locality by locality, as people adapt to changing economic realities.

Stanley may be right that Britain is following France towards fiscal and social breakdown.

But he leaves unanswered the most important question.

What happens afterwards?

The answer may not be another political ideology, another government programme or another attempt to revive economic growth.

It may be the natural emergence of Localism as the economic and social organisation of a post-growth society.

And, unlike the political movements that seek to preserve an increasingly unaffordable system, Localism does not have to wait for permission from government.

It can begin wherever people live.

Britain’s political leaders are promising a new age of industrialisation. Yet the factories described in the Telegraph’s report are closing, reducing production or struggling to survive. The promises point towards an expanding industrial future. The physical evidence points in the opposite direction.

The demolition at Llanwern is a powerful image of this contradiction. Buildings that once represented industrial strength are being dismantled while politicians promise to restore that strength.

But the deeper question is whether the conditions that supported the industrial era can be restored at all.

The argument that the industrial era is over does not mean that every factory will close. It means that industrial expansion can no longer be assumed to provide the organising principle of our economy and society.

The Conditions Have Changed

Industrialisation depended on abundant energy becoming available at a cost that allowed production to expand. Coal, followed by oil and gas, enabled machinery to replace human and animal effort on an extraordinary scale.

Factories produced more. Transport carried goods further. Larger markets supported larger businesses. Rising incomes allowed households to buy what those businesses produced.

This became a reinforcing process. More energy supported more production, more consumption and further investment.

Politicians still expect that process to resume. Their proposals assume that investment, technology and government encouragement can set it moving again.

But investment is a financial commitment. Production is a physical activity. Money cannot remove the need for affordable energy, materials, functioning infrastructure and customers who can pay.

The Telegraph’s account repeatedly returns to these constraints. Energy costs undermine production. Overseas competition squeezes margins. Factories operate below capacity. Government support runs up against strained public finances.

These pressures are evidence of Britain’s industrial difficulties. They do not, by themselves, prove that industrial expansion has ended everywhere. Nevertheless, they expose the weakness of promising a return to industrial prosperity without explaining how its physical foundations will be secured.

Moving Production Does Not Remove Dependence

For decades, Britain could lose factories while continuing to consume manufactured goods. Production moved elsewhere. Imports filled the shops.

This made deindustrialisation appear manageable.

But an economy dependent on imported goods still depends on industry. It also depends on international transport, reliable suppliers and sufficient income to pay for those imports.

Calling Britain a service economy does not release it from these requirements.

Financial services, consultancy, administration and digital businesses all operate within a material world. They need electricity, buildings, equipment, food and transport. Their customers must have money to spend.

As households devote more of their income to essentials, some discretionary services face the same affordability pressures as manufacturers.

Changing the description of the economy does not change its foundations.

Technology Cannot Promise the Old Prosperity

Advanced manufacturing will remain valuable. Britain needs medicines, electrical equipment, machinery and other essential products. Research can improve their production.

But successful specialist factories cannot automatically recreate the employment once provided by mass industry. Automation may increase output while requiring fewer workers.

Nor does electrification abolish the energy question. Electric furnaces and automated production still require dependable power. New generating capacity, networks and equipment must themselves be built and maintained.

Technology can change what is possible. It cannot guarantee that everything technically possible will also be affordable.

Preserve What We Need

The end of the industrial era calls for a different purpose for industrial policy.

The priority should be to preserve the capabilities needed to sustain everyday life. These include food processing, medicines, water equipment, essential transport, repair and the production of durable tools.

Some require substantial national organisation. Others can operate closer to the people they serve.

Public support should therefore be judged by the essential capacity it protects. A subsidy may be justified where losing a factory would create a serious vulnerability. That does not make every struggling business the foundation of a new growth era.

We must distinguish maintaining necessary production from attempting to recreate an economy built around continually increasing consumption.

The Opening for Localism

As distant systems become more expensive or less dependable, meeting needs within a locality becomes more valuable.

Repair, food growing, building maintenance, care and small workshops can provide useful work. They can also reduce some transport requirements and extend the life of existing possessions.

This will require skills, premises, access to land and customers with sufficient purchasing power. People leaving discretionary employment will not become successful local businesses merely because work elsewhere disappears.

But these practical foundations deserve more attention than another promise to restore the industrial past.

The industrial era is over in the sense that its central expectation, continuing expansion supported by cheap energy and rising consumption, can no longer safely guide our future.

Industry will remain. Its purpose must change.

The task is to organise production around what people need, preserve the capabilities we cannot afford to lose, and allow local economies to develop around the work of sustaining life.

Written in response to “Burnham wants to revive British industry. This is why he’ll fail”, by Matt Oliver, Emma Taggart and Szu Ping Chan, published in the Telegraph on 4 October 2026.

An economy can become more difficult to live and work in without coming to a sudden halt. Businesses continue trading. Government continues collecting taxes. People continue working. Yet more effort goes into understanding rules, chasing answers and overcoming failures in the systems which are supposed to help everything function.

There is evidence that this is happening in Britain.

The strongest evidence concerns the machinery surrounding economic activity. Tax administration, public services and government information systems show signs of increasing complexity and poor coordination.

In its 2025 report on the cost of the tax system, the House of Commons Public Accounts Committee stated that the system was becoming more complex. It recorded 240 tax policy changes announced between 2022 and 2024. These were expected to impose additional costs over the following years of about £875 million on HMRC and £913 million on businesses. The committee also noted that complexity increases opportunities for avoidance and evasion, and the risk of error.

Each change may have its own justification. Taken together, however, changes require businesses to keep learning, adjusting software, seeking advice and checking that they have understood their obligations.

The National Audit Office reported in February 2025 that businesses faced an estimated annual tax compliance cost of £15.4 billion. It considered this likely to be an understatement. There was no equivalent estimate of the total cost borne by individual taxpayers.

This is part of the cost of keeping the economy functioning. It uses time and skills which could otherwise contribute to providing goods and services.

Difficulty increases when a complicated system is accompanied by inadequate help.

The National Audit Office’s May 2024 investigation found that HMRC had cut services too aggressively while introducing digital alternatives. Those alternatives had not reduced demand for assistance as much as expected. Poor service created further pressure, while attempts to close telephone lines had to be reversed following opposition.

The resulting muddle is familiar. An unresolved problem produces another enquiry. A delayed answer produces a reminder. A mistake requires a correction. Work is generated by the failure to complete earlier work.

An apparent saving within an organisation can therefore transfer costs to everyone dealing with it. The business owner loses working time. The householder loses an afternoon. An accountant must intervene. The saving looks less convincing when these wider costs are included.

Government has acknowledged similar problems across its digital services. Its January 2025 blueprint identified fragmented institutions, data held in separate systems, ageing technology, inconsistent leadership, shortages of skills and outdated funding arrangements. These are weaknesses in how organisations work together, as well as in their computers.

Even understanding the economy presents difficulties. In September 2026, the Office for National Statistics explained that recent movements in its Labour Force Survey reflected both economic developments and improvements to the survey itself. It advised caution over short-term changes and said payroll records currently provided the most reliable measure of employees. This does not make all economic statistics unreliable. It does make confident interpretation more demanding.

There is also evidence of improvement. In July 2026, the ONS reported recovering survey responses and fewer lower-impact errors. The picture is therefore uneven. Some systems improve while others remain difficult or fragmented.

For localism, the significance lies in the relationship between complexity and available resources.

Within a shrinking economy, an elaborate administrative structure can become increasingly difficult to support. If resources are squeezed while obligations remain complicated, delays and mistakes can multiply. This is an interpretation of the evidence, rather than a conclusion established by these reports.

Localism offers scope to shorten some of the relationships involved in meeting everyday needs. A local repairer can discuss a fault directly with a customer. A food producer can learn what nearby households need. A care provider can organise work around people they know.

These arrangements still need standards, fair taxation and accountability. Small businesses can also struggle with paperwork, and local organisations can be badly managed. Simply making an organisation smaller does not guarantee competence.

The practical aim should be to reduce unnecessary steps and make responsibility clear. Essential national systems must function reliably. Local enterprise needs rules it can understand, help it can reach and decisions made within a reasonable time.

An economy becomes muddled when too much effort is spent navigating its arrangements and correcting their failures. The evidence suggests that Britain has a substantial problem of this kind.

As resources become harder to find, simplicity becomes an economic necessity. More of our available effort needs to reach the work that feeds, houses, warms and cares for people.

Britain’s 30-year government bond yield has passed 6 per cent, reaching its highest level since 1998. The rise forms part of a wider sell-off in government debt, driven by concerns about inflation, energy prices and public finances.

This is more than a financial market story. It raises a question which governments have avoided for years. How much longer can borrowing sustain commitments which the underlying economy struggles to support?

There is an important distinction. A 6 per cent yield on 30-year gilts does not mean that Britain suddenly pays 6 per cent on its entire national debt. Much existing debt carries rates agreed when it was issued. But higher market yields make new borrowing more expensive. They also increase the cost of replacing debt as it matures.

The pressure therefore builds over time. More public money goes towards interest, leaving less available for services, maintenance and investment unless taxes or borrowing rise further.

Energy Behind the Financial Pressure

The immediate concern is another energy price shock associated with the Iran war. More expensive energy raises the cost of transport, farming, manufacturing and heating. These costs spread through the economy.

Yet higher prices do not necessarily mean that people are buying more. Households can spend more money while receiving fewer goods and services.

This distinction matters. Inflation can accompany declining living standards.

Higher interest rates may restrain spending and help prevent inflation from becoming entrenched. But they cannot produce additional oil or gas. They cannot remove the physical costs of extracting energy, maintaining infrastructure or transporting food.

When inflation begins with an energy shortage or disruption, raising interest rates imposes another burden upon an economy already under pressure.

The Limits of Borrowing

Borrowing brings spending forward. Its justification usually rests upon the expectation that future income will make repayment manageable.

That expectation becomes harder to fulfil when the economy’s capacity to generate prosperity weakens.

From the perspective of energy-driven shrinkage, the present difficulty is not simply that governments have chosen the wrong financial policy. It is that maintaining economic activity requires energy and materials, while an increasing share of available resources may be absorbed by the cost of obtaining them.

Less remains for everything else.

A sudden wartime price shock is different from this longer structural process. Nevertheless, it exposes the vulnerability of an economy dependent upon affordable energy, extensive supply chains and continuing access to credit.

The latest movement in bond yields does not, by itself, prove that permanent shrinkage has arrived. It does show how quickly the financial arrangements supporting everyday life can become more expensive.

The Squeeze Reaches Households

Government borrowing costs are only one part of the problem.

Mortgage pricing is influenced by expectations for interest rates and conditions in financial markets. Businesses also face higher financing costs. A shop, workshop or food producer may struggle even when there is demand for its products.

Households then face several pressures together. Food and energy absorb more of their income. Mortgage payments may rise when existing deals expire. Employers become more cautious about recruitment and spending.

Discretionary purchases are postponed. Businesses dependent upon them lose customers. Some reduce their workforce or close.

The consequences reach essential activities too. Food production, care, repairs and transport all require customers who can afford to pay.

An economy can therefore become less affordable without everything physically disappearing. Goods remain available, but fewer people can buy them. Services are needed, but neither households nor public authorities have sufficient money to support them.

Localism Under Financial Constraint

These pressures strengthen the case for localism, but they do not make its development automatic or easy.

People losing formal employment will not all be able to establish successful businesses. They may lack premises, tools, skills or working capital. Their potential customers may also be short of money.

Localism must therefore involve more than encouraging everyone to become an entrepreneur.

It includes repairing possessions, sharing equipment, growing suitable food, organising care and passing practical knowledge between generations. Some activities will support small businesses. Others will take place within households or through mutual help.

Their value lies in meeting needs with fewer purchased inputs and smaller financial commitments.

Local production is not always cheaper or more energy-efficient. The useful question is whether a particular arrangement reduces total dependence upon expensive transport, borrowing and external supplies.

A locality that can maintain tools, repair buildings, support care and produce some of its food has practical resources which cannot be measured solely by the amount of money changing hands.

A Government Within Its Means

National government will remain necessary. Defence, specialist healthcare, major transport networks and other shared systems cannot simply be transferred to individual localities.

But rising borrowing costs make the choice of commitments more difficult.

Government needs to distinguish between maintaining essential provision and financing expansion on the assumption that growth will eventually pay for it. Maintenance protects what already serves a useful purpose. Expansion creates additional obligations which must be supported for years.

The same distinction applies locally and within households.

The deeper lesson of rising borrowing costs is that financial promises must remain connected to physical capacity. Money can organise claims upon resources. It cannot guarantee that those resources will be affordable.

If economic shrinkage continues, the task will be to protect essentials, reduce avoidable dependence and enable useful local activity. Success will increasingly mean preserving quality of life through sufficiency, rather than borrowing against a future of ever-growing consumption.

Source: The Telegraph, “UK borrowing costs hit highest level since 1998”, 1 October 2026

A household that borrows to pay for food, heating or electricity has little room to absorb another setback. Research by Christians Against Poverty (CAP) shows how falling behind on essential bills can push people below the Minimum Income Standard, a measure of what households need for an acceptable living standard. Its Pushed under, pushed out report was published in March 2024, although the account quoted here was posted in September 2026.

That distinction matters because the problem has not arisen overnight. CAP found that 82% of people in the group it identified as having fallen behind on household bills were at risk of being below the Minimum Income Standard. It also found that, once debt reaches about a fifth of income, the risk of falling below that standard rises sharply. Job loss and ill health add to the danger.

What happens to people caught in this position? Governments usually speak of getting them back into work. But a job is useful only if its pay, hours and security allow someone to meet the cost of living. CAP’s more recent work argues for looking at the quality and sustainability of employment, as well as whether a person is recorded as employed.

Some people who cannot find secure employment may indeed become self-employed or start small businesses. A locality needs repairs, food production, cooking, care, maintenance and many other practical services. Someone with a skill and a few local customers may be able to earn a living from work that a large employer would never organise. As national growth weakens, such activity could become increasingly valuable.

But unemployment does not automatically create an entrepreneur. A person struggling with arrears may have no savings for tools, premises or a vehicle. They may be unable to risk an uncertain week’s takings. Their potential customers may be struggling too. Calling self-employment the answer without facing those obstacles would place yet another burden on people who already have too little.

Localism offers a more realistic possibility when it grows through practical support. Shared workshops and equipment can lower the cost of starting. Experienced tradespeople can pass on skills. Small firms can work together and refer customers to one another. Local buyers, including established businesses and public services, can give new enterprises a steadier flow of work. Debt advice and adequate income remain essential while people find their feet.

So, are those out of work bound for localism? Some may find a place in new local businesses, but they are not bound for self-employment simply because other work has disappeared. The measure of success is whether a locality can turn useful work into a dependable livelihood. If it cannot, a growing number of small businesses may merely disguise a growing number of people who still cannot afford the essentials.

The Government is trying to push a heavily laden car uphill. Ministers strain against the back of it. They announce new plans, targets, subsidies and reforms. They urge everyone to push harder.

But the car is becoming heavier, the hill is becoming steeper, and the people pushing it are becoming exhausted.

This is a useful picture of Britain’s economic predicament. The Government still assumes that economic growth can be restored if it finds the right policies. It tries tax incentives, planning reform, public investment, borrowing and regulation. When these fail to produce growth, it concludes that even more intervention is required.

The possibility that sustained growth is no longer affordable is rarely considered.

What makes the car so heavy?

Britain must support an enormous structure of government, public services, debt, regulation, infrastructure and administration. It must also maintain an ageing population, an ageing energy system and an ageing stock of roads, railways, water pipes, hospitals and public buildings.

Much of this structure was created during a period of abundant and relatively cheap energy. That energy supported industrial production, international trade, mass transport, expanding public services and rising household consumption.

Energy is still available, but obtaining and using it has become more expensive. More money, materials and effort must be devoted to maintaining the systems upon which the economy depends. Less remains for genuine expansion.

Debt has temporarily concealed the problem. Borrowing allows the country to continue consuming more than it can presently afford. It does not remove the weight from the car. It adds another load which must eventually be carried.

The symptoms

The first symptom is persistently weak economic growth. Governments announce recoveries, but improvements are small and often disappear after allowing for population growth and inflation. Many people become poorer even when the official economy is said to be growing.

A second symptom is rising taxation without visibly improving public services. The Government collects more money, yet people wait longer for medical treatment, roads deteriorate, councils reduce services and police become less visible. More revenue is required merely to prevent further decline.

A third symptom is the growth of public debt. Borrowing is increasingly used to meet ordinary expenditure rather than to create productive assets. A growing share of taxation is then required to pay interest on earlier borrowing.

Another symptom is the repeated failure of large projects. Costs rise, completion dates retreat and plans are reduced or abandoned. Britain can still design impressive projects, but increasingly struggles to afford the materials, energy and skilled labour needed to complete them.

Businesses experience the same pressure. Energy, wages, rents, interest, insurance and regulation all become more expensive. Customers have less money to spend. Profits narrow and investment is postponed. Shops, pubs, farms and small manufacturers close, while surviving businesses reduce staff.

Housing provides another symptom. Governments promise large numbers of new homes, but builders cannot construct them at prices ordinary households can afford. The difficulty is described as a shortage of planning permissions or land. The deeper problem is the widening gap between construction costs and household purchasing power.

Employment becomes less secure. Vacancies decline, young people struggle to enter settled work, and self-employment becomes more precarious. At the same time, the State creates additional administrative work in an attempt to manage the consequences.

Infrastructure begins to fail more frequently. Water leaks, power shortages, transport disruption and communications failures become harder and more expensive to prevent. Each system depends upon many other complex systems. A failure in one place can rapidly spread elsewhere.

People also notice a decline in quality. Goods become less durable. Services become harder to contact. Telephone menus, websites and automated systems replace people, but do not always solve problems. Citizens spend more of their own time doing work once performed by banks, utilities, councils and government departments.

These are not separate accidents. They are symptoms of a society trying to maintain an industrial system which has become too heavy for the economic energy available to support it.

Pushing harder will not solve the problem

The usual political answer is to demand greater productivity. Workers must work harder, businesses must invest more and government departments must become more efficient.

Some improvements are certainly possible. Waste should be reduced and useful technology should be adopted. But efficiency alone cannot overcome the physical and financial limits facing the whole economy.

Indeed, greater complexity can make matters worse. New computer systems, reporting requirements, regulators, consultants and managerial layers are introduced to improve performance. Each requires money, energy and skilled labour. The machinery intended to lighten the load can add still more weight.

Nor can the Government solve the problem simply by borrowing more. Borrowing may help the car move a few yards, but the additional debt makes the next part of the climb harder.

Lightening the car

If the car is too heavy to push uphill, there are only three realistic choices. The load must be reduced, the journey must be shortened, or a less demanding destination must be chosen.

This means accepting that the purpose of the economy cannot be the endless expansion of consumption. The priority must become the dependable provision of essentials: food, water, shelter, heat, care, basic health services, useful work and social order.

Many activities will have to move closer to the people who need them. Food can be grown and processed nearer to its market. Repair can replace frequent replacement. Care, small-scale energy, practical education and essential manufacturing can be organised within localities.

National government will still be needed for defence, taxation, telecommunications, specialist medicine, the railway network and other functions which cannot sensibly be provided locally. But it must stop trying to control every detail of economic and social life from the centre.

Localism is therefore not an attempt to overthrow the State. It is a practical response to the State becoming overloaded. It transfers manageable responsibilities to a scale at which people, resources and consequences can be connected.

The Government is presently trying to push the old industrial economy uphill. Every Budget asks the public to push harder. Every new crisis adds another suitcase to the boot.

The sensible response is not to blame the exhausted people behind the car. It is to recognise that the load has become too great, remove what is no longer essential, and begin building an economy based upon locality, resilience, quality and sufficiency.

There is a respectable historical argument that Britain became the first industrial nation because it possessed an unusually productive agricultural economy.

Fewer people were needed to produce food. Farming used horses and bullocks, improved ploughs, crop rotation and carefully bred livestock. British land was predominantly devoted to useful food, fodder and wool rather than luxury crops such as grapes, olives and silk. Agricultural productivity released labour for mining, manufacturing and the growing towns.

That explanation is not complete, however. Britain also possessed accessible coal, navigable rivers, good ports, accumulated commercial capital and an overseas trading system. Robert Allen’s influential explanation emphasises the particularly British combination of high wages and cheap energy. It made the invention of labour-saving, coal-powered machinery commercially worthwhile. Cambridge University Press

The interesting question is whether some of these advantages have now been reversed. Might the first industrial nation also be among the first to enter the post-growth era?

The evidence that it might

1. Britain’s original energy advantage has disappeared

The Industrial Revolution was built upon plentiful domestic coal. During the twentieth century, North Sea oil and gas provided another period of relatively abundant home-produced energy.

Both advantages have largely gone. In 2025, Britain depended upon net imports for 43.3 per cent of its energy. More than 90 per cent of energy imports consisted of oil and gas. UK energy statistics

Renewables produce increasing quantities of electricity, but electricity is only part of total energy consumption. Transport, heating, agriculture, construction and industry remain heavily dependent upon fossil fuels. Britain has therefore moved from extraordinarily cheap domestic energy to expensive, increasingly imported energy.

This is almost an exact reversal of the circumstances which helped industrialism to begin here.

2. Industrial energy is exceptionally expensive

British manufacturers now face some of the highest industrial electricity prices in the developed world. Energy-intensive industries, including steel, chemicals, glass, paper, cement and ceramics, have consequently contracted.

This matters because these are the industries which supply the physical foundations of the economy. Financial services and computer programs cannot replace steel, fertiliser, bricks, machinery or electricity.

Britain may therefore be encountering post-growth conditions sooner because it has lost much of the productive base needed to maintain a complex industrial economy.

3. Economic growth has become weak despite enormous effort

British governments continue to pursue growth through borrowing, housebuilding, immigration, financial expansion, infrastructure projects and technological innovation. Nevertheless, growth per person remains very small.

GDP grew by 1.1 per cent in 2024 and 1.3 per cent in 2025. Real GDP per head did not grow in 2024, although it recovered by 1 per cent in 2025. Office for National Statistics

These figures do not prove that growth has ended. They do show that increasingly elaborate efforts are producing diminishing results. The economy can still become larger through population growth and rising expenditure while the average person experiences little improvement.

That is one possible early sign of post-growth: nominal activity continues to increase, but material prosperity per person ceases to advance appreciably.

4. Investment is insufficient to renew the industrial system

British business investment remains weak by comparison with most other large developed economies. In 2026, IPPR estimated business investment at only 11.1 per cent of GDP, the second-lowest rate in the G7. It also estimated that British manufacturing workers had access to substantially less machinery and equipment than workers in comparable economies. IPPR

This suggests that Britain is not merely failing to expand its productive system. In some sectors, it may be struggling to replace what already exists.

In a shrinking economy, maintenance becomes more important than investment in additional capacity. Britain appears to be approaching that position without yet acknowledging it.

5. Britain depends heavily upon imports

Britain imports much of its energy, manufactured goods and food. In 2024, it produced about 65 per cent of all the food it consumed. Self-sufficiency was only 53 per cent for fresh vegetables and 15 per cent for fresh fruit. UK Government food strategy

Imports allowed Britain to specialise in services while reducing domestic production. That arrangement worked while energy, shipping, credit and internationally traded goods remained affordable.

It becomes much less secure when the cost of energy rises, international trade fragments and Britain must export more services merely to pay for physical necessities.

6. Debt has concealed the underlying loss of momentum

Public and private borrowing have allowed Britain to maintain consumption, property prices and government services despite weak improvements in productive capacity.

But borrowing cannot permanently replace surplus energy or physical production. The Office for Budget Responsibility has warned that, under unchanged policies, public debt could rise from under 100 per cent of GDP to more than 270 per cent over fifty years. Office for Budget Responsibility

Such a projection will never be allowed to materialise exactly as shown. Long before then, taxes, public expenditure, pensions or services would have to change. The importance of the projection is that the present system assumes economic growth to meet promises which a low-growth economy may be unable to afford.

7. Britain is an exceptionally mature industrial society

Britain industrialised first. It therefore accumulated some of the world’s oldest railways, sewers, water systems, housing, electricity networks and public institutions.

A mature system must devote an increasing proportion of its resources to maintenance. Bridges must be repaired, water mains replaced, hospitals rebuilt and the electricity grid reinforced. These activities may be essential, but they do not necessarily provide the large additional returns once obtained by building the systems for the first time.

Britain could therefore be the first country to encounter the full cost of maintaining an ageing industrial civilisation.

Important qualifications

Britain is unlikely to be the first country in which conventional economic growth becomes persistently weak. Japan has experienced several decades of low growth, while Italy’s productivity and living standards have stagnated for a long period. Some countries have already undergone severe economic contraction.

Nor has Britain consciously adopted post-growth. Every major political party still promises economic growth. Government finances, pensions, mortgages and business expectations remain organised around it.

The more defensible proposition is therefore:

Britain may be among the first large industrial countries to experience the practical conditions of post-growth while its institutions continue to assume that growth will return.

That distinction is important. Post-growth does not necessarily begin with an announcement from the Treasury. It begins when additional borrowing, technology, infrastructure and complexity can no longer produce sustained improvements in material prosperity.

Why Britain might also adapt first

Britain retains some advantages which could make adaptation possible:

• a mild climate capable of producing a useful range of food;
• plentiful rainfall, despite considerable failures in collecting and distributing it;
• compact towns and relatively short distances;
• an extensive railway system;
• strong traditions of local government, voluntary organisation and mutual assistance;
• surviving agricultural knowledge and productive countryside;
• thousands of identifiable localities in which food, care, repair and small production could be reorganised.

These are not advantages for maintaining unlimited industrial expansion. They favour a less energy-intensive, more local economy.

Conclusion

There is no conclusive evidence that Britain will be the first country to enter the post-growth era. Post-growth does not have an agreed statistical starting point, and Britain still records occasional growth in GDP and GDP per person.

Nevertheless, the convergence is striking. Britain was the first industrial nation because it combined productive agriculture, cheap domestic energy, capital, trade and technological ingenuity. It now combines depleted domestic energy, expensive industrial power, weak investment, import dependence, ageing infrastructure, heavy debt and negligible long-term improvement in prosperity per person.

Britain may not be the first nation to formally choose post-growth. It could, however, be one of the first to discover that post-growth has already arrived.

An article by Tom Tugendhat in The Daily Telegraph carries a disturbing title: “The wheat war has begun and it could trigger a revolution.”

The immediate danger comes from the war between Russia and Ukraine. Both countries are major grain exporters. Attacks on their ports, ships and storage facilities are reducing the amount of wheat reaching the world market.

Ukraine has attacked Russian grain terminals, including the enormous port of Novorossiysk. Russia continues to attack Ukrainian farms, ships and ports, including Odesa and Izmail. Shipowners are increasingly reluctant to send vessels into dangerous waters.

The result is that grain exports from both countries are falling sharply. According to Tugendhat, Ukrainian exports fell by 76 per cent during the first half of August. Russian wheat exports in July were less than half their five-year average.

Wheat prices have already risen considerably this year. But the deeper warning is that the consequences of today’s disruption may not be fully felt until next year.

More Than a War

It would be comforting to believe that this is simply another consequence of the war. If peace returned, the problem would gradually disappear.

Unfortunately, the position is much more serious.

The war is exposing the fragility of a global food system that depends upon a small number of exporting countries, vulnerable sea routes, plentiful natural gas, synthetic fertiliser and cheap transport.

Britain’s own harvest has been damaged by heat and drought. Farmers elsewhere face similar conditions. Extreme weather is no longer an occasional local problem. Poor harvests can now occur in several important producing areas at the same time.

Meanwhile, the Persian Gulf conflict and the closure of the Strait of Hormuz have interrupted the international fertiliser trade. Roughly one-third of the world’s traded urea normally passes through the strait. Its price almost doubled in April.

This matters because modern grain production depends heavily upon nitrogen fertiliser. Industrial nitrogen is manufactured using natural gas. Gas is also required to provide the heat and energy used in the manufacturing process.

Modern wheat is therefore not simply a crop grown from soil, rain and sunlight. It is part of an industrial system sustained by fossil fuels.

Natural gas makes the fertiliser. Oil powers tractors, combines, lorries and ships. Electricity dries and stores the grain. Global financial and trading systems move it between continents.

When one part of that system fails, stocks may conceal the problem for a while. Supermarket shelves do not empty immediately. Bread prices may remain fairly stable.

The bill arrives later.

A fertiliser shortage this year reduces next year’s harvest. A shipping interruption draws down stored grain. If stocks are not replenished, the next disruption begins from a much weaker position.

Food Prices and Political Stability

Rising food prices do not automatically cause revolutions. They can, however, become the event that turns widespread dissatisfaction into popular unrest.

This happened before the Arab Spring. A severe Russian heatwave in 2010 contributed to a grain export ban. International food prices rose. By early 2011, the cost of staple foods had become one of the grievances driving protests in countries such as Egypt and Tunisia.

The political conditions were already present. Rising food prices helped ignite them.

Poorer countries are most immediately exposed because food absorbs a large proportion of household income. But Britain is not protected.

When food prices rise, the poorest households are forced to reduce spending elsewhere. Local shops, pubs, cafés and other discretionary businesses then lose customers. Employment falls. Government support becomes more expensive just as tax receipts weaken.

Food inflation can therefore spread through the whole economy.

This is particularly dangerous in a shrinking economy. Governments may try to protect households through subsidies, borrowing or price controls. Such measures can temporarily redistribute the cost, but they cannot create grain, fertiliser or energy.

A physical shortage cannot be solved by printing money.

Britain Has Allowed Its Defences to Disappear

Britain imports a substantial part of its food, animal feed, fertiliser and energy. Our food supply depends upon long international chains over which we have little control.

We have also allowed domestic fertiliser production to disappear. Britain’s last large ammonia plant has closed. Farmers must now compete for supplies on the international market and pay the cost of transporting them here.

Tugendhat proposes that Britain should hold strategic fertiliser reserves, just as countries hold emergency oil stocks. There is considerable sense in treating nitrogen fertiliser as a strategic commodity.

But reserves can only provide temporary protection. They cannot resolve the underlying dependence.

Nor should the answer be simply to maximise industrial agriculture at any environmental cost. Soil degradation, loss of organic matter, water shortages and declining biodiversity are also threats to future food production.

The real task is to make agriculture less vulnerable while continuing to produce enough food.

That will require a mixture of methods. Fertiliser must be used more carefully. Manure and human waste will have to be treated as valuable resources. Crop rotations, legumes and mixed farming can help restore nitrogen naturally. Soil must be protected so that it retains more water during droughts and absorbs more water during floods.

None of these measures offers an instant replacement for industrial fertiliser. But together they can reduce our exposure to an increasingly unreliable world market.

Food Must Become More Local

The central lesson is that food security cannot be left entirely to international markets.

For decades, Britain has assumed that food will always be available from somewhere. If one country has a poor harvest, traders will buy from another. If domestic production is expensive, imports will fill the gap.

That assumption becomes dangerous when several failures happen together.

War restricts Black Sea exports. Drought reduces British yields. Conflict interrupts fertiliser supplies. Energy costs increase. Shipping becomes more expensive and dangerous. Exporting countries may then protect their own populations by restricting sales abroad.

Under these conditions, the country with the most money will not necessarily obtain all the food it wants. Exporters will place their own security first.

A more resilient system would produce a greater proportion of essential food closer to where it is consumed.

This does not mean that every locality must become completely self-sufficient. That would be neither possible nor desirable. It means rebuilding the ability to produce, process, store and distribute basic food within Britain and within its localities.

More land could be used for fruit, vegetables, pulses and other foods intended directly for people. Local mills and bakeries could reduce dependence upon a few enormous processors. Small slaughterhouses, dairies, cold stores and food markets could shorten supply chains.

Local authorities could identify productive land before a crisis arrives. Farmers could be helped to supply nearby schools, hospitals and care homes. Communities could develop storage, preserving and distribution arrangements.

Gardens and allotments will not replace commercial farming, but they can add useful production and spread knowledge. Skills that now appear old-fashioned, including growing, preserving, milling, baking and repairing machinery, could become increasingly important.

Preparing for a Different Future

The wheat war is not an isolated emergency. It is an early warning.

The global food system was built during an age of relatively cheap energy, expanding trade and confidence that supplies could always be purchased from somewhere else. That age is becoming less secure.

War may be the immediate cause of the present disruption, but energy, climate, fertiliser and transport are all part of the same problem.

The proper response is not panic. Nor is it the belief that government can insulate us from every international shock.

Britain needs emergency stocks of essential agricultural inputs. It also needs a long-term national food strategy. Above all, it needs practical action within every locality.

We should know where our food can be grown, who can grow it, how it will be processed and how it will reach people if international supplies falter.

Food security begins with fields and farmers. But it also requires functioning local markets, storage buildings, mills, bakeries, workshops, transport and people with the necessary skills.

The wheat war shows us what happens when food becomes a weapon and international supply chains become battlefields.

We cannot prevent every war, drought or trade interruption. We can make ourselves less vulnerable to them.

The time to rebuild local food resilience is before the shortages reach the shops.

In his latest article, “The Evolution of Inverting Scarcities”, Dr Tim Morgan identifies a fundamental change taking place within the economy.

For most of the industrial age, money was treated as scarce while energy and natural resources appeared to be abundant. We are now moving towards the opposite condition. Money and credit have become plentiful, but the energy and physical resources upon which the real economy depends are becoming increasingly scarce and costly.

This inversion of scarcity helps to explain why localism is likely to emerge as the natural form of the shrinking economy.

Money Is Not the Economy

Morgan begins by distinguishing between two economies.

The first is the financial economy of money, credit, assets and transactions. The second is the real economy of energy, materials, goods and practical services.

Money has no useful value in itself. It is a claim upon the products and services of the real economy. Creating more money does not create more energy, food, housing, water or productive land.

If the supply of financial claims grows more rapidly than the supply of real goods and services, each unit of money commands less. We experience this as inflation.

Since 2005, Morgan calculates that global debt has increased by 150 per cent and broader financial assets by at least 175 per cent. Over the same period, energy consumption increased by only 34 per cent, surplus energy by 26 per cent and material prosperity by 24 per cent.

The financial economy has therefore grown far more rapidly than the material economy upon which it depends.

Governments have tried to compensate for weakening material growth by borrowing and spending more money. This may increase measured GDP, but it cannot reverse the physical causes of economic contraction. It merely creates additional claims upon a limited supply of real resources.

The Growing Scarcity of Surplus Energy

The modern economy was created by access to abundant and inexpensive fossil energy. Coal, oil and natural gas enabled societies to replace human and animal labour with machinery. They also supported mass production, long supply chains, large cities and increasingly complex systems of government and commerce.

But not all energy obtained from nature is available for general economic use. Some must be consumed in finding, extracting, processing and delivering energy itself. Morgan describes this as the Energy Cost of Energy.

He estimates that this cost has risen from 2 per cent in 1980 to more than 11 per cent today.

As the energy cost rises, the amount of surplus energy available to the rest of society falls. Less remains to support manufacturing, transport, health, education, government, consumption and the maintenance of infrastructure.

The result is not simply that we will have slightly less of everything. The structure of the economy must change.

As I have argued, economic growth and economic shrinkage are not mirror images of each other. The economy will not retain its present shape while becoming uniformly smaller. The most complex, energy-intensive and financially dependent activities will become unaffordable first.

From Complexity to Simplicity

During the period of growth, the economy evolved towards greater scale, specialisation, centralisation and complexity.

Businesses became larger. Supply chains became longer. More intermediaries appeared between producer and consumer. Goods became increasingly difficult to repair. Ownership was often replaced by leasing, borrowing and subscription payments.

Complexity appeared efficient because cheap energy carried its hidden costs.

A supermarket can obtain food from around the world only while transport, refrigeration, packaging, warehousing and computerised stock control remain affordable. A centralised care system can operate only while society can meet the costs of buildings, management, regulation, finance, transport and administration.

These arrangements may look productive when measured in money. But a large proportion of their cost does not provide food or care. It supports the complex system surrounding the essential service.

As prosperity contracts, this complexity becomes a burden.

Morgan uses the modern motor car as an example. Manufacturers have added electronic systems which owners and small garages cannot repair. These systems allow manufacturers to retain control after the car has been sold and can create continuing income through subscriptions and dealership servicing.

But people whose discretionary income is shrinking will need vehicles which are cheaper, simpler, longer-lasting and locally repairable. The choice may eventually be between simpler cars and no cars at all.

The same principle will apply throughout the economy. Products and processes will have to become simpler because people will no longer be able to afford the cost of complexity.

Why This Leads to Localism

Morgan explicitly identifies this movement towards simplification and de-financialisation with localism.

Localism shortens the distance between production and consumption. It removes unnecessary intermediaries and reduces dependence upon expensive central systems. It replaces some purchased services with direct provision by families, neighbours and local enterprises.

Food provides a clear example. Between the farmer and the household now stand processors, wholesalers, distributors, supermarkets, transport companies, advertisers and financial interests. Each stage adds costs for energy, buildings, packaging, refrigeration, administration and profit.

A more local food economy would not eliminate trade or specialist production. It would reduce the number of stages between producer and consumer wherever this was practical. More food would be grown, processed, sold and consumed within the locality.

The same reasoning applies to care. Supporting elderly and disabled people in their own homes can avoid much of the cost of residential institutions. Public money could be concentrated upon training, respite care, equipment and direct support instead of being absorbed by property costs, corporate administration, borrowing and profit.

Local workshops could repair tools, machinery, clothing and household goods. Small businesses could make simpler products suited to local requirements. People displaced from discretionary and administrative employment could move into food production, care, maintenance, repair and other essential activities.

Human labour would begin to replace some of the external energy upon which the industrial economy has depended.

De-financialisation

Localism also involves a gradual reduction in the role of money.

This does not mean that money will disappear. It means that a growing proportion of useful activity may take place outside conventional commercial systems.

Families already provide care, childcare, cooking, gardening, maintenance and transport without recording these activities as financial transactions. Neighbours exchange help. Volunteers support community organisations. Small producers sometimes exchange goods and services directly.

Such activity contributes to real wellbeing even though it is largely absent from GDP.

During economic growth, many informal activities were drawn into the commercial economy. Tasks once performed within families or local communities became paid services. Property, insurance, regulation, management and finance were then added around them.

In a shrinking economy, this process is likely to reverse. People will have less money, but they will still possess time, practical knowledge and the ability to help one another. Informal and reciprocal activity will become more important because it can provide essential value without carrying the full financial cost of commercial provision.

The relative scarcity of money within households may therefore encourage arrangements which use fewer monetary transactions but provide more direct practical value.

The Limits of Centralisation

Large central systems depend upon reliable revenue, complex administration and substantial energy use. As the economy contracts, governments will struggle to maintain everything they presently promise.

This does not mean that central government will disappear. Some functions must remain national. These include defence, taxation, telecommunications, intercity transport and highly specialised medicine.

But many everyday needs can be provided more economically within the locality. Food, basic care, routine maintenance, some education, small-scale energy and many forms of transport need not always be organised through distant institutions.

Central government will increasingly have to support local provision rather than attempt to deliver everything itself. Its role may become one of setting basic standards, distributing limited resources and maintaining the essential national framework within which local economies can operate.

An Evolution, Not a Political Programme

The importance of Morgan’s argument is that localism does not depend upon governments being persuaded to adopt it.

It will emerge because the alternatives are becoming unaffordable.

Long supply chains will shorten when their energy and financial costs can no longer be carried. Over-complex products will lose their markets. Some large organisations will fail when falling sales leave them unable to cover their fixed costs. Commercial intermediaries will disappear when consumers can no longer afford their margins.

At the same time, people will still need food, warmth, shelter, care and useful work. These needs will encourage the formation of simpler, more direct and more local arrangements.

Localism is therefore not an attempt to recreate the past. It is the likely economic response to a future in which energy and material resources are scarce while money and financial promises have become excessive.

Preparing for What Comes Next

Morgan concludes that the real economy may be capable of contracting in a reasonably manageable way. The greatest danger lies in the failure of the complex financial system built upon expectations of perpetual growth.

Preparation should therefore concentrate upon the real economy.

We need to strengthen local food production, practical skills, repair businesses, domestic care, small workshops and local sources of energy. Products should be durable and repairable. Systems should be understandable. Essential provision should not depend upon long chains of borrowing, transport and administration.

The industrial economy evolved towards centralisation because abundant cheap energy made centralisation possible. As surplus energy declines, the direction of evolution will reverse.

The future will favour the simpler over the complex, the useful over the financial, and the local over the distant.

That is the relevance of inverting scarcities to localism. Localism is not merely desirable. It is the form that economic life is likely to take as the real world reasserts its limits.

Many of the pieces on this blog start from the same observation. The formal, industrial system that shaped the last two centuries is no longer expanding. It is becoming more brittle, more abstract, and less able to describe the conditions it is meant to manage. One consequence of this is rarely named, but it matters greatly. Large systems are increasingly poor at telling the truth about what is actually happening.

This is not because people have become less honest. It is because scale weakens feedback.

There is strong evidence that small, local systems generate fewer invented facts than large, top-down organisations. This strengthens the case for localism, not as a lifestyle choice, but as a structurally viable way of organising society in a period of contraction.

In local settings, most interactions are direct and repeated. People know one another and share overlapping knowledge of the same places, activities, and outcomes. Claims are made in the presence of others who can test them against lived experience. If a harvest is considered good, the fields are visible. If a scheme is said to be working, its effects are felt locally.

This produces tight feedback loops. False claims are rarely exposed through formal processes. They are exposed through everyday contradiction. A person who repeatedly invents facts does not simply lose an argument. They lose trust, cooperation, and standing. In an informal local economy, that loss has immediate practical consequences.

Large organisations operate oppositely. Information moves upwards through layers, losing detail as it goes. Reports replace observation. Targets replace judgment. Responsibility is dispersed to the point where no one wholly owns the accuracy of what is being said.

In such systems, invented facts usually arise without malicious intent. People adapt their descriptions of reality to what the organisation can tolerate. Bad news is softened. Ambiguity is resolved in favour of approved narratives. Over time, internal coherence becomes more important than correspondence with lived conditions.

This is a structural outcome of scale, not a failure of individual character.

In small communities, knowledge is redundant. Many people know the exact facts through different routes. This makes sustained fabrication difficult. In large systems, knowledge is siloed. Falsehoods can persist simply because those closest to reality lack authority, while those with authority are distant from reality.

This pattern is well supported by the work of Elinor Ostrom, who studied how local groups successfully managed shared resources such as water systems, fisheries, and grazing land. Across thousands of cases, she found that small, self-governing groups shared information openly, detected rule-breaking quickly, and maintained higher factual accuracy than centrally managed systems.

These groups did not function because people were unusually virtuous. They functioned because dishonesty was visible and costly. Everyone depended on the same resource. Everyone could see when claims diverged from reality.

This connects directly to the wider argument of this blog. As discretionary markets shrink and formal institutions struggle to adapt, systems that depend on abstract reporting and distant control become increasingly fragile. They require simplification to function, and simplification drifts into distortion. Targets replace reality. Invented facts become a way of keeping the system moving.

Local systems do not scale, and that is precisely why they remain viable. Their small size anchors them in observation, shared experience, and rapid correction. Errors surface quickly. Misjudgements are owned locally. False claims cannot be institutionalised or passed endlessly upwards.

Localism does not eliminate deception. People remain human. But in a local setting, deception is short-lived and self-limiting. It damages trust quickly and cannot be embedded into the structure of the system.

As the formal economy contracts and informal systems take on a larger role in meeting everyday needs, this matters. A society that cannot accurately describe its own condition cannot adapt to change. Localism remains viable not because it promises harmony or moral improvement, but because it preserves feedback.

And feedback, more than scale or efficiency, is what keeps a system connected to reality.