1.3.3: Putting knowledge to use: becoming practically wise
Abstract thinking about money easily drifts into self-deception; for money to serve the Good Life, we need to anchor it to a practical philosophy
Abstract notions of wisdom are all well and good, but what to do with money is an intensely practical topic. ‘Wisdom,’ wrote Matthieu Ricard, ‘is precisely that which allows us to distinguish the thoughts and deeds that contribute to authentic happiness from those that destroy it. Wisdom is based on direct experience, not dogma.’[i]
The Greeks – unsurprisingly – had a word for particularly practical wisdom: phronēsis. It’s the sort of wisdom derived from our perspectival and participatory forms of knowing. It stands in contrast to the cross-contextual sense of wisdom more commonly conjured up in ancient contexts, which they called sophia. Where sophia is concerned with understanding underlying principles, phronēsis is pragmatic, variable, context dependent, and oriented towards action. It implies good judgment, helpful habits, and excellent character. In some spirits it can mean ‘mindfulness’. In others (including Part Three of this book) it simply means not being an idiot. It’s less about knowledge of rules, and more about knowing what to do in a given situation. It’s the difference between telling someone to calm down and getting them to breathe deeply. The concept of phronēsis also has important implications when we look at spotting a good adviser in Part Four.
We need sophia-esque wisdom too, of course. But people rarely go wrong because of a lack of understanding of principles or even the processes in which those principles fit. They go wrong because they fail to use such understanding to make their lives better. They fail to grasp the interpretive significance of the descriptive knowledge. Investments provide unlimited scope for crunching numbers, but it’s practically pointless if the crunching doesn’t improve your living.
The first two layers of knowing are textbook knowing. In contrast, ‘Phronēsis,’ Aristotle tells us, ‘is concerned with human affairs, namely, what we can deliberate about.’ No one can deliberate about what cannot be otherwise. You cannot debate the output of a mathematical equation. Nor can you deliberate, Aristotle continues, ‘about what has no goal that consists in a good achievable in action.’[ii]
The goal of phronēsis – of practical wisdom – is not only how to choose a path to an end, but how to choose the end most consistent with the aim of living well overall. For a tool as convertible as money, with almost infinite options for deploying it towards the intrinsically individual goal of a Good Life, there is a surprising confluence of ways in which it is wielded. Especially so, given that the most common ways have an obviously terrible track record of not working very well.
Recall our earlier contemplation of the ways in which our deliberation goes awry – misunderstandings in problem formulation, and fallacies in reasoning towards a solution. Phronēsis is the process of overcoming these: achieving the right things by the right steps. It is in this way the antidote to another concept we’re all aware of (in life, if not in language) – akrasia. Akrasia is the unhelpful force that prevents us from doing what we deep down want to do, know well enough how to do, know we ought to do, but for some reason don’t do. It’s our procrastination, our misprioritisation, and our falling prey to distraction all in one. It is impossible to be both phronetic and akratic. Practically wise people do not act against their better judgment. Practically wise people are not blind to the right actions to take with money.
Money problems are mindset problems. Specifically they are problems of self-deception. We adopt and believe stories about money that do not serve our higher aims. Philosophy is a cure for self-deception. In the hierarchy of our cognitive development, the philosopher is to the adult as the adult is to the child. Better able to both zoom out and zoom in, to better understand the world, themselves, and the perspectival and participatory interplay of the two. Better able to see through the veil of self-deception to the Good Life, and to live it, as a natural side-effect of their cognitive experience. But what, precisely, is the Good Life that we want to be living?
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 In human contexts, the answer is never accumulating more knowledge in a propositional or procedural sense. A paper that counted for a quarter of my degree was on money in an abstract political, social, and economic context. It taught me nothing of any relevance when advising people how to make more of the money in their lives.
 Doing idiotic things is still entirely possible, of course; the point is that such things should not be derived from a positioning of oneself as an idiot.
 In Aristotle’s words, ‘It seems to be characteristic of the practically wise person to be able to deliberate nobly about what is good and beneficial for himself, not in particular respects, such as what conduces to health or strength, but about what conduces to living well as a whole.’ (from Nicomachean Ethics). See also Principle #2: There is only one goal.
[i] Matthieu Ricard, Happiness
[ii] Aristotle, Nicomachean Ethics