Robert Kiyosaki claims we should “know the difference between an asset and a liability, and buy assets. The rich buy assets,” he says. “The poor only have expenses. The middle-class buy liabilities they think are assets”.

Herb Schlossberg chimes in:

“An economy living on capital rather than income resembles a body deprived of nourishment, living off its own tissues and wasting away. But this is not an organism that is starving because of the pressure of external factors beyond its control. It is, rather, suffering from an infantile inability to discipline itself and provide for its future."

Consider three broad scenarios:

1 Most people are employed by someone else, exchanging time and labor for a paycheck. That paycheck is passed in turn to the butcher, the baker, the candlestick maker, and, of course, the government, in exchange for goods and services. In a good month, income and expenses balance. In a bad month, folks shrug and say, “What are you gonna do?” This is a lifestyle that constrains freedom and opportunity, diminishes creativity and strangles generosity. The only thing that increases is vulnerability.

2 Workers of a middle-class sensibility find that the desire to possess things increases at a pace that more than matches increasing revenues. In a month when income and expenses don’t balance, desirable things may be acquired through credit which quickly turns to debt. Some of those things are useful for generating income—most are not. Thus, liabilities are accumulated in the form of consumer loans, mortgages and credit card debt. People have the use of many things, with the appearance of prosperity, but they are paying for usage instead of ownership. So, while creating the impression of wealth, they become poor and enslaved to their things. The bondage, largely self-inflicted, results from consuming, rather than leveraging economic resources.

3 Some of those desirable things are useful for generating income—most are not. Some workers learn to treat a portion of their income as “seed” instead of consuming all of it (or merely squirreling some of it away). This seed income is leveraged to acquire capital in the form of assets that produce more income. This is in stark contrast to acquiring liabilities that consume resources but don’t contribute anything. Depending on the balance of income with real necessities, this may not be easy. It takes discipline to delay the acquisition of desirable commodities until they can be purchased with the income from assets, rather than trading assets for liabilities. This scenario reflects God’s design sensibilities introduced at the end of the first chapter of Genesis. God created humankind in his own image and gave them responsibility for managing the rest of creation, not just as consumables, but as capital—the natural capital of creation was designated to generate value in perpetuity as a well of resources with which to do good, to be generous, to increase freedom, and to leverage productivity in service to God.

God’s economic activity, in the structuring of the material world, was designed to give us capital so that we could, generation after generation, fulfill his mandate to be fruitful and to continue working the earth productively. The sun gives energy. The land gives increase. It is God, as the Apostle Paul works the metaphor in 1 Corinthians 3, “who makes things grow.”

God could certainly have provided ongoing handouts or constituted humankind as his wage-slaves. Instead, God established an economic system in which land was allocated to families. This distribution of capital was not merely to accumulate wealth but to see it employed productively:

Proverbs 28:19. "He who works his land will have abundant food, but the one who chases fantasies will have his fill of poverty".

And God commends those who generate capital instead of merely spending their income:

Proverbs 31:16. "She considers a field and buys it; out of her earnings she plants a vineyard".

The economy of the 40-year Wilderness narrative looked like a wage or welfare economy, but the economy of the Promised Land was designed for each family to have a capital base. Capital engenders productive interdependence.

God’s commandments against stealing and coveting protect legal rights to property as the mainspring of economic development….and his requirement that the land lie fallow in the seventh year renovated the soil for renewed fertility. The Sabbath ordinance does the same for human capital. And the Jubilee legislation in Leviticus 25 shows that the productivity of capital was in God’s mind….land transfers are to be priced to recognize that what the seller “is really selling you is the number of crops”—Leviticus 25:16. The documentation of property (e.g. Joshua 21) and the injunctions against such crimes as moving boundary stones are precisely what is now needed in much of the Developing World.

Without such legal arrangements, capital ceases to be fungible. It becomes, as Hernando de Soto demonstrates in his striking research on The Mystery of Capital, “inert or dead.”

“The major stumbling block that keeps the rest of the world from benefiting from capitalism is its inability to produce capital. Capital is the force that raises the productivity of labor and creates the wealth of nations….most of the poor already possess the assets they need to make a success of capitalism.

Even in the poorest countries, the poor save….but they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these professions are not adequately documented, these assets cannot readily be turned into capital…in the West, by contrast, every parcel of land, every building, every piece of equipment or store of inventories is represented in a property document that is the visible sign of a vast hidden process that connects all these assets to the rest of the economy. Thanks to this representational process, assets can lead an invisible, parallel life alongside their material existence. They can be used as collateral for credit…by this process the West injects life into assets and makes them generate capital”.

deSoto argues that bringing Capital to life “requires us to go beyond looking at our assets as they are to thinking actively about them as they should be. It requires a process for fixing an asset’s economic potential into a form that may be used to initiate additional production”.

We had better learn how to encourage this understanding in Africa, South America, across the width of Asia and the Middle East. And de Soto shows the way.

In American society, at least, very few evangelical writings on money even address the difference between income and capital. It’s time to set that right. The pursuit of spiritual and economic transformation in the business context must include special attention to the formation of capital as a regenerative force in God’s economy.