The theory and practice of fiscal localism is expanding. Your local farmers market is an example. The Buy Local movement of ‘locarians’ is another example. Popular local community currencies have been expanding, with hundreds in the USA and thousands worldwide.

The specific purpose of fiscal localism is to open, nurture and advance local market structures and economies. This in turn helps these local markets and regional networks trade much more efficiently. Outcomes are diverse, open and prosperous economic ecologies.

Often, fiscal localism is confused with a closed economy or autarchy. Autarchy is when a political state creates closed economic policies. Creating deliberate market barriers, planned and closed economies, always eventually fails. Japan prior to 1850, Germany in the 1930s, Romania 1980s and North Korea today are typical examples of failed closed economies.

Some people perceive fiscal localism is a backlash to global economies. They are terrified by the mythical hegemony of global capitalism. They believe prosperous, local and open markets somehow diminish the chilling specter of evil global capitalism.

On the contrary, precisely the opposite is true! Greater economies prosper when lesser economies prosper. Fiscal localism propels distributed capitalism. In addition, it fundamentally advances the principle of distributism – where the ownership of the means of production is spread as widely as possible among the general population. In short, as the saying goes,

“Too much capitalism does not mean too many capitalists,
but too few capitalists!”

- G.K. Chesterton

Prosperity, in all markets and economies, local and global, depends on perpetual, open interaction with the environment of suppliers, talent, capital, markets, etc.

Fiscal localism and distributism are important, expanding principles. They are some concerns however, particularly the notion of bounding, closing or worse, attempting to control markets and economies among strongly-tied or ‘like-minded’ groups.

The social network principle of homophily is simply that similarity breeds connection, i.e., ‘birds of a feather.’ It includes structures and network ties of every type, including marriage, friendship, work, advice, support, information transfer, race, exchange, membership, business and all other types of relationship. The result is that people's personal networks are homogeneous with regard to many sociodemographic, economic, behavioral and intrapersonal characteristics.

Homophily is deeply problematic and harmful to fiscal localism. ‘Closed’ networks sharply limits people's social worlds and opportunity space. It has powerful implications for limiting information they receive, the attitudes they form, and the interactions they experience. Beware. Closed networks breed ignorance.

Fiscal localism and distributism depend entirely on diverse, open hetrophilious social networks. Structures and patterns of fluid ‘weak ties’ fosters exchange and prosperity. For example, the thriving local milieu of farmers, craftsmen and shop owners, informs the local markets and creates the open social arrangements for exchange, markets and economic prosperity.

On the contrary, the ‘strong ties’ of narrowband, parochial and homophilious social networks limits diversity, limits market exchange and creates economic dysfunction. Strong ties are difficult and costly to maintain, sap energy, attenuate authentic exchange, alienate participation and sharply limit market viability.

The current revolution in social commerce and collaborative consumption like GroupOn depend entirely on radically open, fluid, diverse and emergent ‘weak-tie’ social networks.

Social commerce and prosperous localism depends on loosely connected ad hoc constituencies that form spontaneously for a uniquely configured market offering. Just look at the massive crowds at the tomato vendor’s table at the farmer’s market in late August when they are the best!   

Fortunately, sheaves of research over decades reveal individuals have on average about 10 or 12 ‘strong ties.’ it is because they are so costly and difficult to maintain. The same people often have hundreds of ‘weak ties.’ Quite simply, this science makes fiscal localism and distributism the natural order. Besides, it’s a lot more fun to stroll the local farmer’s market than the aisles at Wal-Mart!