The First Rule of Critical Thinking: Think Systemically (about Capitalism)

This is the second blog entry in a series on critical thinking which lays out ten guidelines for critical thought: (1) Reflect Systemically, (2) Expect challenge, (3) Reject neutrality, (4) Suspect ideology, (5) Respect history, (6) Inspect scientifically, (7) Quadra-sect violence, (8) Connect with your deepest self, (9) Detect silences, (10) Collect conclusions. The series was inspired by responses to my April 16th reflections on the Boston Marathon bombing.


The first rule of critical thinking as understood in this series is to think systemically. This is a ground-clearing rule. Its point is to clarify the vocabulary and concepts without which you’ll not be able to think critically about the most important issues facing our world today. You can’t think about poverty, hunger, war, climate change, healthcare, education, or a host of other problems without clear understandings of the basic economic concepts presented here. Without them, you’ll be thrown for a loop; your eyes will glaze over when conversation turns economic. And economics, remember, is the principal language spoken in the world of politics and newscasts.

Think about what’s happened since the 2008 election of Barack Obama. With the implementation of bailout programs, and discussion of “Obamacare,” there has been a lot of talk about “socialism,” hasn’t there? This has come along with accusations about “Marxism,” “communism,” “fascism” – all in a context that supposes the superiority of “capitalism.” The discussions have rarely recognized the universal prevalence of “mixed economies.” Instead, the discourse has illustrated huge divergences of understanding and opinion about the meaning of all the terms just placed in quotation marks.

Most debate participants simply do not have clear ideas about their meaning. They are convinced, of course, that communism is bad, and that capitalism is good. Beyond that however, ideas remain confused. Most are even unaware that all the terms mentioned describe positions adopted towards the free market economic system.

It is the modest, yet ambitious, purpose of the explanation of this first rule of critical thinking to clear up confusion simply by defining terms in an easy- to- understand way. Doing so is absolutely necessary for any critical thinker to join productive discussions about our days’ most important issues. So, oversimplifying for purposes of discussion and clarity, what follows will summarize the crucial categories in three points each, beginning with capitalism, and then moving on to Marxism, socialism, mixed economy, communism, and fascism.

Today’s blog entry will define capitalism in this way.


Liberal capitalism is an economic system based on (1) private ownership of the means of production (2) free and open markets (places where goods are bought and sold), and (3) unlimited earnings. Those are the three points.
Private ownership of the means of production dictates that individuals should be empowered to own fields, forests, farms, factories and other sources of products for sale and exchange. Communal ownership is thus excluded. That’s capitalism’s first point.

Free and open markets means that private ownership should permit those in question to produce what they choose to produce, where and when they choose to do so, employing whom they choose, without any power outside of market forces of supply and demand dictating that production. Here government interference in the market by way, for instance, of outlawing or controlling some productions (such as liquor or cigarettes) and mandating others (such as beans and rice) is rejected. Moreover, anyone at all should be able to enter an open market regardless of personal attributes such as race, age, gender, nationality, or religion. In all this emphasis on “freedom,” we find expressed the “liberal” nature of “liberal capitalism.” That’s capitalism’s second point: free and open markets.

Finally, liberal capitalism calls for unlimited earnings. That is, the producer’s talent and the quality of her or his product alone should limit the income goals attainable. Limits on earnings such as taxes should be kept to the minimum necessary to provide public protection of private property (police, military, the judicial system) and to supply the infrastructure necessary for commerce (roads, bridges, etc.) That’s capitalism’s third point: unlimited earnings.

Income ceilings, of course, are out of the question for capitalism strictly understood. For capitalists wide disparities between the rich and the poor are not a problem. And some might even admit to greed as a kind of virtue that is responsible for human progress. That idea was captured in the film, “Wall Street,” where entrepreneur, Gordon Gecko (played by Michael Douglas), praises greed in a speech before the stockholders of his company, Teldar Paper Company:

These words, of course, not only praise greed in business, but in national life. Echoing the words of economist Milton Friedman (at the top of this blog entry) and ignoring the fact that in the past greed was considered by Christians one of the Seven Deadly Sins, Gecko claims that greed leads to salvation. It will not only save his business from low returns on the Stock Market, but the United States itself from what ails it as well. For Gecko and Friedman greed is the virtue at the heart of capitalism. It’s what makes the world go ’round.

(Next week: Marxism in three easy points)