* Book: Phyles: Economic Democracy in the Network Century. by David de Ugarte

This is a really remarkable, breakthrough and must-read book for the p2p-oriented community, especially those groping for personal sustainability, open business models and an economy of the commons, and which outlines the new network form of phyles, as well as discussing historical predecessors such as the greek Demos, the medieval Guild, and the Renaissance passagium’s.

This will undoubtedly feature at the top or very near the top of my book of the year selection. It fills a major missing piece in my own synthetic p2p theory.

David de Ugarte:

“This work is the last instalment in a series of books, written by half a dozen authors besides me, that try to describe and understand, from a common logic although from different angles, the vast social changes which took place in the wake of the fall of the Berlin Wall. In the last twenty years, we have seen how the division of the world into two great blocs gave way to globalisation, while the emergence of the Internet produced a deep change in the fundamental structures of power, always dependent on the management and social control of information.

This substantial change converged and merged with a new paradigm of conflict as apparently distributed and ungraspable. This new expression of an emerging world cohering around distributed networks (the web, the blogosphere, SMS networks) became apparent in its civic dimension when, all over the democratic world, waves of cyberthrongs influenced political processes which had apparently been under the full control of the powers that be: from the fall of Estrada in Manila in 2002 to the Athens riots in 2008, through the 2004 13M in Madrid and the 2005 French swarming. This was a distributed paradigm which, on the other hand, could be glimpsed in conflicts since the 90’s, and which was given a label with the advent of al-Qaeda: what are known as the post-modern wars.

In less than two decades, the whole world started to inculturate a fundamental change in the shape of the great social network. The idea of belonging was changing. The cohesive, explanatory power of nationality was shrinking. Nations were starting to become both too small and too large to explain who we are. The mass experience of virtual socialisation, de-territorialised but personal, as well as the changes in the economic system leading, in the face of the onslaught of networks and globalisation, to what Juan Urrutia has called the coming capitalism, opened a period characterised by the search for identity, by identitarian experimentation.

We are in the process of going from a world of decentralised networks to a world of distributed networks. This is evidenced in communication as a crisis in the information systems of agencies and newspapers; in the cultural sphere as a crisis in the current industrial model for films, books, and music; in democracy as citizens’ cyberthrongs; and in war as a new paradigm. This shift leads us to a new paradigm, seen in the complex world of collective identities in the increasingly important role of a new kind of community, communities which are closer to the old real, contiguity-based communities than to the great nationalistic imaginaries of Modernity. We are experiencing, in that area, another shift, one taking us from nations to networks.

Studying this latter dimension, the changes in the identity patterns of our time, we discover a new kind of socio-economic organisation: the phyle. The phyle is much more than a kind of business; it has, among its main features, all the elements that articulate our time – it is born from the experience of socialisation in virtual communities, it is transnational, and it vindicates new forms of economic democracy which, in turn, link it to traditional cooperativism.

Even more interesting: we find how organisations as distant from the hacker world as some of the largest Sufi brotherhoods in Senegal, scourged by immigration and the impact of distributed communications, plunged into a crisis and developed new, identity-based forms of commercial networks, which brought them closer and closer to phyles.

The study of phyles is not, at least today, the study of a mass phenomenon, nor is it leaping onto the bandwagon of an uncertain prophecy of social reform. It is the discovery, through the experience of a budding world, of the limitations of economic democracy and its forms. It is not at all a question of discarding the traditions and values of cooperativism. For a century and half, cooperativism has been living proof that, even under industrialism, it is possible to organise production differently, making people its centre. But the distributed network society can go even farther. Among other things, because the incentives it is based on in order to innovate and generate cohesion are different from those in industrial society.

In this book, we will discover how, paradoxically, the first phyle replicates forms whose origins lie in the first trade revolution, which took place in the Mediterranean between the 10th and 12th centuries, during the apogee of the Sea Republics and the great trade networks that linked the Muslim and Christian worlds. We will discover how much the new forms of democratic business organisation, which distinguish between community and demos, owe to medieval guilds. And above all we will see how the concepts of equality and fraternity are redefined and permeate the production and trade space creating a new kind of collective identity which takes personal freedom as its basic structural criterion.

The new world, which we are all exploring every day, sends us many signs of social and economic decomposition. This is not exactly an idyllic world. However, it still is an open world where the only path that is closed is turning back. The study of phyles is a bet on all that is cohesive and democratic in the new world of networks: a bet because the models on which we shall build our future will not be overly contradictory of those which still have a libertarian optimism about progress.”

Topic 1: Abundance Logic vs Scarcity Logic

“Abundance logic is a seminal concept introduced by Juan Urrutia in 2002 as the basis on which to understand what was then known as the “new economy”.

The classic example is the comparison between newspapers and the blogosphere. In a newspaper, with a limited paper surface, publishing one more line in an article entails suppressing a line somewhere else as in a zero-sum game. By contrast, in the blogosphere, a space where the social cost of an extra post is zero, any blogger’s publishing his or her information does not decrease anyone else’s publication possibilities. The marginal cost is zero. The need to collectively decide what is published and what is not simply disappears. As opposed to scarcity logic, which generates the need for democratic decision, abundant logic opens the door to pluriarchy.

In such a universe, every collective or hierarchical decision on what to publish or not can only be conceived as an artificial generation of scarcity, a decrease in diversity, and an impoverishment for all.

For a generation and a professional domain whose work tools work under such a logic, even economic democracy must be seen as a lesser evil, a truce with reality in those social spaces – such as business – where scarcity still prevails. In that way, innovators in the domain of social networks or Internet design rediscover traditions as old as cooperatives from a new perspective.”

Topic 2: Knowledge is always communal

“Interpretative, meaning-generating frameworks are in turn worlds resulting from a sustained interaction within a community which self-identified by means of its own knowledge system. For, in fact, knowledge exists only in community, to the extent that it is often the community which adjectivises knowledge: scientific community, scientific knowledge; faith community, theological knowledge, etc.

What goes for a kind of supposedly universal knowledge also goes for identitarian knowledge: from art to the particular knowledge of the imaginary communities of nation, ideology, or sex, through the meaninggenerating narratives of real communities, enterprises and families.

What the Internet has done is multiply the visibility and facilitate the generation of new knowledge spaces, identities, and communities, making it increasingly hard to homogeneously represent the map of social knowledge. Where there used to be a four-piece puzzle, we now have a jigsaw made up of millions of tiny pieces, the sea of flowers. Diversity makes us complex by making us face the mirror of the very diversity of our environments.

So-called netocrats are really context gardeners, information processors, communicators, hackers, bricoleurs who develop, transmit, or give value to contexts: who overlap them or break them in the organic dance of the great social digestion of information.

They have been professionally born and raised in a world in which the irreducible nature of diversity is obvious, where everything is both collaborative and identitarian, but where value is after all given by the coherence of the community they are members of and the recognition they obtain from it.”

Topic 3: In Phyles, Community precedes Enterprise

“Recognition and hierarchy do not go well together.

Forced cohesion tends to dissolve in a world where nothing is easier than jumping from one network to another own, than identifying with and plunging within an alternative context. Netocrat companies tend towards horizontality and the almost complete lack of hierarchies, as these are counterproductive when it comes to attaining the kind of incentives which motivate netocrats. For this reasons, Juan Urrutia proposes differentiating them from entrepreneurs and seeing them as we see scientists. They intend to make a living, but that is not their final goal.

What they really want is recognition and the possibility of continued learning.

In the midterm, netocrats feel more comfortable with the idea of living in an economically autonomous business community than creating communities around companies whose deep structure will still follow the industrial and hierarchical logic of the old world.

Those business-empowered communities are what are known as phyles. To begin with, all that is common to them all is the idea of the pre-eminence of communities.”

Topic 4: On the link between Fraternity and Innovation

“In a world where the largest portion of any product’s value arises from innovation, and therefore from the creative part of the production process, valuegenerating incentives are not those aimed at managers, but those which nurture community interaction and recognition.

This friction has now moved to the world of traditional business, as every restructuring of the incentive system ends up modifying the property structure. A business must be valuable to those who work, live, and trade with it. And its value derives, above all, not so much from bonuses and incentives as from a way of life.

Netocrats, Neo-Venetians, regard business management as one more duty of their community citizenship. Just as time is no longer split between work time (divine punishment) and life time (leisure), community and management are no longer mutually alienated, but rather are fused in a space that can only be described as fraternity.

The misunderstood Pope John Paul II once said that, while the 19th century had been the century of liberty and the 20th century had been that of equality, the 21st century would be the century of fraternity. Juan Urrutia, in The Coming Capitalism, analysed the reasons for this. Fraternity, which provides the foundation, beyond liberty and equality, for economic democracy, is based precisely on what business organisations need to survive in a global market which is undergoing a crisis and is, moreover, doomed to change: an identity which makes it possible to attain assignations otherwise unattainable in its absence and a taste for work in common which makes the existence of a balance easier.

As we shall see, it is no longer a matter of moral admonition, but something which companies themselves are increasingly willing to pay for. Teaching, preparing, and organising economic democracy as a path and as an experience is already a successful product.”