“The decentralized provision of basic necessities is not likely to flow from a utopian vision of a perfect or even improved society (as have some social movements of the past). It will emerge instead from iterative human responses to a daunting and worsening set of environmental and economic problems, and it will in many instances be impeded and opposed by politicians, bankers, and industrialists. It is this contest between traditional power elites on one hand, and growing masses of disenfranchised poor and formerly middle-class people attempting to provide the necessities of life for themselves in the context of a shrinking economy, that is shaping up to be the fight of the century.”

Excerpted from a must-read strategic change essay by Richard Heinberg:

‘As the world economy crashes against debt and resource limits, more and more countries are responding by attempting to salvage what are actually their most expendable features—corrupt, insolvent banks and bloated militaries—while leaving the majority of their people to languish in “austerity.” The result, predictably, is a global uprising. This current set of conditions and responses will lead, sooner or later, to social as well as economic upheaval—and a collapse of the support infrastructure on which billions depend for their very survival.

Nations could, in principle, forestall social collapse by providing the basics of existence (food, water, housing, medical care, family planning, education, employment for those able to work, and public safety) universally and in a way that could be sustained for some time, while paying for this by deliberately shrinking other features of society—starting with military and financial sectors—and by taxing the wealthy. The cost of covering the basics for everyone is within the means of most nations. Providing human necessities would not remove all fundamental problems now converging (climate change, resource depletion, and the need for fundamental economic reforms), but it would provide a platform of social stability and equity to give the world time to grapple with deeper, existential challenges.

Unfortunately, many governments are averse to this course of action. In fact, they will most likely continue to do what they are doing now—cannibalizing the resources of society at large in order to prop up megabanks and military establishments.

Even if they do provide universal safety nets, ongoing economic contraction may still likely result in conflict, though in this instance it would arise from groups opposed to the perceived failures of “big government.”

In either instance, it will increasingly be up to households and communities to provide the basics for themselves while reducing their dependence upon, and vulnerability to, centralized systems of financial and governmental power. This is a strategy that will require sustained effort and one that will in many cases be discouraged and even criminalized by national authorities.

The decentralization of food, finance, education, and other basic societal support systems has been advocated for decades by theorists on the far left and far right of the political spectrum. Some efforts toward decentralization (such as the local food movement) have resulted in the development of niche markets. However, here we are describing not just the incremental growth of social movements or marginal industries, but what may become the signal economic and social trend for the remainder of the 21st century—a trend that is currently ignored and resisted by governmental, economic, and media elites who can’t imagine an alternative beyond the dichotomies of free enterprise versus planned economy, or Keynesian stimulus versus austerity.

The decentralized provision of basic necessities is not likely to flow from a utopian vision of a perfect or even improved society (as have some social movements of the past). It will emerge instead from iterative human responses to a daunting and worsening set of environmental and economic problems, and it will in many instances be impeded and opposed by politicians, bankers, and industrialists. It is this contest between traditional power elites on one hand, and growing masses of disenfranchised poor and formerly middle-class people attempting to provide the necessities of life for themselves in the context of a shrinking economy, that is shaping up to be the fight of the century.”

Richard Heinberg concludes this must-read essay with four possible scenarios of simplification/decentralisation:

“Scenarios for societal simplification

A. Continued pursuit of business-as-usual.

In this scenario, policy makers desperately try to re-start economic growth with stimulus spending and bailouts; all efforts are directed toward increasing, or at least maintaining, the complexity and centralization of society. Deficits are disregarded.

This was the general strategy for many governments in late 2008 and throughout 2009 as they grappled with the first phase of the global financial crisis. The US and stronger members of the EU experienced tangible but limited success at engineering a recovery and averting a deflationary meltdown of their economies through deficit spending. However, the fundamental problems that led to the crisis were merely papered over. Most of the largest banks are still functionally insolvent, with temporarily hidden “toxic assets” still weighing on their balance sheets.

The limits of this course of action are revealing themselves as the US “recovery” fails to gain traction, Chinese growth winds down, and the EU slips into recession. Further stimulus spending would require another massive round of government borrowing, and that would face strong domestic political headwinds as well as resistance from the financial community (taking the form of credit downgrades, which would make further borrowing more expensive).

Meanwhile, despite much talk about the potential for low-grade alternative fossil fuels such as tar sands and shale oil, world energy supplies are in essentially the same straits as they were at the start of the 2008 crisis (which, it is important to recall, was partly triggered by a historic oil price spike). And without increasing and affordable energy flows a genuine economic recovery (meaning a return to growth in manufacturing and trade) is probably not possible. Thus financial pump priming will yield diminishing returns.

The pursuit of business-as-usual appears to lead us back to the sort of turmoil seen in 2008; however, next time the situation will be worse, as most of the available stimulus/bailout “ammunition” is already used up. If governments and central banks are able to get ahead of debt deflation and deleveraging by massive “printing” of new money, the eventual result will be hyperinflation and currency collapse.

B. Simplification by austerity.

In this scenario, nations pull back from their current state of over-indebtedness and placate bond markets by cutting domestic social spending and withdrawing social safety nets put in place during the past few decades of steady growth. This strategy is being adopted by the US and many EU nations, partly out of perceived necessity and partly on the advice of economists who promise that domestic social spending cuts (along with privatization of government services) will spur more private-sector economic activity and thereby jumpstart a sustainable recovery.

The evidence for the efficacy of austerity as a path to increased economic health is spotty at best in “normal” economic times. Under current circumstances, the evidence is overwhelming that austerity leads to declining economic performance as well as social unraveling. In nations where the austerity prescription has been most vigorously applied (Ireland, Greece, Spain, Italy, and Portugal), contraction is accelerating and popular protest is on the rise. Even Germany, Europe’s strongest economy, is being impacted—its economy contracted in Q4 of 2011. As Jeff Madrick argued recently in the New York Review of Books, policy makers are failing to see that rising deficits are more a symptom of slower economic growth than the cause.

Austerity is having similar effects in states, counties, and cities in the US. State and local governments have cut roughly half a million jobs during the past two years; had they kept hiring at their previous pace to keep up with population growth, they would instead have added a half-million jobs. Meanwhile, due to declining tax revenues, local governments are allowing paved roads to turn to gravel, closing libraries and parks, and laying off public employees.

It’s not hard to recognize a self-reinforcing feedback loop at work here. A shrinking economy means lower tax revenues, which make it harder for governments to repay debt. In order to avoid a credit downgrade, governments must cut spending. This shrinks the economy further, eventually resulting in credit downgrades anyway. That in turn raises the cost of borrowing. So government must cut spending even further to remain credit-worthy. The need for social spending explodes as unemployment, homelessness, and malnutrition increase, while the availability of social services declines. The only apparent way out of this death spiral is a revival of rapid economic growth. But if the premise above is correct, that is a mere pipedream.

Both of these scenarios lead to unacceptable and unstable outcomes. Are there no other possibilities? Well, yes. Here are two.

C. Centralized provision of the basics.

In this scenario, nations directly provide jobs and basic necessities to the general public while deliberately simplifying, downsizing, or eliminating expendable features of society such as the financial sector and the military and taxing wealthy individuals, banks, and businesses.

In many cases, centralized provision of basic necessities is relatively cheap and efficient. For example, since the beginning of the current financial crisis the US government has gone about creating jobs mainly through channeling tax breaks and stimulus spending to the private sector, but this has turned out to be an extremely costly and inefficient way of providing jobs, far more of which could be called into existence (per dollar spent) by direct government hiring2. Similarly, the new (yet to be implemented) US federal policy of increasing the public’s access to health care by requiring individuals to purchase private medical insurance is more costly than simply providing a universal government-run health insurance program. If Britain’s experience during and immediately after World War II is any guide, then better access to higher-quality food could be ensured with a government-run rationing program than through a fully privatized food system. And government banks could arguably provide a more reliable public service than private banks, which funnel enormous streams of unearned income to bankers and investors. If all this sounds like an argument for utopian socialism, read on—it’s not. But there are indeed real benefits to be reaped from government provision of necessities, and it would be foolish to ignore them.

A parallel line of reasoning goes like this. Immediately after natural disasters and huge industrial accidents, people impacted typically turn to the state for aid. As the global climate chaotically changes, and as the hunt for ever-lower-grade fossil energy sources forces companies to drill deeper and in more sensitive areas, we will undoubtedly see worsening weather crises, environmental degradation and pollution, and industrial accidents such as oil spills. Inevitably, more and more families and communities will be relying upon state-provided aid for disaster relief.3

Many people would be tempted to view an expansion of state support services with alarm, as the ballooning of the powers of an already bloated central government. There may be substance to this fear, depending on how the strategy is pursued. But it is important to remember that the economy as a whole, in this scenario, would be contracting—and would continue to contract—due to resource limits. Think of state provision of services not as utopian socialism (whether that phrase is viewed positively or negatively), but as a strategic reorganization of society in pursuit of greater efficiency in times of scarcity. Perhaps the best analogy would be with wartime rationing—a practice in which government takes on a larger role in managing distribution so as to free up resources for fighting a common enemy.

How to pay for such an expansion of services in a time of over-indebtedness and scarce credit? The financial industry could be downsized by taxing financial transactions and unearned income. Further, the national government could create its own financing directly, without having to borrow from banks. One might think that if government can just create as much money as it wants, then it could do away with scarcity altogether. But in the end it’s not just money that makes the world go ’round. With energy and resources in short supply, the economy would continue to shrink no matter how much money the central government printed; over-printing would simply result in hyperinflation. However, up to a point, efficiency gains and equitable distribution could reduce human misery even as the economic pie continued to shrink.

Some nations have already begun to make policy shifts along the lines suggested in this scenario: Ecuador, for example, has expanded direct public employment, enforced social security provisions for all workers, diversified its economy to reduce dependence on oil exports, and enlarged public banking operations.4

For some large industrial nations, such as the US, entrenched interests (principally, the fossil-fuel, financial, and weapons industries) would work to prevent movement in these directions—as they are already doing. Meanwhile, the fact that the economy was still contracting even in the face of strenuous government efforts might lead many people to believe that contraction was occurring because of government, and so popular opposition to government (from some quarters at least) might increase. Government might be motivated to crush such dissent in order to maintain stability (this, of course, is what far-right anti-government groups most fear). A nation that remained stuck in option C for decades would likely come to resemble the Soviet Union or Cuba. It might also resort to extreme efforts to stoke patriotic sentiment as a way of justifying repression of dissent.

In any case, it’s hard to say how long this strategy could be maintained in the face of declining energy supplies. Eventually, central authorities’ ability to operate and repair the infrastructure necessary to continue supporting the general citizenry might erode to the point that the center would no longer hold. At that stage, Strategy C would fade out and Strategy D would fade in.

D. Local provision of the basics.

Suppose that as economies contract national governments fail to step up to provide the basics of existence to their citizens. Or (as just discussed) suppose those efforts wane over time due to an inability to maintain national-scale infrastructure. In this final scenario, the provision of basic necessities is organized by local governments, ad hoc social movements, and non-governmental organizations. These could include small businesses, churches and cults, street gangs with an expanded mission, and formal or informal co-operative enterprises of all sorts.

In the absence of global transport networks, electricity grids, and other elements of infrastructure that bind modern nations together, whatever levels of support that can originate locally would provide a mere shadow of the standard of living currently enjoyed by middle-class Americans or Europeans. Just one telling example: we will likely never see families getting together in church basements to manufacture laptop computers or cell phones from scratch. The ongoing local provision of food and simple manufactured goods is a reasonable possibility, given intelligent, cooperative effort; for the most part, however, during the next few decades a truly local economy will be mostly a salvage economy (as described by John Michael Greer in The Ecotechnic Future , pp. 70 ff.).

If central governments seek to maintain their complexity at the expense of locales, then conflict between communities and sputtering national or global power hubs is likely. Communities may begin to withdraw streams of support from central authorities—and not only governmental authorities, but financial and corporate ones as well.

In recent decades, communities have seen it as being in their interest to give national and global corporations tax breaks and other subsides for locating factories and stores within the local tax-shed. Analysis after-the-fact is showing that in many instances this was a poor bargain: tax revenues have been insufficient to make up for new infrastructure costs (roads, sewer, water); meanwhile, most of the wealth generated by factories and mega-store outlets tends to find its way to distant corporate headquarters and to Wall Street investors (see Michael Shuman, the Small-Mart Revolution). Increasingly, communities are recognizing big chain-retail corporations (and big banks as well) as parasites siphoning away local capital, and are looking for ways to support small, local businesses instead.

City and county governments are just beginning to adopt a similar attitude toward federal and state governments. Formerly, larger governmental entities provided subsidies for local infrastructure projects and anti-poverty programs. As funding streams for those projects and programs dry up, local governments find themselves increasingly in competition with their cash-starved big brothers.

If communities are being hit by declining tax revenues, competition with larger governments, and the predatory practices of mega-corporations and banks, then non-profit organizations—which support tens of thousands of local arts, education, and charity efforts—face perhaps even greater challenges. The current philanthropic model rests entirely upon assumed economic growth: foundation grants come from returns on investments. As growth slows and reverses, the world of non-profit organizations will shake and crumble, and the casualties will include thousands of aid agencies, environmental organizations devoted to protecting regional habitat, symphony orchestras, dance ensembles, museums, art galleries, and on and on.

If national government loses its grip, with local governments pinched simultaneously from above and below, and with non-profit organizations starved for funding, from where will come the means to support the local citizenry? Local businesses and co-ops (including cooperative banks, otherwise known as credit unions) could shoulder some of the burden if they are able to remain profitable and avoid falling victim to big banks and mega-corporations before the latter go under.

The next line of support would come from the volunteer efforts of people willing to work hard for the common good. Every town and city is replete with churches and service organizations. Many of these would be well placed to help educate and organize the general populace to facilitate survival and recovery—especially some of the more recent arrivals, such as the Transition Initiatives, which already have collapse preparedness as a raison d’être. In the best instance, volunteer efforts would get under way well before crisis hits, organizing farmers’ markets, ride- and car-share programs, local currencies, and “buy local” campaigns. There is a growing body of literature intended to help that pre-crisis effort; the latest worthy entry in that field is Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity, by Michael Shuman.

The final source of support would consist of families and neighborhoods banding together to do whatever is necessary to survive—grow gardens, keep chickens, reuse, repurpose, repair, defend, share, and, if all else fails, learn to do without. People would move into shared housing to cut costs. They would look out for one another to maintain safety and security. These extreme-local practices would sometimes fly against the headwinds of local and national regulations. In those cases, even if they’re in no place to help materially, local governments could lend a hand simply by getting out of the way—for example, by changing zoning ordinances to allow new uses of space. (See, for example, this helpful article on how counties can use land banks and eminent domain to take over unused real estate and make it available for community use.5) Thus enabled, neighborhood committees could identify vacant houses and commercial spaces, and turn these into community gardens and meeting centers. In return, as neighborhoods network with other neighborhoods, a stronger social fabric might re-invigorate local government.

As discussed above, movements to support localization—however benign their motives—may be perceived as a threat by national authorities. This is all the more likely as the Occupy movement organizes popular resistance to traditional power elites.

Where national governments see local citizens’ demands for greater autonomy as menacing, the response could include surveillance, denial of public assembly, infiltration of protest organizations, militarization of the police, the development of an increasing array of non-lethal weapons for use against protesters, the adoption of laws that abrogate the rights to trial and evidentiary hearings, torture, and the deployment of death squads. Chris Hedges, in a recent article6, tellingly quoted Canadian activist Leah Henderson’s letter to fellow dissidents before being sent to prison: “My skills and experience—as a facilitator, as a trainer, as a legal professional and as someone linking different communities and movements—were all targeted in this case, with the state trying to depict me as a ‘brainwasher’ and as a mastermind of mayhem, violence and destruction. . . . It is clear that the skills that make us strong, the alternatives that reduce our reliance on their systems [emphasis added] and prefigure a new world, are the very things that they are most afraid of.”

Altogether,

the road to localism may not be as easy and cheerful a path as some proponents portray. It will be filled with hard work, pitfalls, conflicts, and struggle—as well as comradeship, community, and comity. Its ultimate advantage: the primary trends of the current century (discussed above) seem to lead ultimately in this direction. If all else fails, the local matrix of neighbors, family, and friends will offer our last refuge.