Subsidiarity is an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. The word "subsidiarity" suggests that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level. The concept is applicable not only to economics, but to the fields of governance, political science, management, and other realms. Federalism is a political manifestation of subsidiarity which asserts the rights of the parts over the whole.

The emerging economic vision shares with subsidiarity a bias towards local activity and power, while acknowledging that local communities need resources from elsewhere and can be impacted by helpful or harmful things happening elsewhere and at different scales of social and ecological functioning. So it makes allowances for economic and political interactivity with other and larger social entities, preferably in peer-based collaborative relationships. Especially in transition, it applies subsidiarital economics by focusing first on developing a community's capacity to meet its own most basic needs and build its own self-reliance and resilience.

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