And the market rewards such ethical practices.

Both proponents and critics have the disposition of characterising capitalism as a mechanism driven by selfishness and greed. Many perceive that capitalists lack empathy and compassion. While, in many circumstances, this can be the case, this is, in all honesty, overly simplified and generalised. The article responds to the fallacy that capitalism and empathy are positioned to be either-or. Subsequently, this article addresses whether and how they can co-exist and, perhaps, complement one another.

Economists such as Paul Collier said that “Greed is good.” And to a broader extent, according to anthropology, human self-interest is part of human nature and not specific to any economic system such as capitalism. That being said, however, many believe that ethical corrections should be necessitated to challenge the justification of being greedy.

In that sense, how can we challenge greed, especially by imposing empathy? Is there an empathic alternative to the existing capitalism model? Let’s take a few minutes to discuss them.

Empathy is Driving Capitalism

While greed and corruption may be encouraged under capitalism, empathy, as opposed to greed, is not a barrier to capitalism. With empathy, we have the ability to recognise and understand others’ feelings and motives. If we look at the broad entrepreneurial landscape in recent decades, Steve Jobs, Mark Zuckerberg and Sam Walton, for example, have thrived because they empathetically understand and cater to consumer needs and desires.

In capitalism, entrepreneurs who are able to prioritise customer needs over their pure self-interest are often the ones who achieve long(er)-term success and financial heights. And one thing we cannot overlook: the market is actually constantly punishing those who are selfish. Companies that act selfishly and unempathically and lose sight of consumer needs are usually punished by the market. That’s why companies seeking sustainable growth aim to publicly comply with ethical practices, satisfy customer needs and reach societal well-being. These approaches are strategically applied to expand the long-term market share and heighten the companies’ reputation.

Unlike socialist systems where state monopolies dominate, under capitalism, consumers penalise companies that fail to meet their needs. BlackBerry which failed to adapt to the smartphone market and Blockbuster that did not adapt to the rise of streaming services (such as Netflix) in media consumption all paid their bills with their downfall.

Even though capitalist monopolies exist, their monopolies per se are usually tentative. If they selfishly ignore customer needs for an extended period of time, new competitors always emerge and, thus, compete and/or replace them. Therefore, capitalists consistently demonstrating empathy — recognising and meeting the needs of customers — are rewarded by the market dynamics.

The Empathic Responses to Flawed Capitalism

Both mainstream capitalism and socialism models have their own benefits and flaws. For capitalism, it facilitates innovation and development at the expense of social and environmental problems that are intrinsically linked to the prioritisation of profit maximisation. Evidence suggests that, under the current model of capitalism, rising inequalities, environmental crises and social tensions compound.

Despite its flaws, socialism, alternatively, promotes shared prosperity and more equal societies. These concepts can be borrowed to update/revise the existing capitalism model. In simple but broad terms, our societies need to minimise rewarding individual success at the environmental and societal expense, but facilitate the development of an ecosystem that benefits everyone to live a dignified life. Such a process is usually dubbed “pragmatic empathy.”

Broadly speaking, innovators, academics and activists champion the promotion of empathicalism. This means, under capitalism, we foster innovation and entrepreneurship but, in parallel, maximise the use of resources for pro-human-centred social development. The expected positive societal outcomes are to prioritise shared prosperity and suppress extreme inequality that the current capitalism model fails to deliver.

Final Thoughts

While the market continues to reward companies and entrepreneurs who act empathically in business, the macro-level consequences of such reward mechanism should not be overlooked. Rather than simply satisfying and meeting the needs of market customers at the individual level, we are heading to a world where the market dynamics value macro-level benefits and, alternatively, denounce the harms.

And such an emerging (concept of) mechanism is more empathic than the existing mainstream capitalism model would offer. In doing so, we are neutralising the “greed” and positively reinforcing the “societal impacts” in capitalism.

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