Holon is a term first coined by Arthur Koestler in his book The Ghost in the Machine to describe a phenomenon that is simultaneously a whole in itself, as well as a part of a larger system. The word itself is constructed from the Greek holos, which means whole, in combination with the suffix -on, which means part. 
Koestler was compelled by two observations in proposing the notion of the holon. The first observation was influenced by Nobel Prize winner Herbert Simon's parable of the two watchmakers, wherein Simon concludes that complex systems will evolve from simple systems much more rapidly if there are stable intermediate forms present in that evolutionary process than if they are not present.  The second observation was made by Koestler himself in his analysis of hierarchies and stable intermediate forms in both living organisms and social organizations. He concluded that, although it is easy to identify sub-wholes or parts, wholes and parts in an absolute sense do not exist anywhere. Koestler proposed the word holon to describe the hybrid nature of sub-wholes and parts within in vivo systems. From this perspective, holons exist simultaneously as self-contained wholes in relation to their sub-ordinate parts, and dependent parts when considered from the inverse direction.
Koestler also points out that holons are autonomous, self-reliant units that possess a degree of independence and handle contingencies without asking higher authorities for instructions. These holons are also simultaneously subject to control from one or more of these higher authorities. The first property ensures that holons are stable forms that are able to withstand disturbances, while the latter property signifies that they are intermediate forms, providing a context for the proper functionality for the larger whole.
Finally, Koestler defines a holarchy as a hierarchy of self-regulating holons that function first as autonomous wholes in supra-ordination to their parts, secondly as dependent parts in sub- ordination to controls on higher levels, and thirdly in coordination with their local environment.
Types of holons
An individual holon possesses a dominant monad; that is, it possesses a definable "I-ness". An individual holon is discrete, self-contained, and also demonstrates the quality of agency, or self-directed behavior.  The individual holon, although a discrete and self-contained is made up of parts; in the case of a human, examples of these parts would include the heart, lungs, liver, brain, spleen, etc. When a human exercises agency, taking a step to the left, for example, the entire holon, including the constituent parts, moves together as one unit.
A social holon does not possess a dominant monad; it possesses only a definable "we-ness", as it is a collective made up of individual holons.  In addition, rather than possessing discrete agency, a social holon possesses what is defined as nexus agency. An illustration of nexus agency is best described by a flock of geese. Each goose is an individual holon, the flock makes up a social holon. Although the flock moves as one unit when flying, and it is "directed" by the choices of the lead goose, the flock itself is not mandated to follow that lead goose. Another way to consider this would be collective activity that has the potential for independent internal activity at any given moment.
- Koestler, A. (1968). The Ghost in the Machine. McMillan: New York.
- Herbert, S. (1968). The Sciences of the Artificial. MIT Press: Boston.
- Wilber, K. (2007). The integral vision. Shambhala Publications: Boston.
- Luhmann, N. (1995). Social systems. Stanford University Press: California.