Hands-on Guide to the FEC

This hands-on guide is to help you to understand how the Fractal Economy works today – i.e. when we are operational - and also how you can get involved. A PDF leaflet version of this page is available for download here

What the Fractal Economy Cooperative is doing today

The Fractal Economy Cooperative (FEC) is a legally registered trading cooperative. These three points sum up in a nutshell what we do:

  1. The FEC invites individuals, businesses, and any other incorporated entities – including charities, NGOs, not-for-profits, government departments, schools etc – to become members. Technically, all entities other than individuals are called partners. Only individuals-members have voting rights.
  2. The FEC encourages and facilitates members to buy preferentially from fellow members. Using app technology, we will be able to keep track of such transactions and levy a 3% commission on sales. This levy we call a transaction tax and will be levied on the recipient of money.
  3. After paying for admin costs, the surpluses made by the FEC will be distributed to not-for-profits that the board and membership of the FEC deem worthy of, or eligible for, gift funding. Members get a direct vote on how they would like to see the gift money allocated. The budget allocation is directly proportional to how members vote.

This is the bare summary of what the FEC will do once it is fully registered and operational. Within that framework, you will discover over time that those three points do not describe the potential and exciting possibilities contained within it. When we build up an economic community with a wide membership base and a lot of capital behind us, we will acquire a banking licence (Core Practice # 4) and do things unprecedented (and unimagined) for a grassroots organisation – such as zero- or very low-interest loans.

FAQs and Things you should know

How is the FEC governed and how are policies made?

The FEC has a board of directors who are voted in periodically. This is equivalent to our voting in members of our legislatures. This is a form of democracy called representative democracy. On top of that we practice a very ‘interactive’ form of what is called direct democracy which allows members to raise a petition to initiate a new policy, amend an existing one, overturn board decisions, etc. If the petition garners endorsement from 20% of the members, it goes to a binding referendum, and is passed if a two-thirds majority votes for it. Direct democracy empowers members in decision making, encourages people to inform themselves about issues (because they can make a difference) and participate in policies. It also makes the cooperative immune to corruption from the top by powerful economic forces. Whatever policy that the cooperative has that you do not agree with, bear in mind that you have as good a say as anyone else in changing it. More on our direct democracy practice is in Direct Democracy in Action and also described in our Six Core Practice #1.

The transaction tax and gift funding appears to be just a form of shifting money around between members and partners. What’s the point of that?

Quick answer: the same question can be asked about our national taxes - so why do we have taxes? Our transaction tax in the FEC is to support not-for-profit communal activities, and organisations that serve society, which on the whole we believe are grossly underfunded. It is a feature of Capitalism that profits are privatised and costs are socialised, so that activities/organisations that serve the common good are underfunded as a result. We include education as a whole in this category. What we do with our transaction tax is to claw back a bit of this private spending to channel it into communal spending. The community as a whole - plus the individuals/entities who pay the tax – will benefit. In the process we will build a grassroots economic community from the ground up in a manner that has never been imagined.

I am not a member of any not-for-profit. Why should I be interested?

The answer to this question may be addressed if you know what an eligible ‘not-for-profit’ may be. It may be the school that you send your child to (we believe that the funding of education is a communal responsibility even though pedagogy - teaching methods and contents - is left for the school to independently manage). It may be your local church; it may be the music festival that you go to yearly; it may be the women’s refuges that you wished the government would support; it may be any number of environmental organisations you support in principle, but not by membership or donation; it may be the local neighbourhood centre; it may be a media which will not take corporate sponsorship (i.e. advertising); etcetera. With such a broad criteria for what we consider as eligible organisations/activities for gift funding, everyone will find a not-for profit that he/she wants to support.

Why would I, running a small business - or any other businesses in our society, for that matter - want to sign up if I incur a transaction tax on my sales?

If you can imagine that you would like to become a member as a buyer in the FEC; and that a lot of people would feel the same way; then all the buyer-members have collective purchasing power. If buyer-members give a slight preference to buying from fellow FEC members, it will in many cases lead to a loss of sales for people and businesses who are not members. (Remember: sales to non-FEC members do not incur our tax.) The big hardware store chains in Australia give a 5-10% discount to certain people like building companies and tradespeople. They do this because they do not want to lose out on potential sales to this market. A discount amounts to the same thing as paying a voluntary tax which is what our transaction tax is. Credit card charges which are borne by businesses also work on the same principle. They will bear these charges rather than lose out on potential sales.

The money that you pay in taxes will be coming back to you in other ways.

For instance, you may vote to allocate gift funding to the very school that you send your child to. Also, we would ask that the not-for-profits that receive gift funding from us spend at least the same amount of money with FEC members, including staff wages. We imagine that some NFPs – and their members – will spend as much as they can with FEC members in the principle of solidarity and furthering the work of the fractal economy. In other words, we will be getting a huge influx of spending money into our community – drawn from the capitalist economy, so to speak. (Quick note: our commons bank, when we have one, will, among other things, keep the money, and the interest on loans, within the fractal economy when it is loaned out.)

What businesses or trades can become tax-paying members?

Just about anything. Retailers with a shop-front are obvious qualifiers but so are online retailers. Tradespeople and contractors like software writers also qualify easily. Manufacturers and wholesalers that do not deal direct with the public can register – their potential customers could well be FEC members. People with packaging and labeling on their products like egg producers could well sell a lot more with the FEC logo on their product.

Very importantly...

...individuals who normally work only within the framework of an organisation, such as customer service, also have a service to sell - their labour, as capitalists and marxists would put it. Companies and organisations, including the NFPs that we support through gift funding, might start hiring people on condition that they are tax-paying FEC members.

What else is in it for me?

One of the biggest and largely unidentified cause of pain and ill health in our society is loneliness and isolation; as well as a sense that one can do nothing about the very apparent ills and injustice in our society. We at FEC believe we can address these issues. There is much more however to what the FEC can offer. Consider what will begin to happen when we start our own bank. Our transaction tax revenue can both subsidise and guarantee our loans – ‘guarantee’ meaning that any failed loan can be addressed by our tax revenue. We will have an unofficial ‘membership loyalty’ measure when we consider loan applications. The more you have participated in the fractal economy, the more we are assured that you understand it and are committed to it. This makes it easier to approve your loan. We associate 'credit' with 'credibility' - the two words are derived from the the Latin credere, to believe in. As you participate in FEC you raise your credibility/believability and thereby your 'credit rating'. Because of our ‘tax revenue subsidy’ we might make loans consistently at an interest rate as low as 2% - even less for ventures we particularly support. We would also give you higher priority when it comes to finding/screening tenants for our ‘affordable housing’ projects. And then there is the possibility of being a co-worker (not employee) in our bank-financed profit sharing cooperatives…

The members we give low-interest loans to; and those who get less-than-market-price land leases from us; will NOT be spending as much money on loan repayments and rent; which means that they will have more disposable income, which most likely will be preferentially spent with FEC members; and so on.

Reality is not just reacting to what is and what has been; it also lies in the ability to create a future through imagination and will.

Notes to not-for-profits

From the above explanation, we believe that almost all not-for-profits will want to sign up as NFP partners of the Fractal Economy Cooperative. Our gift funding is pretty much no-strings-attached if your NFP qualifies. It will be the easiest, high-return, no-cost, form of fundraising you will ever come across. But we need your participation if you want to help yourself, financially speaking. When we allocate the gift funding, it is directly proportional to how members vote. If a person allocates 50% of her vote to XYZ, 25% to ABC, etc; then ABC gets half as much funding, on the basis of her vote, as XYZ. Every person gets to allocate an equal share of the budget. What this means is this: if as a not-for-profit you encourage your members and supporters to register with the FEC, they will very likely swing gift money towards your organisation. At the same time they (your members) will increase the total membership and sales (and tax revenue) with the fractal economy. This is a win-win for all.

How do I start?

  1. If you wish to familiarise yourself with the FEC through a talk/workshop; and if you can organise a small group of interested people (say ten plus); then contact us and we can probably arrange for someone to give a verbal presentation.
  2. If you wish to proceed now, the first thing is to sign up as an individual. FEC does not have joint individual membership.
  3. If you have a business, register your business separately as an ‘trade partner’. If you wish to sell goods and services in your own name, tick the appropriate box in the application form that says you wish to sign up as a vendor/seller, and therefore willing to pay the transaction tax.
  4. If you are a vendor/seller, download our app onto your phone, tablet or even laptop and desktop to register sales with us. (Once you are registered as a vendor/seller member, you are obliged to use this app at point of sale if the buyer declares her FEC membership).
  5. Familiarise yourself with how we make policy decisions. If you wish, participate through our Direct Democracy in Action webpage.
  6. Browse our Purple Pages directory of goods and services to see if any FEC member has anything to sell that you may be interested in.
  7. Look at our Directory of not-for-profits gift recipients. You may start straight away to vote on how you would like funding to be allocated. If an organisation that you support is not on the list, tell them why they should be.
  8. Spread the word by any number of means. Retailers might display the FEC logo on their shop front, and perhaps even stock the FEC leaflet in a prominent position. You may use the logo in any of your signs, letterheads, product packaging, etc. Social media and group mailing lists are other means
  9. Enjoy