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The foundation of practical wisdom is derived from Aristotle's Nicomachean Ethics. It deals with the question: How best shall we live?
To live well is to act well. To act well is the ability to do the right thing at the right time, in the right way, and for the right reason. To do that, we need discernment and the will to do so.
To merely have practical intelligence and skill can run the risk of what Aristotle called "cleverness" or "shrewdness" - the ability to accomplish one's goals regardless of the rightness or consequences of those goals themselves.
Aristotle suggests that having the right character puts one on a much better footing. To know the intention of an action is to know its real aim. To act rightly, we need to know the right ends we aim for, the motivation to want those ends (i.e. moral will), and the means to accomplish them (i.e., character virtues). This is practical wisdom.
For social institutions, like the family, the community, businesses, hospitals, governmental organisations, etc., their true aim must be known to function well.
Unhinged from its larger purpose can lead them astray. For example, politicians that vie for power rather than service, doctors working for money rather than humans, news outlets sensationalising for rating instead of objective reporting, etc.
One avenue for practical wisdom's application is in system changers. This comes back to Aristotle's original vision for legislators and politicians, whose primary obligation was to structure organisations and their practices to encourage others to learn to act wisely.
Practical wisdom cannot be learned in the narrow sense of learning as reading books or listening to lectures. It is embedded within the actual practices of a given role or vocation and can only be learned through hands-on, lived practice.
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