Name an example of a company that you think addresses both individual level and system level challenges? Please reference Cha
Assignment: Write a 1-page reflection answering the following question: Name an example of a company that you think addresses both individual level and system level challenges? Please reference Chapter 4 and whether you think the company follows an economistic or humanistic blueprint and why.
H U M A N I S T I C M A N A G E M E N T
In a world facing multiple crises, our foundational institutions are failing to offer effective solutions. Drawing on the emerging consilience of knowledge, Michael Pirson debunks the fundamental yet outdated assumptions of human nature that guide twentieth-century management theory and practice – as captured in the “economistic” paradigm – and instead provides an urgently needed conceptual and practical “humanistic” framework, based on the protection of human dignity and the promotion of well-being. By outlining the science-based pillars of this innovative system, Pirson provides a new model for the responsible twenty-first- century leader seeking sustainable ways to organize in a world of crisis. Highlighting relevant applications for research, practice, teaching, and policy, this book is ideal for graduate students and professionals seeking to develop their understanding of responsible business, business ethics, and corporate responsibility.
M I C H A E L P I R S O N is Associate Professor of Management, Global Sustainability, and Social Entrepreneurship, and Director of the Center for Humanistic Management at Fordham University. He cofounded the Humanistic Management Network and serves as Editor of the Humanistic Management Journal. He has won numerous awards, including from the Academy of Management, and has published extensively on humanistic management, philosophy, and business ethics.
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Advance Praise
This book is an absolute must read to any business school student and leader of any type of organization, from profit to non-profit, small to large, business to political!
Christopher Arbet Engels, Chief Medical Officer Poxelpharma, former VP at Biogen, Boston Massachusetts
In Humanistic Management, Michael Pirson argues for a significant shift in how we all – companies and individuals alike – need to conceive the practice of managing today and most importantly tomorrow, putting the old “economistic” paradigm behind us and moving rapidly towards a more humanistic paradigm for managing organizations and our economic institutions. Read this important, accessible, and beautifully-developed book. You will be glad you did!
Sandra Waddock, Boston College
As a 30-year veteran of Wall Street, I lived through many of the examples cited by Dr. Michael Pirson in exposing the shortcomings of Economistic leadership. His is a well-researched and compelling case for the critical importance of empathy, dignity and collaboration in the success of 21st century enterprises.
Ron D. Cordes, Co-founder of AssetMark and the Cordes Foundation
Humankind looks over the edge of a precipitous cliff, reflected in business scandals and public mistrust. The path we have taken stops at the edge. In Humanistic Management Michael Pirson points to another path, one away from the cliff, toward a future where dignity counts as much as maximization.
Thomas Donaldson, The Wharton School University of Pennsylvania
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Finally! Here is a book that explains what “humanistic management” is all about. Pirson’s work is an important step towards a change of paradigm in the way we think, teach, practice business.
Claus Dierksmeier, Director of the Weltethos-Institut
This is an important book. It explains how the narrative of business is changing, and why we should adopt this more human understanding of business. Read it more than once. We can and should make business better.
R. Edward Freeman, University of Virginia, The Darden School
This book is a revelation! So many people in senior management positions today feel a huge disconnect between their personal values and those of their businesses and the wider economy. They long for a new story-a new way of doing business. This brilliant book not only explains why they feel as they do but shows how to construct an economy that reflects who we truly are as people.
Stewart Wallis, Visiting Professor, Lancaster University and previously Director, New Economics Foundation
Michael Pirson provides a sterling upgrade to the inadequate business economic theories that currently shape democratic capitalism. With this brilliant book, Pirson helps readers see a path toward better theory, which has the potential of spurring better practice and a more meritorious future for us all.
Roger Martin, Institute Director of the Martin Prosperity Institute and the Michael Lee-Chin Family Institute for Corporate Citizenship,
Rotman School of Management
Michael Pirson re-introduces humanity into problems of economic organizing. His book is both a masterpiece of interdisciplinary scholarship and an easy-to- read appeal to common sense in how we live and work. If you are struggling to find purpose and meaning in these turbulent times, read Humanistic
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Management. It offers a clear, accessible, dignity-centered bridge to an economy in service to life.
Chris Laszlo, Weatherhead School of Management and Case Western Reserve University
An important book, it provides critical foundations for a new narrative of an economy in service to life.
L. Hunter Lovins, President, Natural Capitalism Solutions
Managers and policy makers who want to improve business and society of tomorrow should read Pirson’s thoughtful analysis. Shifting business strategy towards dignity and wellbeing can benefit not only employees but society at large.
Douglas Frantz, Pulitzer Prize winner and Deputy Secretary General, OECD
This is an excellent book which expounds on the basics for stakeholder responsibility: protection of dignity and contribution to wellbeing.
Klaus Schwab, Executive Chairman of the World Economic Forum
Michael Pirson provides a much needed humanistic perspective on management given the pervasive mindlessness of current business practices.
Ellen J. Langer, Harvard University
In Humanistic Management, Michael Pirson questions decades of teachings about what motivates people and makes them happy. We humans are complicated beings, seeking not only stuff and security, but also connection and meaning. Pirson makes the case that with a deeper understanding of human motivation, we can design better economies and companies, which of course are made up of people. Backed by deep academic research and credibility, Pirson takes us on an important and highly readable trip toward a new theory of management.
Andrew Winston, bestselling author, Green to Gold and The Big Pivot
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Very few people have the intellectual breadth to accomplish what Michael Pirson did in this remarkable book. Weaving together insights from a variety of disciplines, he has shown us what lies at the core of our shared humanity –our desire to be treated with dignity– and how crucial it is to develop a paradigm for business that recognizes his fundamental truth.
Donna Hicks, Harvard University
Humanistic Management is a much needed and timely articulation of humanistic perspectives on organizations. For researchers, managers, policy makers and teachers alike this book is a wakeup call to take humanistic perspectives seriously. However, beyond waking us up through research, examples, and arguments, the book provides direction and inspiration about how to move down the pathways toward greater well-being and human dignity.
Jane E. Dutton, Robert L. Kahn Distinguished University Professor of Business Administration and Psychology
Pirson’s Humanistic Management frames key questions, and provides good tools, for cultivating businesses that affirm rather than violate human dignity and further rather than thwart the advance of well-being for our own species and for nature as a whole.
Vincent Stanley, Yale University, Visiting Fellow at INSEAD, and co- author of The Responsible Company with Yvon Chouinard
Michael Pirson provides the long overdue reembedding of economic theory and managerial practice into its scientific and real-life contexts: from ethics to democracy, from psychology to ecology. Something that got completely separated and fragmented is being healed and becoming whole again. Humanistic Management transforms an impoverished chrematistic ideology back into what it ought and originally was thought to be: an economy serving the common good.
Christian Felber, Vienna University of Economics and Business, initiator of the international Economy for the Common Good movement
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We are living in a time where old understandings of politics, economic organization and management are collapsing under their own weight. The pernicious idea that corporations exist to create shareholder value has reached the end of its useful life. What would organizations look like in an economy organized around the creation of well-being? Humanistic Management provides a solid and grounded framework for creating these new ways of management.
Jerry Davis, Michigan Ross School of Business, and author of The Vanishing American Corporation
An insightful book for the 99% – and the 1% who think that they run the world should take a close look, too.
John Elkington, Chairman & Chief Pollinator, Volans; co-founder of Environmental Data Services (ENDS) and SustainAbility; and co-author
with Jochen Zeitz of The Breakthrough Challenge
We are facing a crisis decades in the making; a crisis created by the belief that economic growth would –on its own– deliver human dignity. With a powerful combination of age-old wisdom and modern scientific evidence, Michael Pirson shows why this was not and what can we do to find our way out.
Camilo A. Azcarate, Manager, The World Bank Group
In this book Michael Pirson takes us on an intriguing journey of tracing the sources and foundations of an emerging paradigm that can inspire the next generation of management research, management practice, and leadership capacity building.
Otto Scharmer, MIT Sloan School of Management; Founder, Presencing Institute; Author, Theory U
Michael Pirson draws upon a wide-ranging and rich set of inputs –from economics, psychology, sociology, management theory, neuroscience, sociobiology, history– to craft nothing short of a compelling and inclusive new narrative for human activity. In this relatively short book, given the breadth of
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its agenda, Pirson manages to define and defend just the sort of “new story” that our world so desperately needs and in so doing, he provides the “scripts” and arguments required for us to voice its case.
Mary C. Gentile, PhD, Creator/Director of Giving Voice To Values and Professor of Practice, University of Virginia Darden School of Business
This is a critically important book in a time where the world is confronted daily with the limitations of the current economic system. It’s a comprehensive, well-researched and practical guide to an inclusive and sustainable global economy.
Patrick Struebi, Founder and CEO, Fairtrasa Group, Ashoka Global fellow and Schwab Foundation fellow
In Humanistic Management: Protecting Dignity and Promoting Well-Being, Michael Pirson provides a much-needed update of flawed assumptions about human motivations that have distorted policies and practices, showing how caring and humane organizations are essential for better lives, businesses, and societies. This excellent book is an important contribution to the growing leadership and management literature paving the way for a more partnership- oriented way of living and making a living.
Riane Eisler, author of The Real Wealth of Nations: Creating a Caring Economics and President, Center for Partnership Studies
The influence of business and how business is done is now pervasive in our lives. Unfortunately, most of business has become dehumanized – people are treated as merely functions or objects in the pursuit of maximum profits. Michael Pirson shows us how we can restore human beings to the center, where they rightly belong. This book is a landmark contribution to our understanding of how to make this happen in practice and in our research and teaching.
Raj Sisodia, Babson College; Co-founder & Chairman Emeritus, Conscious Capitalism Inc.
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H U M A N I S T I C M A N AG E M E N T
Protecting Dignity and Promoting Well-Being
Michael Pirson Fordham University, New York
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University Printing House, Cambridge CB2 8BS, United Kingdom
One Liberty Plaza, 20th Floor, New York, NY 10006, USA
477 Williamstown Road, Port Melbourne, VIC 3207, Australia
4843/24, 2nd Floor, Ansari Road, Daryaganj, Delhi – 110002, India
79 Anson Road, #06–04/06, Singapore 079906
Cambridge University Press is part of the University of Cambridge.
It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international
levels of excellence.
www.cambridge.org
Information on this title: www.cambridge.org/9781107160729
DOI: 10.1017/9781316675946
© Michael Pirson 2017
This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University
Press.
First published 2017
Printed in the United Kingdom by Clays, St Ives plc
A catalogue record for this publication is available from the British Library.
Library of Congress Cataloging-in-Publication Data
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Names: Pirson, Michael, author.
Title: Humanistic management : protecting dignity and promoting well- being / Michael Pirson, Fordham University, New York.
Description: Cambridge ; New York, NY : Cambridge University Press, 2017.
Identifiers: LCCN 2017008344| ISBN 9781107160729 (hardback) | ISBN 9781316613719 (pbk.)
Subjects: LCSH: Management–Social aspects. | Organizational sociology.
Classification: LCC HD30.19 .P57 2017 | DDC 658.4/08–dc23 LC record available at https://lccn.loc.gov/2017008344
ISBN 978-1-107-16072-9 Hardback
ISBN 978-1-316-61371-9 Paperback
Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is,
or will remain, accurate or appropriate.
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Dedicated to
Marina,
Maximilian,
Leonard, and
Lucas
with appreciation, gratitude, and love.
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Contents Preface
Introduction
Part I Foundations of Humanistic Management
1 Two Narratives for Business
2 Understanding Human Nature
3 A New Humanistic Model
4 Economistic and Humanistic Perspectives on Organizing
5 Dignity and Well-Being as Cornerstones of Humanistic Management
6 Economistic and Humanistic Archetypes of Management
Part II Applications of Humanistic Management
7 Developing Humanistic Management Research
8 Developing Humanistic Management Practice
9 Developing Humanistic Management Pedagogy
10 Developing Humanistic Management Policies
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Concluding Remarks
Index
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Preface
Dear Reader, While traveling the world to talk about the concept of Humanistic
Management, I have frequently been asked to recommend books providing a short overview. My answer has always been: “There are none.” Then I would slowly add: “Yet.”
This book is the result of various efforts, including numerous collaborations within the Humanistic Management Network. Together with Shiban Khan, Ernst von Kimakowitz, Heiko Spitzeck, Wolfgang Amann, Claus Dierksmeier, Consuelo Garcia de la Torre, Osmar Arandia, and many others, I was one of the cofounders of the Humanistic Management Network some twelve years ago. Since then, more than twenty national interest groups and chapters of the network have been established across the globe. We have organized numerous global conferences and events to discuss the role of management in a world fraught with problems. In addition, we have published more than fifteen books and several special issues in academic peer-reviewed journals. This book is one of the first attempts to provide an overview of Humanistic Management as an alternative paradigm for Management. It cannot, of course, be definitive in any way – the field is still emerging. The point of this book is thus to introduce the basic paradigmatic ideas that have emerged from the collaborations of different groups from various academic disciplines, including practice and public policy, over a little more than a decade.
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The main purpose of this overview is therefore to inform and stimulate further discussions around the two questions that I consider fundamental: Who are we as people? And how can we organize to create a world that works for all, or as we say, a life-conducive economic system?
There may be a plurality of approaches toward more humanistic management. In the following pages, I will present one approach. It is intended to be broad and inclusive, yet naturally limited by my personal perspective. I want to thank Christian Felber, Donna Hicks, Hunter Lovins, Roger Martin, Paula Parish, and Sandra Waddock for their helpful comments on prior versions of the book. I acknowledge the remaining limitations and am responsible for all persisting errors.
This rather massive undertaking would not have been possible without the wonderful partnerships with my colleagues within the Humanistic Management Network across the globe; the rich collaboration with the Global Ethic (Weltethos) Institute in Tuebingen, Germany, the inspiring partners at the Leading for Well-Being consortium, especially Hunter Lovins, Chris Laszlo, David Levine, James Stoner, and Andrew Winston; as well as my colleagues at the Academy of Management. I am equally appreciative of the support I have received from Fordham University and its Center for Humanistic Management in New York.
Finally, my heartfelt thanks to my wife Marina and my kids Max, Leo, and Lucas, who would have preferred their daddy play soccer with them rather than write a book.
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Introduction ◈
The Need for a New Paradigm in Management
As you can witness almost daily, we live in tumultuous times. We face an array of global crises, ranging from increasing inequality and poverty, to fundamentalist terrorism and war, to mass migration and environmental destruction, all of them amplified by climate change. These crises require a fundamental rethinking of how we organize at the global political level, the societal level, the economic level, and the organizational level. The economic system has become increasingly dominant, and the current roadblocks toward progress challenge the way we organize, think about, and do “business.”
Einstein famously stated: “We can't solve problems by using the same kind of thinking we used when we created them.”1 Nevertheless, mainstream business practitioners, as well as business school educators, seem to lack an alternative way of thinking. William Allen, the former chancellor of the Delaware Court of Chancery, notes that “[o]ne of the marks of a truly dominant intellectual paradigm is the difficulty people have in even imagining an alternative view.”2
The Humanistic Management Network has worked on conceptualizing this much-needed alternative paradigm for business – a
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humanistic paradigm, one based on the protection of dignity and the promotion of well-being rather than mere wealth. This book starts by describing the dominant narrative of the current worldview – an economistic paradigm focused on wealth acquisition. The basic argument is that our understanding of “who we are as people” fundamentally influences the way we organize individually, in groups, in organizations, and in society.
In the following pages, I present both narratives in business: the dominant model representing “homo economicus,” which accurately describes only about 1 percent of the population; and the alternative “homo sapiens” model, which represents the remaining 99 percent of us. While there is scientific evidence to support the latter perspective, the economics and management disciplines have memetically adopted an understanding based on inaccurate, axiomatic assumptions. This homo economicus worldview of human beings as uncaring and narrowly self- interested has influenced the way business structures are set up (limited liability, focus on profit maximization). The homo sapiens perspective allows us to understand the importance of care, the notion of human dignity, and the evolutionary reasons for humans only surviving when organizing for the common good. By adopting this perspective we can envision organizations as caring communities that converge to produce for the benefit of the common good.
In collaboration with the Humanistic Management Network and beyond, scholars have chronicled numerous organizations that follow the humanistic paradigm, which succeed because they focus on the protection of human dignity and the promotion of societal well-being. Some of these organizations are highlighted in Chapter 8. The fact that many such organizations are run successfully, and often more profitably over time,
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proves that there are alternatives to the current economistic understanding of how best to organize human endeavors.
Humanistic management scholars focus on human dignity, described by Kant as that which escapes all price mechanism and which is valued intrinsically (freedom, love, care, responsibility, character, ethics). This, they argue, has superior theoretical accuracy to the current paradigm. In addition, if the end goal of organizing were expanded to include well- being or common good, scholars can demonstrate how business might play an active role in solving current global problems.
In the first part of the book, the basic conceptual foundations of humanistic management are presented.3 In the second part of the book, the applications of the humanistic management perspective are outlined for research, practice, pedagogy, and policy. In the first chapters, the notion of humanistic management as an organizing principle for the protection of human dignity and the promotion of human flourishing within the carrying capacity of the planet are introduced. This notion is becoming increasingly relevant given the multitude of problems humanity faces. In addition, the dysfunctionality of the existing, dominant paradigm is demonstrated by showing that it violates human dignity and undermines human flourishing, while constantly disregarding the planetary boundaries. A humanistic perspective of human nature is presented, outlining the consequences of this perspective for groups, organizations, and society. The basic pillars of the humanistic management paradigm present a framework for differing organizing archetypes. The book suggests that these archetypes can help guide a transition toward more humanistic management practice, pedagogy, and management-related public policy. It examines the research implications and specific applications by means of selected examples. Moreover, the book suggests that a humanistic paradigm is critical for
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academic thought leaders, business leaders, civic leaders, political leaders, as well as anybody concerned with the future of humanity.
Chapter 1 outlines the basic concept of humanistic management and contrasts it with the mainstream view of business. Chapter 2 examines the differing assumptions about and insights into human nature. Chapter 3 presents a humanistic understanding of human nature, which can serve as a cornerstone of management research, practice, pedagogy, and policy. Chapter 4 presents the consequences of such a humanistic perspective on organizing, providing examples, among others, for business strategy, governance, leadership, and motivation. In Chapter 5, the basic pillars of humanistic management, human dignity, and human well-being are outlined in greater depth. Based on these pillars, Chapter 6 suggests different archetypes for thinking about management, which inform research, teaching, practice, and policy making.4 Chapter 7 explores how these archetypes can support a transition toward more humanistic management research.5 Conversely, Chapter 8 investigates how these archetypes can support a transition toward more humanistic management practice. Thereafter, Chapter 9 explores how these archetypes can support a transition toward more humanistic management pedagogy, and Chapter 10 how they can support a transition toward more humanistic management policy. The concluding chapter presents a summary and outlines pathways toward a collaborative approach to a more human-centered economy.
The book is meant to be a stepping-stone to facilitate further, rich conversation and collaboration.
Notes
1 Albert Einstein. BrainyQuote.com, Xplore Inc, 2016. www.brainyquote.com/quotes/quotes/a/alberteins121993.html, accessed
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June 27, 2016.
2 Allen, W. T. (1993). “Contracts and communities in corporation law.” Washington & Lee Law Review, 50, 1395–1407. (Cited from Page 1401).
3 Readers interested in a more thorough philosophical treatment of the humanistic management paradigm should check out Claus Dierksmeier’s book: Reframing Economic Ethics- Philosophical Foundations of Humanistic Management. www.springer.com/us/book/9783319322995
4 Some readers may want to skim or skip Chapter 6, as it may be too conceptual for them. The following chapters build on the framework presented in Chapter 6 yet present mostly case studies that can be understood without the conceptual framework.
5 Friendly reviewers also suggested that those readers who are not members of the Academy of Management might do better skimming the research chapter, as it might distract from the more digestible chapters that follow.
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Part I ◈
Foundations of Humanistic Management
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1
Two Narratives for Business ◈
A Failing Narrative Meet Elisabeth, my neighbor. Elisabeth did all she was told to succeed in life. After earning an MBA at a reputable school, she chose to work for a hospital. She wanted to stay true to her desire to serve others and thought the health care industry would allow her to do so.
One afternoon, we run into each other as she is walking her dog. I ask her how she likes her work and she confesses, “It is awful – so stressful … I never really wanted to be in a competitive, business type of environment, but it seems the hospital is just as corporate and mean-spirited as everything else.”
Meet Richard, formerly a successful Wall Street banker. He joined the world of banking because he admired its service orientation, but quit the industry in what he later described as a midlife crisis. The more he thought about the type of work his bank was doing and the people with whom it was working, the more depressed he became. He had an especially hard time reconciling what he heard in church on Sunday with the values that surrounded him in the financial industry. The banking and
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service culture that he admired had turned into something of which he wanted no part. He decided to get out.
Meet Tiffany, a former student, who never wanted to be in business, which she believed was an arid field, devoid of human touch and care. She did not feel attracted to the private sector and wanted to be a “good person.” She chose a low-paying public policy career and worked for nongovernmental entities to stay true to her personal philosophy.
Elisabeth, Richard, and Tiffany have the luxury of many choices. In many ways they are privileged. These real-life stories highlight a shared unhappiness about business despite privilege. While one could easily dismiss such unhappiness as a minority view, research shows that, despite unprecedented levels of material wealth, people are increasingly alienated from their work1 and want to redefine the meaning of success.2 On the flipside, an increasing number of people wish to engage in more meaningful activities at work and beyond, and long to be part of the solutions to the many problems that humanity faces (climate change, terrorism, social inequality, poverty).3
Mainstream thinking about the business world has become associated with the fictional character Gordon Gekko and his motto: “Greed is good.” Money and power are portrayed as the ultimate motives of human ambition, and disagreeing with this is sheer naivety. The dominant narrative is that people are greedy, money-hungry maximizers, or homo economicus.
Nevertheless, there seems to be something wrong with the larger cultural narrative about what human beings value first and foremost. The economist Richard Layard has mentioned that there is something wrong when we have unprecedented material wealth and economic growth but stagnating levels of human well-being.4 The famous Easterlin Paradox5
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states that happiness is not significantly associated with income. As such, the dominant narrative is failing.6
At the core of the three life stories above lies a narrative about business that has failed to deliver the “good life,” as many people perceive it. The wish to change the narrative is the crux of a concerted effort to rethink how people have come to understand life and their role within the economic system. The position advocated here is that a change in the narrative can contribute to a better life and a better economy.
Crisis Signals – Three Challenges …
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