The most important characteristic of business models in a local economy is universal participation by community members. In other words, all community members contribute to their local economy however they can. This may be counterintuitive if one thinks of business models from a typical global economy perspective. Let’s consider some of the main differences between the two economic views.
In a local economy, members are both the market for and the means by which their needs are met. This is quite the opposite of what happens in the global economy where those who produce, process, prepare, and distribute are often separated from one another by considerable distance and even further removed from the end-user or customer. Because of this, the consequence of buying decisions on a particular community does not impact consumer choices within the global economy.
As a result, the purpose of a local economy is to assure sustainability of the community that defines it. The community is the central focus. Community members contribute in whatever ways they can to establish, manage, and maintain the requisite level of business activity within the community that meets their needs. The intent is to advance interdependence among many businesses in the interest of resilience, adaptability, and self-reliance.
In contrast, each business in the global economy strives to be first to market, remain alone in that market for as long as possible, and be deemed best in the market among any other competitors should they appear. The business is the center of attention. A wide array of stakeholders comprised of management, employers, suppliers, and investors promote the business in an effort to gain acceptable returns. The objective is to survive in an intensely competitive environment that challenges the right of each business to exist on a routine basis.
Given participation in a local economy is so important, what does it look like?
Essentially, community members participate in their local economy along five pathways of action:
- They buy from local businesses
- They believe that interdependent local businesses must be successful to assure community sustainability
- They advocate on behalf of local businesses and the local economy
- They administer to the rules of the local economy so that businesses within it have opportunities to function more effectively and efficiently
- They invest in businesses
The following graphic recasts the five paths mentioned above as vectors positioned on a backdrop of concentric circles that represent level of participation as indicated by the teardrop scale at the bottom which begins with limited involvement at the status quo center and progresses through three levels to much wider participation in the outer ring.
The view below offers additional descriptors for each vector, level by level. Although this particular example relates to a local food system, the diagram applies to any product or service related to meeting the basic needs of a community.
But these details are not answers. They are merely placeholders to spur your thinking.
How do you participate in YOUR local economy?
What are the appropriate labels to indicate involvement by you and your community members?
Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Tuesday, August 31, 2010