Economic Wisdom for Managerial Decision-Making
The paper argues that Aristotle’s “phronesis” can be explained as social practice wisdom, a discursive system linking mind and social practice to produce wellbeing and human flourishing. It uses the contemporary conceptualization of phronesis and its rela
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Economic Wisdom for Managerial Decision-Making Mike Thompson
Abstract The paper argues that Aristotle’s “phronesis” can be explained as social practice wisdom, a discursive system linking mind and social practice to produce wellbeing and human flourishing. It uses the contemporary conceptualization of phronesis and its related metatheoretical construct of wisdom principles to bring a practical dimension to wise decision-making. The paper first reviews progress in the understanding of wise leadership within leadership studies and the principles of wisdom proposed by McKenna. Against this taxonomy it then recontextualizes the numerous calls in leadership literature for qualitative, research. It presents samples and interprets the resulting theory based in original material from interviews with 184 managers generated by the Wisdom Project. The paper concludes that an economic wisdom is present in the minds of managers. Economic wisdom could offer resources for management education and development across all business domains to address the challenges of the VUCA world with a more realistic, holistic and planet-friendly approach.
The search for wisdom in organizational, corporate and governmental practice has become more apparent as the modernist faith in positivist, determinist and objectivist rationality has waned. The case for homo oeconomicus has been eroded since the first serious wounds were inflicted by Amartya Sen (1977) and Kahneman and Tversky (1979). In the past three decades modernist economics has been assailed by psychologists and philosophers who believe that the assumptions of modern economics are fundamentally flawed (Sen 1987; Werhane 1989; Griswold 1999; Brown 1994; Solomon 2006; Raphael 2007). In the words of Bevan and Werhane: The flaw seems to be that pure “individualism” is considered to be at the core of Smith’s thinking. Stripped of his/her original sociality, the individual becomes a self-centered agent M. Thompson (*) GoodBrand, London, UK China Europe International Business School, Shanghai, China University of Victoria, Victoria, BC, Canada e-mail: [email protected] © Springer International Publishing AG 2017 P. Rona, L. Zsolnai (eds.), Economics as a Moral Science, Virtues and Economics 1, DOI 10.1007/978-3-319-53291-2_13
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and the invisible hand is transformed from a simple metaphor into the concrete hand of the idealized market and Adam Smith’s “invisible hand” economics profoundly misunderstood as raw “individualism”. (Bevan and Werhane 2015: 330)
The basis of Smith’s market society is not only the “self love” in The Wealthof the Nations (1776) but also the moral sentiment and “fellow-feeling” in The Theory of Moral Sentiments (1790): we are intrinsically social beings and selfish egotistical beings are not typical of homo sapiens. As a consequence, we have unavoidable responsibilities to, and because of, others in commercial dealings (Bevan and Werhane 2015: 327). Elsewhere in this volume, Luk Bouckaert argues that Adam Smith is one of the first moral philo
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