In a small fishing village in Fife artists and locals gather to celebrate a way of life now long gone. John Lloyd, who grew up there, pays a visit

Tourist brochure publicity for the five old fishing villages on the east coast of Fife - Crail, Anstruther, Pittenweem, St Monans and Elie - tends to recall that they were known as the "five pearls" and that they were the "fringe" in the description of Scotland (attributed to James VI of Scotland and I of England) as "a beggar's mantle fringed with gold". Their wealth and importance brought them royal burgh status; and in their centres there are substantial 16th-century and earlier houses, little castles and churches, many of them preserved and lived in yet.

Their late-medieval wealth came from salt and coal, which were exported. Their economies were buoyed when these trades faltered in the 18th century by a switch to fishing, mainly for herring in the Firth of Forth and the North Sea. Herring became the omnipresent symbol of the place; two of them appeared, crossed, on the crest of my local comprehensive. We smutty lads said they were "ha'n a ride", or fucking. But they did not ride enough: the firth produced too few fish for too many boats. My mother's generation would recall to mine that the harbour at Anstruther - where I was born and grew up - would be so full of boats when the fleet was unloading that you could walk across the harbour on their decks, from the esplanade to the lighthouse built by Robert Louis Stevenson's father on the tip of the longest pier.

The fleet shrank back and back. My grandfather, with whom we lived and who made his money, on retirement from the merchant navy, by mending the fishing boats' diesels and winches, grumbled that he could barely make a living and retired. Yet, at the same time, the economy in the fifties and sixties roared ahead; the boats were bigger, subsidies were larger, prices higher and the dole protected the few workless and idle. As my grandfather's work faded, my grandmother's - she was a beautician - picked up, and the little front room of our house that she had converted into a beauty parlour rang with the shrieks of the fishermen's wives having their ears pierced and their eyebrows plucked with the aid of hot wax.

Away at university in the late sixties, I was only sporadically aware that Pittenweem was winning the war for primacy by building a new fishmarket. The Anstruther fishmarket grew gradually deserted, and within a few years the old men who had hawked and gabbed on its benches so they could get some vicarious life from the daily landing of the catch now stopped there as only one of the stations of their ceaseless strollings. Pittenweem was the only working fishing town; the others turned more and more to tourism and services. The young, especially the educated young, left; many of those who stayed travelled to St Andrews or Kirkcaldy to work.

I was hardly aware of the changes over the years; on retirement, my mother and stepfather lived in the district centre of Cupar, 15 miles inland, and I visited the fringe of gold infrequently. Then, in 1993, my mother died; I came back from Moscow to be with her in her last months and learnt that she wanted me - the last of a family that had been in East Fife for generations - to keep a link. I sold her flat to an RAF officer and bought another in a renovated 16th-century house on Pittenweem harbour.

My mother's cousin Mamie, who had been a primary school teacher all of her life, lives alone in an adjacent house, very lame but very game. The flat is beautiful and quite roomy; it presently has a market value of one-fifth of the smaller flat that I have in north London.

In my occasional weekends and short holidays there, either alone or with my son, it sank in that I had come back to a different world. That became crystal clear last weekend, when I went there for the first three days of the Pittenweem Festival, which I have always missed before.

There I saw that the culture that formed me, which I rejected and to which I wished to return in a dilettante fashion as a condescending prodigal, had dissolved into little fragments. My adopted world had come in and was hollowing it out, while offering the hope of a future, but quite different, life.

The Pittenweem Festival was conjured out of nothing 11 years ago, the brainchild largely of Joyce Laing. A painter and teacher of painting to the mentally and physically ill, Laing had bought the tiny castle, Kellie Lodging, in Pittenweem High Street. Laing was one of a number of artists and writers and cultural folk who had moved into the fringe steadily, mainly in the eighties, attracted by the beauty, the light, the quietness, the low property prices - and the nearness of a medieval university (St Andrews), which provided work or at least some support for many of them.

The first festival, in 1988, had been a series of improvisations. There were about a dozen halls and houses that could be used as exhibition space: a few readings were put on, and some musical events. Reinhard Behrens, a German married to the Scots artist Margaret Smyth, constructed a galleon in homage to a Spanish vessel that had been fleeing from the defeat of the Armada and had been washed up on the East Fife shore (since the Spaniards had been fighting the English, the locals welcomed them). The model was ceremonially burnt in the old swimming-pool just outside of town on the opening night.

Each year, the festival got a little bigger. Last weekend it opened with 35 halls and houses mounting exhibitions of various kinds, with a salsa band and a column of pipers escorting about 3,000 people through the town to pick up burning torches and go to the old swimming-pool, where another galleon was burnt. I went with my neighbours, Isobel and Ewan McAslan, themselves considerable and arresting painters, who were exhibiting in the entrance lobby leading to my flat.

We stood above the town, watching the torches flicker in the dusk and the galleon burn as fireworks went off; it could have been a medieval festival modernised.

In the day, the streets were thronged with visiting arty folk, mingling with the locals - some of whom were themselves arty folk. A group of young Italians, with warm coats on in the face of the incomprehensible (to them) cold in August, passed and asked me for a "real restaurant". I had seen them the night before in the fish and chip shop, staring wonderingly at their slabs of yellow fried fish and heaped mounds of thick chips wrapped in newspaper, which the girl behind the counter had helpfully already clad in vinegar, salt and ketchup.

The one "genuine local" artist to exhibit was an elderly man called J Muir Horsburgh, who had been a fisherman until the 1970s. He paints detailed studies in oil of fishing life, tending to the past and the elegiac. One picture, which was poignant, showed a steam drifter, gutted of its ironworks, beached on a deserted stretch of coast. Underneath, Horsburgh had written an angry little note saying these boats had been "stripped and left to rot" - as if they were sentient beings. I tried to talk to him as local to local, reminding him of my mother and of my great-grandfather's ship chandler's shop in Pittenweem - which features in the background of one of his paintings.

He said he knew who I was but he seemed self-enclosed, self-conscious, unwilling to admit me into the community of the local, concentrating on being a primitive among sophisticates, one whose reserve would take longer to break down than I was willing to give.

I bought two prints and later showed them to Behrens. He said, "You can't really call him naive. Look at the painterly skill in these fish baskets - they are quite remarkable in their own way."

One woman who did take the time to break down reserve was a jolly Danish photographer named Aase Goldsmith, who had married a Scot fellow photographer and had persuaded the Fife museums department to sponsor a series of photographs-with-text studies of the East Fife villages. A selection of her shots, taken at the previous year's festival, were on the wall of an exhibition space that had been the village's council offices. We talked, leaning against a window on which had been etched in late-19th-century style: "Wm. Patterson, Town Clerk and Burgh Chamberlain".

"Look at that window!" she enjoined me. "These windows are rare now; this must be preserved."

I took my mother's cousin Mamie to see her exhibition. They got on like a house on fire. Mamie had taught in little schools all over the district from the 1930s on; she sat behind the table in the old Burgh Chamberlain's office and talked of cold village schools where the children came hungry from the teeming families of the farmworkers, of struggles with a severe bureaucracy for indoor toilets, of lodgings she had in remote farmhouses. Goldsmith took notes and smiled encouragement - while interspersing her own knowledge, gained from research, which Mamie and I had either forgotten or never knew.

Next door, in Joyce Laing's little castle, the star exhibition of the week was laid out. This was by Lil Neilson, an artist born in the industrial town of Kirkcaldy, 20 miles down the coast in West Fife, who spent much of her creative life in a little fishing village called Catterline, near Aberdeen.

Laing had shown her work in Kellie Lodging 12 years before; Neilson died, at 60, last year. She left figurative work behind in her thirties; her paintings were (as her friend Ann Steed describes them in a catalogue) "executed in vibrant primary colours and are essentially abstract - but sometimes, recognisable images appear, such as a hare, a fish or a flower. According to Jungian psychology, such symbols are universal, belonging to a common pool".

Steed goes on to write that, as Neilson's work progressed from figurative to abstract, it was "no longer the outward appearance of the place that was being celebrated, but its very essence".

It was the point of much of the art being exhibited, and of the festival itself. The art of outward appearances was being celebrated, or appreciated, by the "real locals".

Horsburgh's paintings were fully comprehensible, done by a working man using his leisure time and retirement to master the craft of painting "well". The "essence" of Horsburgh's vision lay in the sense of loss, in the harking back to the 1930s in most of his paintings, to a world gone but still pictured vividly enough in his mind to allow him to paint it, carefully and realistically.

The "essence" came up again at a poetry reading in St Fillan's cave. St Fillan was a local holy man whose cave can normally be seen on application to one of the shops in the high street; during festivals, it is opened for readings, the acoustics, to an extent, compensating for its dank chill. The poets Brian Johnstone and Anna Crowe were reading when I went there, to an audience of about 50; Johnstone, who founded the Shore Poets group in Edinburgh and who started the tradition of poetry reading at Pittenweem, told me after the reading that the area was now saturated with artists and writers - the poets Douglas Dunn, Robert Crawford and John Burnside all lived within a few miles, the first of these a major figure and the other two frequently described as "among the finest of the new generation".

Crowe, a gentle-mannered Englishwoman who has lived in Pittenweem for some years and now runs a second-hand bookshop in St Andrews, was the main reader. Between her readings, Arthur Timperley, also English, who has been a vet in the area for some time, played the small pipes.

Crowe read a poem called "Pittenweem Beach", which recalls the pressing to death in the 17th century of the "witch" Janet Cornfoot. She intercut the story of the death on the beach at the hands of the Pittenweem mob with a lyric of her daughter playing on the same beach:

To reach the beach the child likes best
Down to the shore they dragged you
I cradle her, rung over rung, to the shingle
To be swum and stoned at a rope's end
To plowter along the tide-line
For no belief or crime of yours, but rumour.

I had not heard of Janet Cornfoot, nor had Mamie nor anyone else I spoke to. Crowe, a stranger (or "incomer", as they are still called), had searched to find some essence of the beach, essence of the place.

Reading the latest collections of Crawford and Burnside later, I found that both had written poems about Anstruther, the next village. Burnside does it elegiacally (it is as if all that these places can conjure is regret), writing: "I think of the times we came here, as children,/and disappeared like ghosts/into the fog".

Crawford had found out that Anstruther's most famous son was the Presbyterian reformer Thomas Chalmers and refers to the lighthouse and lifeboat named after him. He has also read the extraordinary fragment "The Beggar's Benison of Anstruther", which is on the other side of the East Fife soul from Presbyterianism - the record of an erotic club that was established there in the 1730s and ran for a century. Crawford describes one of the traditions of the local gentry who attended it: "Where the Beggar's Benison met to measure their pricks/On a special platter, we stand and stare up at the stars".

Size mattered then. Now, everything has shrivelled back - except for the arty folk and those who would make a history of the place and those who come to these villages to read and write and paint or to tap away on their keyboards and pump the digits down the lines to offices in less pleasant places.

The essence is left to the incomers; and as they seek to distil and describe and preserve it, they change these places fundamentally, in a way that no progress or modernisation has done before.

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