Business Capital and Debt

Reading Rothbard’s The Formation of Capital (Man, Economy, and State with Power and Market, 2004, Chapter 1 Section 9), I observe that debt is not included in his explanation. The four major themes that he discussed include labor, saving, investment, and human decision. I personally find this strange particularly when I compare my reading on Rothbard with my previous reading on financial education.


I find that debt is a central idea in raising business capital in financial education. This is true at least in Robert Kiyosaki’s books. You will repeatedly find the importance of leverage or other people’s money (OPM) in raising business capital (Perhaps I am missing something here, a gap between the two concepts of capital. I am not sure about this).

For Kiyosaki, not all debts are bad; it depends on where and how you will use it. If you will spend it on liabilities, it is a bad debt; but if you will use it on building assets, it is a good debt.

At first, such distinction between debts confused me for as a result of my plain reading of the Bible it appears that debts are discouraged especially for the followers of God.  But as I read more of Kiyosaki’s books, his distinction started to make sense to me. I understand that Robert Kiyosaki is using his “Austrian insights” on the existing monetary system for his own economic advantage. And this is most evident in his advice on OPM.

As I turn to Rousas John Rushdoony’s Institutes of Biblical Law, he teaches that there is a legitimate place for debt in the Bible, but only on short-term basis. No man has the right to mortgage his future by enslaving himself in debt in view of the fact that God is the Ultimate Owner of all things including every man.

However, with the monetary system based on debt that we have right now, as lovers of liberty how should we respond? Can we blame financial advisers like Robert Kiyosaki taking advantage of the system? Or should we follow the Austrian school in campaigning for the end of a monetary system based on debt? What is the right thing to do? Is the question of morality and ethics still applicable to contemporary financial system? Does the Bible provide a clear teaching on this critical issue? If the Bible is really relevant to present economic issue, how theologians, preachers, and Christian educators ought to respond?

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