03/18/2013 04:45 pm ET Updated May 18, 2013

Morality, Capitalism and Empathy

Earlier in the week I led a panel discussion on "empathy in business" with a great group of co-panelists: Angel Cabrera, President of George Mason University, Bill Drayton, CEO and Founder of Ashoka Innovators for the Public, Carly Fiorina, formerly CEO of HP and currently CEO of Carly Fiorina Enterprises, and Julie Rogers, President and CEO of the Eugene and Agnes E. Meyer Foundation. It was a very interesting conversation, and one that showed pretty clearly that as you triangulated on business and society from various political angles and viewpoints there was a common thread. Empathy, the ability to acknowledge and shape your message and attitudes by how you affect others around you, was a key competency for entrepreneurs, managers and leaders to possess to succeed in business and wealth creation. It is not a value; it is a tool, like reading, writing or computer literacy.

This morning I read with more than a little interest Steven Pearlstein's piece in the Washington Post, asking if capitalism was moral. Steven is a friend and a very smart guy, and his analysis was balanced and right on point. Morality with respect to capitalism, it seems, is very much shaped by your political viewpoint. To generalize: the right leaning viewpoint is that morality is found in the unencumbered freedom to generate as much wealth as possible; and the left leaning viewpoint is that morality is found in redistributing wealth to provide a middle class livelihood to as many as possible. With such a disconnection in what constitutes morality, it's not surprising that it's hard for politicians and citizens to agree on a common course of action as we struggle with our nation's economic future. By now, of course, this blog has wadded into "class struggle" and your hackles are up. As Michael Buffer likes to say, "Let's get ready to rumble!"

And, that is the point. When you start to talk about issues of morality and empathy, the default tendency that most of us have these days, is to define the conversation in terms of politics and class. But, then the conversation often breaks down into name calling, shouting, and overall unpleasantness. It's not surprising that it does. Conversations about limiting freedoms, picking winners and allocating wealth are always going to be hard. These are at best difficult topics.

However, in the US, unlike other societies, the conversation is made much more difficult because of a particular approach we take to politics and economics. Elsewhere in the world, politics and economics are seen as highly interactive and interrelated - you can't talk about one without the other. Politics is about allocation of wealth and opportunity, and economics is the mechanism for discussing how allocation occurs. Here in the US, we have a different approach, one that stretches back to the 1930s, and perhaps earlier. We are strongly encouraged to separate our politics and economics. The pressure to do so is intense and pervasive.

I am often struck in my teaching how often my students will say that an unencumbered free market economy is a core value of the United States. Yet, in the same conversation they will talk about building their careers in industries that are shaped by, and benefit from, government regulation, government R&D spending and a government supported legal system that reinforces wealth creation and retention. The pressure to separate politics and economics is also seen when someone suggests that politics is about allocation of wealth and opportunity and they are stigmatized as being a "communist" or "socialist." To suggest in the US that politics and economics are interrelated is to run the risk of being identified as a left winger, heretic or worse. "You didn't make that" became an election year meme, as a "socialist" president suggested that all benefited from government spending, not just the poor. To my ear he was suggesting that government spending and rules created conditions that allowed people to be rich, not that the government made them rich. But, perhaps I had wax in my ears....I do wonder though how many hedge fund managers in Connecticut would survive in a world without rules that prohibited the use of force, or a world without government regulated securities trading markets that allow them to move money around the world in computers and bandwidth of incredible complexity and inter-dependency.

Anyway, the reality of modern society is that we live in a world that is highly complex, and one that requires rules of conduct. Society hasn't been an unencumbered free market since we were located in small groups where we were all known to each other. To observe that there are things that society needs rules to do, and that there might in fact be issues of fairness to discuss, does not mean that the observer doesn't appreciate the system that exists.

I suspect that where empathy and morality really intersect is where there is conflict between individual freedoms and the rights and benefits to a broader society. This is the core challenge of any democratic system, including our own. When we talk about morality, on all sides of our political debates, there is a clear polarization of what constitutes "right and wrong." There is also, in many instances, a clear polarization around the concept of empathy. This is not surprising, since empathy often constrains our own individual actions.

Over the last few days I have wondered about empathy and morality in connection with our business world and society, and I have come up with the following thought experiment. Have you ever walked past a homeless person? I bet that when you make eye contact you are much more likely to give that person some money for a meal, than if you walk past unseeing. How about behind the wheel of your car? When you are in line waiting to get in, don't you find that the person in the car next to you lets you in more often if you make eye contact? What you are seeing, I think, is that when those around us are not anonymous, we tend to moderate our behavior in favor of those who we contact. Or, if we don't moderate our behavior we tend to think about it a bit more.

I wonder if it could be that the reason why our political debates are so nasty and disconnected is because we just don't see each other anymore. I also wonder if by decoupling politics and economics, it makes it easier to ignore the human implications of policy prescriptions. American democracy requires that we work through challenges and come up with solutions that work for our country as a whole - not certain sub groups. Compromise is not a weakness, and suggesting that we look at morality in the broad context of economics and limits on individual rights does not mean that entrepreneurs can't continue to create wealth, or keep what they make.

I believe that the entrepreneurial spirit, the right to pursue a greater economic purpose and wealth is a major driver for the United States' historical prosperity and its future. I also believe that we need to ensure that we preserve this right to do so in a democracy that has the support of its citizens. The question that I find most troubling is can you have a sustainable society, one that will support the economic freedom I just described, without ensuring that the system works for substantially all? Can we have a society where we do not see each other? And, where we hide behind arbitrary disconnections to avoid asking hard questions? I am not sure I like the answer to those questions, but if I was working downtown in Congress, it's what I would be asking my peers right now. Perhaps with a bit more empathy they could find a path that worked for all Americans, instead of trying to muscle through an approach that satisfies their own narrow viewpoints.