Phyles: the new neonomadic p2p business structure for the network age

Phyles are business-empowered communities: they are not companies linked to a community, but transnational communities that have acquired enterprises in order to gain continuity in time and robustness

This new form is described in a remarkable and must read book, Phyles: Economic Democracy in the Network Century, written by David de Ugarte.

David de Ugarte:

“They are not companies linked to a community, but transnational communities that have acquired enterprises in order to gain continuity in time and robustness. They are phyles.

Phyles may function democratically and be cooperative-based, as in the case of the Indianos, or else they may have a small-business structure and even a religiously inspired ideology, as in the case of the Murides. But they share two key elements: they possess a transnational identity, and they subordinate their companies to personal and community needs.

Phyles are “order attractors” in a domain which states cannot reach conceptually and in areas that states increasingly leave in the dark: phyles invest in social cohesion, sometimes even creating infrastructures, providing grants and training, and having their own NGOs. Transnational thinking allows them to access the new globalised business before anyone else. A phyle’s investment portfolio may range from renewable energies to PMCs, from free software initiatives to credit cooperatives. Their bet is based on two ideas. First: transnational is more powerful than international. Second: in a global market the community is more resilient than the “classic” capitalist company.

Winning a bet in the cyberpunk and postmodern world we live in nowadays amounts to nothing but resisting and thriving. In order to do so, one must truly belong in this world, truly love its frontiers. Phyles are the children of its explorers: of free software, virtual communities, cyberactivism, and the globalisation of the small.”

What are their Characteristics?

1. 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.” (

Phyles are Transnational

“A phyle is not a subset of the imaginary national identity. As a political space, if something defines its frontiers, it is the languages in which the internal debate takes place. There are no Spanish, Cameroonian, or Chinese phyles. There are phyles working in Latin, Bantu, or Chinese languages, but the frontiers of the community are not determined by belonging to a nationality or a state.”

Phyles are marked by Abundance 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.”

Phyles are marked by interconnection

“Industrial-age business was based on specialisation. The magic words were scale, expertise, and so on. By contrast, phyles are based on interconnection and innovation. We know that innovation increases when there are more interconnections in a network, making it more distributed. And phyles are communities which generate value by commercialising it through businesses. The distance between both worlds is that between classic capitalism and the coming capitalism described by Juan Urrutia.

In the former, all innovation would generate a temporary monopoly, sometimes even a stable industry. There was time. Specialising was the best way to improve within a product paradigm, to become more efficient. This was an engineers’ world.

In the coming capitalism, on the other hand, past profits tend to dissipate, as speed and ease of copy are so high that the only way to maintain a certain advantage over competitors is to allow oneself to be seized by change, to continually innovate, and thus, when many agents behave like this, to complete markets, to make in turn a world where past profits dissipate even more quickly.”

Deliberation creates community and constitutes the ‘politics’ of the phyle

“Deliberation follows abundance logic and produces diversity, not homogeneity. In a phyle, everything is deliberated in common, without expecting or needing consensus on most things. Common decisions are only made with regard to what is scarce, basically economic matters. And given that what is scarce constitutes natural grounds for conflict, it requires an even more documented and powerful deliberation.

Deliberation is a sign and a materialisation of that taste for being together among those who share an identity which we call fraternity, and which delimits a community.

One does not deliberate in order not to have to decide: one deliberates to reduce the scope of democratic decision – and thus of the weight of the economic in management – to a minimum, keeping the margins of individual decision as broad as possible, encouraging diversity, and, at the same time, encouraging cohesion. It is this equilibrium that we call “politics” in phyles.”

David de Ugarte elaborates on the transnational nature of phyles:

“One of the most important characteristics of phyles is their transnational nature. Phyles don’t think, or are thought, from the nation or from the state.

The We in a phyle has no national adjectives. The cohesion born within the fraternity of a community and, even further within it, from the equality of the demos ignores the dividing lines between imaginary national communities.

If there is something a full member of a phyle is very clear about, it isthe phyle demos and its origins, which lie not in any nation but in the free interaction among a group of specific people, in a real community, in a material process of knowledge generation. A knowledge that is closer, more tangible, practical and identificatory than any national imaginary which might want to absorb it.

Whereas nations are what we invented to understand the material origin of our lives in the intangible and distant world of the emergence of national markets and early capitalism, phyles explain it all over again in the specific terms of the real community, of the people we know by their names and surnames and whom we come into contact with, even if only virtually. Whereas nations turned us into the product of a national spirit, the democracy of phyles makes us the main characters in a History that is no longer a parody of classical theogonies (deified nations, heroic leaders), but a little Bible for domestic use, the tale of the origins of a tribe that decided to be its own tutelary deity. From the constructs which are the product of nations we move on to a world of phyle creators and protagonists.

Whereas nations represented the world as a jigsaw made up of many flat pieces, each one in its own colour, phyles narrate it as a series of alliances, routes and journeys through time which leave a sediment of consensual, open knowledge.

Phyle business and strategy are not thought of in national terms. To do so would be to align ourselves with the point of view of the taxman, whose final accountability lies with the accounts of a territorial state. A phyle represents itself as a single common metabolism in a world in which the flow of information and knowledge makes it possible to locate the centre whenever it is most efficient in minimal time. It is not a question of exporting to and fro, it is about materialising production itself at different times and places, in each of the passagia the Neo-Venetian year. It is not a matter of consolidating the accounts of an internationalised activity. It is about quartering, for tax purposes, the operation of a single economic metabolism into accounts which are taxable by each state.

From this point of view, a phyle is transnational even if its trade does not go beyond the frontier of a single state at one point, and even if at that point all members of its demos have the same passport. The national limit is, in any case, just a mere conjuncture. There are no implicit genealogies, there is no historical We prior to the specific will of one’s own adhesion and integration. There is no intermediate imaginary between the hyperproductive tribe – living in the pluriarchic fraternity of permanent deliberation – and the generic empathy towards the human.”

4 Comments Phyles: the new neonomadic p2p business structure for the network age

  1. AvatarSepp

    Thank you Michel, for digging out this book.

    It’s a highly interesting discussion that includes much history of how international trade was established in the middle ages and how this might well be relevant to today’s business environment.

    I find my own business is running in a way much more closely related to what de Ugarte calls a Phyle, rather than the traditional command-and-control structure most businesses follow today…

    One important realization contained in the book: “We have to learn how not to grow”. The remark was made in response to the falling-apart of the Mondragon co-operatives after they were converted to businesses with a more “traditional” style of management.

  2. AvatarSamer

    Interesting, but I still don’t see a practical example of a phyle working on today’s world. Could you, Michel, or anyone, provide invented or real examples in today’s world, to illustrate better the theoretical description?

  3. AvatarMichel Bauwens

    Dear Samer,, consider themselves a phyle, and so do I.

    Here is how they describe their activities in relation to coops:

    “”the main question is that the phyle is a distributed network of people formed from transnational deliberative process who develop an identity alternative to national identity and then build up an Economy for themselves.

    So, Indiano’s phyle have coops (where we work), have associations, it takes part in foundations, have shares in limited companies and even in corporations… The only subject of property is the phyle as itself.

    We could close tomorrow every company and invest the money in shares, and the phyle will still exist and be healthy. Coops, companies, associations, etc. are indeed different economic tools for us. Is the transnational community what is important.

    For understanding the phyle is easy to imagine us as a «micro-country without territory» without the concept of «abroad» but with a kind of local economy.

    The workers coop movement is international (national clusters, local identity etc.) but some few big coop groups (Mondragon) are becoming increasingly transnational (suffering a lot of ideological problems in the process btw).

    Even we took part these year in the «National» Worker Cooperative Conference 2010 in USA [2] and we are members of both Spanish and Basque worker coop’s federation and we will associate to Uruguayian coop federation this year too, the fact is that the kind of problems of these territorial coops federations have is not very close to ours (the majority of them legal and state-centered, linked to a certain dependance of subsidies and public contracts, etc.)

    We share more worries with Mondragon (intelligence, travel security, visas, need for transnational infraestructures, need for coordinating commercial and local development investments…).

    So, we have very good relations with the intl coop movement in Spanish, Basque, Aymara and Portuguese languages. We have funded coops in four countries, from los Andes to the Cantabric Sea, and we work now with Mondragon in the development of the first transnational platform of intelligence and diplomacy services for cooperatives (but not only cooperatives). It will be officially funded in three weeks in Arrasate (the town known before as Mondragon.”
    (p2presearch mailing list November 2010)

    They also cite the Murides, a Sufi brotherhood of the Wolof people in Senegal, who you see selling “prada” bags and luxury watches on European beaches, as an example of an ethnic phyle, see

    More at

  4. AvatarPoor Richard

    Various authors have suggested the concept of phyles or new tribes for characterizing p2p culture, but I think I prefer the idea of federated GUILDs. A guild can function just as envisioned above for a phyle but does not carry the same connotation as a tribe, clan, or phyle of having a primary basis in familial kinship, nor the historical reputation (in certain cases) of rebellion against central authority. The subtle but important difference is that a guild is all about practical know-how and about taking care of business– not about ideology or revolution (at least on the surface).


    1. an organization of persons (PEERS) with related interests, goals, etc., especially one formed for mutual aid or protection.
    2. any of various medieval associations, as of merchants or artisans, organized to maintain standards and to protect the interests of its members…


    The main point on which I think guilds differ with David de Ugarte’s characteristics of phyles above is “1. In Phyles, Community precedes Enterprise”. In the case of guilds, community and enterprise are two sides of one coin. I think this fits well with p2p culture.

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