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How does a workplace gain or lose membership of a federation?

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Anyone is free to start up a new enterprise in a participatory economy. However, an important difference to today is that a startup does not apply for a loan from a bank or seek equity from a private investor. There are no banks or stock markets because productive resources are owned by society.

Instead a startup will need to make an application for membership to join their relevant industry federation. The application will involve creating a business plan similar to today, in order to demonstrate to their industry peers their credibility and ability to carry out what they say they will.

If approved by their industry federation they will be granted a set of initial capital, such as equipment or a building, some support setting up if needed, and be granted a license to enter the annual participatory planning procedure along with other workplaces to submit a proposal for access to resources.

A workplace could lose membership of their federation for two reasons:

  1. if they are unable to provide a proposal in the annual planning that is making an efficient use of society’s resources, or
  2. fails to deliver more social benefits to social costs during the year.

How do we know whether a workplace is making an efficient use of resources? By measuring the total value of the products or goods they make, which we call social benefits, and dividing that by the total value of inputs they use, what we call social costs. Anything below one can be considered inefficient.

Before losing membership of a federation, a workplace will be given an opportunity for support and help by their federation to improve. It may also be that the industry is simply at over capacity through no fault of their own and some workers in the industry will need to be re-trained to join other industries which are increasing in capacity.