---
title: "Deep Insight: The Way to Make Money in China Has Changed—Now You Must Understand and Apply \"Capital Thinking\""
description: "In an era of rapid change, new wealth opportunities emerge, but they also test our understanding of the underlying logic of wealth. This article explains the concept of \"capital thinking,\" which involves leveraging resources to create value, and categorizes people into three types: resource owners, allocators, and capitalists. It argues that to make big money, one must align with the most important social trends and master the art of capital operation."
author: "水木然"
publisher: "New Distribution"
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published: "2016-09-17"
language: "en"
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---

# Deep Insight: The Way to Make Money in China Has Changed—Now You Must Understand and Apply "Capital Thinking"

> In an era of rapid change, new wealth opportunities emerge, but they also test our understanding of the underlying logic of wealth. This article explains the concept of "capital thinking," which involves leveraging resources to create value, and categorizes people into three types: resource owners, allocators, and capitalists. It argues that to make big money, one must align with the most important social trends and master the art of capital operation.

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**Introduction**
**1-minute quick read**
In an era of great change, new wealth opportunities emerge, but they also test our deep understanding of the underlying logic of wealth. As the saying goes, concepts are more important than methods, and methods are more important than technology. The logic of making small money may be similar, but when it comes to making big money, it is more important to align with the most important social trends. Making big money is usually based on a correct understanding of the most important trends. Follow this article, dive into the river at the bottom of wealth, follow the tides, and dance with wealth in the rhythm of accurate wave-riding.

**The main content of this article is selected from "Cross-Border War" (already published)**

Now China has entered a higher-level era of "capital economy."

What is the "capital economy" era? In short, it adds a "lever" on the basis of a market economy. In physics, the role of a "lever" is to use the "force arm" to amplify "force," thereby lifting larger masses. With this lever in the economy, its activity space and flexibility are greatly enhanced, which is also called "capital thinking." From now on, Chinese people must deeply understand and apply the tool of "capital thinking."

**Capital Thinking**

To learn "capital thinking," you must first deeply understand what "capital" is. Does "capital" only mean money? No. Capital is the "right to control" resources. Bringing more control through resource control is called "capital operation." Optimizing and allocating social wealth through "capital operation" to achieve maximum social efficiency is the social value of "capital operation."

Because capital has profit-seeking and value-adding properties, it pursues profit maximization. This will promote the allocation of social resources in the direction of maximizing efficiency and benefits. Social resources will flow in turn to the most efficient countries and regions, the most efficient industries, the most efficient enterprises, the most efficient projects, and the most efficient individuals. The profit-seeking nature of capital promotes the optimization of resources, and the optimization of resources gives rise to new capital, continuously creating new opportunities, thus cycling and expanding.

> For example, in physics, graphite and diamond are allotropes; they are both elemental substances formed by carbon, but their physical properties are vastly different, and their values are as different as heaven and earth, simply because their composition structures are different.
>
> Therefore, the essence of capital thinking is structural reorganization. That is, adjusting the space-time and structure of resource molecules, thereby producing the value-added effect from "graphite" to "diamond." At the macro level, capital operation is the reorganization of resources for the whole society, such as China's state-owned enterprise restructuring, which will greatly change the structure of China's economy and improve the operational efficiency of the entire society. When a social economy operates by "capital operation," it steps into the era of "capital economy."

**Comment by Shui Muran:**
**From an economic perspective, there will only be three types of people in society from now on:**
**1. First, resource owners.** They are the most direct owners of resources, relying on selling their own resources to survive, such as farmers relying on farming, workers on physical strength, doctors on skills, writers on writing, as well as teachers, lawyers, etc.
**2. Second, allocators.** It doesn't matter who owns the resources; the key is having the right to allocate resources. This type of person earns money by allocating resources, engaging in the work of resource input-integration-operation-output, mainly entrepreneurs, and startups also belong to this category.
**3. Third, capitalists/investors.** They are farthest from resources, but all resources are controlled by them; they only play operational games behind the scenes. Venture investors belong to this category, such as Masayoshi Son investing in Jack Ma, and Alibaba's listing made him a huge success. Capitalists have no borders; they can control the flow of global resources; they can dominate a large amount of other people's assets through the financial system.

So, resources are nominally owned by resource owners, but in reality, they are owned by capitalists. The measure of a person's power is how many resources he can allocate.

According to these three different roles, how can individuals obtain wealth in the future? There are only three channels: **selling resources, allocating resources, and mastering capital.**

**1. Resource owners (ordinary people)**

"Resource owners" survive by selling their own resources, that is, their skills, namely: time + physical strength. This is also the most widely distributed group in society.

So ordinary people can only find a job in a company and sell themselves to exchange for wealth. However, ordinary people's time and physical strength are similar, and the resources they can sell are similar. Therefore, to sell their resources at a good price, they can only improve their skill level and proficiency.

A common practice at this time is to study, which is why parents hope their children study well, and why graduates from Tsinghua and Peking University generally have higher starting salaries than those without education.

But now the skill gap brought by diplomas is getting smaller and smaller. There is no essential difference between an ordinary first-tier university student and a second-tier student; instead, they are not as valuable as someone who has learned well at Lanzhou Technical School (a famous vocational school for excavator operation), because the former is numerous, the latter is few, and the latter pays more attention to practice. Supply and demand determine the price of resources, so the theory that "education is useless" has long been popular.

So, if you are just an ordinary person, either obtain higher and rarer skill value through education; or improve your practical ability through thinking, being a good person, and a lot of practice.

In addition, for "resource owners," there are also naturally rare resources, such as appearance. An ordinary person who looks good can obtain a lot of extra wealth in daily marriage, work, and life; if good-looking and lucky, they can enter the entertainment industry, and after becoming a star, their resources become scarce, and the price of resources is far higher than ordinary people!

But appearance generally cannot change the essential situation of a "resource owner," only slightly improve it. Even if Wang Baoqiang does fitness + maintenance + professional styling design, he cannot surpass Andy Lau in appearance, so he is a simpleton, and Andy Lau is a master thief. Moreover, appearance as a resource is not necessarily the prettier the better; the appearance traits of Wang Baoqiang and Huang Bo are also indispensable parts of their success.

All ordinary workers, white-collar workers, professional managers, and even the former "working emperor" Tang Jun and major stars belong to the "resource owners." The characteristic of such people is that their wealth is limited.

Sometimes they work hard all their lives, but if a family member gets seriously ill, they almost collapse. Some have to work three jobs to support their children or patients, which is very sad. Professional managers earn as much as they can, but it is limited; past-their-prime stars live worse than ordinary people, etc.

Of course, some people are born with scarce resources. For example, the second generation of the rich can inherit a legacy of scarce resources at birth. Another example is the children of stars, who are born with the scarce resource of media attention; or someone lives in a broken courtyard in the city center, and as long as demolition occurs, they can get a large fortune; they are born with the scarce resource of location, or if you are very lucky and win the lottery, you also enjoy the scarce resource of "good luck."

This kind of wealth is a matter of chance and cannot be sought; it depends on luck. Moreover, these lucky "resource owners" often do not know how to manage resources, their wealth is not sustainable, cannot appreciate or expand, and is often wasted. Stars and rich second generations may take drugs when lonely, inheritances may be squandered, lottery prizes may be spent, and demolition money is often used for gambling...

Of course, there is one last thing not mentioned, which is selling risk. If you are willing to bear the risk of prison and death, to steal, rob, or cheat, there was a news story about someone who robbed a bank and got millions, then fled, changed his name, and started a real estate business. A few years later, his family assets exceeded 100 million, but the crime was also exposed. Therefore, if you make money through this channel, your wealth will increase, but the risk you bear will also increase, and in the end, it is not worth it.

**2. Allocators (business owners)**

This type of person is not the direct owner of resources; they often use their brains to design the allocation of resources and make money by optimizing resources. Entrepreneurs belong to this category.

In slave society, the most important productive force was "manpower" (i.e., slaves); in feudal times, the most important productive force was "land," and in the capital era, the most important productive force is "capital," and the essence of capital is the allocation of resources.

By definition, entrepreneurs are people who organize and manage resources and bear business risks. The income of an entrepreneur is directly proportional to the efficiency of his allocation, with no upper limit. But at the same time, he must bear the risk of his resource allocation, and the lower limit is bankruptcy.

Why do many people want to start a business? Because they want to climb from the first type to the second type. Once upgraded from "resource owner" to "allocator," it means no longer selling your skills, but starting to operate your thoughts and wisdom, achieving freedom in both personal and economic aspects, thereby realizing personal freedom.

**But not all "resource owners" are suitable for entrepreneurship. They must have a certain culture, vision, courage, innovation, opportunity, and capital.** Allocators are the most important group in a society; their quality and quantity determine the efficiency of resource allocation in a society and represent the level of productive forces. Allocators very much need the spirit of innovation; so-called innovation is their development of new products, new markets, new production methods, new organizations, and the control and allocation of new raw material sources.

Here we need to mention the generational change of Chinese entrepreneurs. More than 30 years ago, China began its first reform and opening up. At that time, the whole country was in ruins, and the big environment was the best opportunity. As long as you boldly came out to explore, even without education or insight, you became an entrepreneur. This was caused by the environment at that time.

In 1981, the Shekou Merchants Bureau put up this slogan, and a group of true businessmen appeared in China.

Now, China is deepening its reform and opening up. At this time, China has undergone earth-shaking changes, and higher requirements are placed on the quality of entrepreneurs. For example, in Europe, the United States, and Japan, entrepreneurs have always been the elite class of society. In the coming China, without a certain cultural literacy, ideal pursuit, and deep understanding of innovation, it will be difficult to become a "allocator" of society. Therefore, Chinese entrepreneurs are undergoing generational change. Some post-90s entrepreneurs have come into our view, and many old entrepreneurs have voluntarily withdrawn from the historical stage. This is the development of the times and an inevitability!

Of course, these qualities can also be created through acquired efforts. Bill Gates had been a programmer for 7 years before he became rich. With all acquired efforts, "resource owners" can completely transform into "allocators." However, obtaining wealth is only one of their signs of success; loyalty to the cause and responsibility to society are the "peak experience" and inexhaustible motivation of entrepreneurs.

**3. Capitalists/investors (behind-the-scenes controllers)**

The wealth of this society seems to belong to the scattered "resource owners," but in reality, it is enjoyed by the "allocators." But in essence, it belongs more to the capitalists!

The definition of a capitalist is: a person who makes a living from capital operation. After the Second Industrial Revolution, entrepreneurs who mastered technology and applications could quickly accumulate huge wealth. Their enterprises had a great impact on a country. These enterprises formed the economic lifeline of the country. In order to obtain high profits, enterprises manipulated and controlled the production, sales, and prices of goods in one or several sectors through mutual agreements or alliances, thus forming monopolies. At this time, the "entrepreneurs" began to sit behind the scenes and manipulate all this, evolving into "capitalists."

The biggest difference between a "capitalist" and an "entrepreneur" is that capitalists do not directly participate in the operation and management of enterprises, but manipulate the macro thinking of enterprises behind the scenes. The products of enterprises are various consumer goods, while the products of capitalists are various enterprises. Through investment, shareholding, mergers and acquisitions, and restructuring, they control the future of an enterprise. Masayoshi Son invested in Jack Ma and helped Alibaba succeed. Jack Ma is an entrepreneur, and Masayoshi Son is a capitalist. Masayoshi Son has N Jack Mas in his hands and became the richest man in Japan. Another example is Buffett, who sits at home doing investment manipulation and layout; he is also a capitalist.

The United States is a free market economy, but why is it called a "capitalist" society? Why not a "free market" society? Because in such a society, "capital" is the standard that measures and determines everything. In ancient China, even if you were extremely wealthy, it was useless; officials could confiscate your property at any time. You had to bribe those in power and buy official positions. As long as you had power, even if you were penniless, you could live a rich life with plenty of food and drink. So it was an official-oriented society.

A certain company once said that it never does R&D itself, letting small companies in the market do the R&D. If they succeed, it buys them out; if they don't sell, it spends money to poach the core people of the company. This is capitalism. (Of course, ignoring intellectual property is problematic; the correct approach is to buy it.)

If you have 100 million yuan in capital, you can spend 10 million to hire the smartest people in the country to turn your capital from 100 million to 200 million. You lie in bed and earn 90 million. And all this is only because you are engaged in capital operation. You only need to be smart enough and have courage; you don't need strength, time, or good looks.

We need to understand that the third type of person earns more than the second type, and the second type earns more than the first type. Therefore, the first type is trying to evolve into the second type, and the second type is desperately evolving into the third type.

In China, very few people are born with capital. Most of the third type evolved from the first or second type. Although this evolution is becoming more and more difficult now, it is not hopeless, because it will be even harder in the future. This is the solidification of class and the reduction of mobility between classes.

Everyone is desperately exploring methods; some succeed, some fail. There are only two reasons: **How smart is your mind? Or how much capital have you accumulated?**

You think of an idea to improve a mobile phone, and you think this idea can make a lot of money. Then you have to ask yourself, do you have the funds to operate this idea? For the same idea, Samsung and Huawei can allocate more funds, hire better engineers, and promote better. Are you sure you are not clearing the way for these capital owners? Or are you heading down a dead end that countless people have already walked? For example, if you do software development, will an angel investor ask you: "What if a giant copies you?"

The answer is: If you don't work, what can you do? Do you think you can make money doing something else? A few years ago, there was a frenzy online about how much money delivery drivers make. I sneered at it. Such an industry without barriers cannot make much money. If you are willing to do this for 10,000, I can find someone to do it for 9,000 in a minute, and I can find someone for 8,000, believe it or not. In the end, whether you deliver packages or set up a stall, whether you sell rou jia mo (Chinese hamburger) or do IT, **you will be pulled to an average income threshold.** Because IT requires learning, it pays more; delivery is hard, so it pays less than IT, but still more than cleaning, and so on.

So how exactly do you evolve from the first type to the third type?

Step one, you need to accumulate capital. Whether you are willing to work or make your own product (some people think they are starting a business), first complete capital accumulation. This step is the most important, and it is also the time to use your imagination and strength. Set up a stall, open a Taobao store, make a website, make an APP, speculate in stocks, do overseas purchasing, open a design studio, sell rou jia mo, take photos for kindergartens, etc. There is no best, only better. In one sentence, this step is to sell your personal resources. It depends on whether you can sell them at a good price. Study more, even if not for a diploma; work hard, as long as it doesn't harm your health.

Step two, make good use of capital, use capital to make money. How to use capital to make money? Ask yourself a question and you will understand. If your family has a small restaurant that earns 10,000 a month, but you need a chef. Your cooking skills are very good. If you are the chef, the restaurant nets 10,000 a month; if you hire a chef for 8,000 a month, the restaurant nets 2,000. How do you choose?

Answer: Hire a chef! In this way, you can use a loan with a monthly interest of 1,000 to take over another restaurant, and that restaurant can also net 1,000. (Supplement: This restaurant earns 2,000, pays 1,000 interest, nets 1,000. For those who are bad at math, don't leave me messages anymore. Is Zhihu the same level as Weibo?) And you, just by taking over 100 restaurants like this, can net 100,000 a month, and at this time, you are traveling abroad, becoming the third type of person.

Many people have been working all along; they haven't become the third type, which is easy to understand. But after the reform and opening up, many people who did business still have no money, because they are their own chefs, their sisters are waitresses, and their mothers manage the cash register. That's all.

**So, in the future, when you ask yourself how to become the third type, it's one sentence: "Don't cook yourself, hire a chef."** **If you can use capital to earn 1 yuan, it is more in line with financial thinking than selling your physical strength to earn 100 yuan.**

In addition, if you only have one of intelligence and capital, remember to find someone with the other to cooperate; they are also waiting for you!

Furthermore, even among people with the same characteristics, their wealth differs. For those who sell their labor or have the same capital, the mental and physical effort they put in is different, and the returns are also different. That is, two identical workers or super-rich second generations, one thinks hard and is willing to work hard, the other plays games and sleeps all day. The former will have more wealth than the latter. But comparing a smart and hardworking worker with a super-rich second generation who plays games and sleeps is just adding trouble to your life.

The rich: they think of something, set a goal, and start raising resources for it. Because of this thinking, nothing can stop them from doing things. If they have no money, they can borrow; if they have no people, they can hire; if they don't understand, they can outsource; if there are restrictions, they can circumvent; if there are enemies, they can make peace; if there are opponents, they can bribe.

As the saying goes, "Human nature is the same; it is by using things that one becomes better."

**Improvement for ordinary people**

At the same time, emphasize one more point: if you are an ordinary person, or think you are ordinary, but have ambition, it is better to be pragmatic and move forward steadily.

There was a public relations manager in a company whose son was already 5 years old. She had to go to work, do housework, and take care of the child every day. But she had a second-level interpretation certificate from the personnel department, had conference interpretation tasks from all over the country every month, and also served as a tutor at this interpretation center.

Open her blog; it has been updated with more than 500 pages and more than 2,000 posts, all of which are articles she practices interpretation every day, averaging two long and one short per day. She has been doing this for nearly 10 years. She is not a professional, but she has been working hard because of her love for English.

She said that 10 years ago, she saw a survey report that if a person wants to master a skill and become an expert, they need to practice continuously for 10,000 hours. At that time, she calculated that if she practiced 5 hours a day, 300 days a year, it would take 7 years for a person to master this skill.

She said: "Fortunately, I know what skill I want to master. I just need to start doing it immediately. I don't have 5 hours a day; I can only study 3 hours a day. It has been almost 10 years now, and I think I have almost mastered this skill."

**Another example: The Beatles had participated in 1,200 performances before they became famous.** But why have you been a civil servant for 10 years and still a small clerk? Why have you been cooking at home for 7 years and not become a top chef, but instead found that the marriage has reached the seven-year itch?

That is because you have not invested energy and enthusiasm to practice a skill. Going to work every day just reading newspapers, surfing the Internet, and dealing with trivial tasks; cooking every day just to keep the family running, not looking at it with a professional eye.

Stop lamenting that your major is lost after graduation. If you count from junior high school, 12 years of school education, even if you learn a skill for 2 hours a day, 300 days a year, you only have 7,200 hours, and there is still a gap of 2,800 hours; even if you insist on practicing 1 hour a day after graduation, you need 10 years.

Why are science and engineering people more likely to succeed? As long as they work in their field after graduation, doing the same thing, they are practicing 8 hours a day. This 2,800 hours can be filled in just over a year. But many of us, the content of our work is not practicing skills; most of it is dealing with trivial people and things. In fact, we are wasting our lives.

Maybe you will say, I am an ordinary person, I don't want to become an expert, I just want to live a peaceful life. That is just your illusion. Time is passing. The behaviors you repeat day after day are shaping you. You don't want to become someone, but you are destined to become someone.

5 hours a day, if you use it to watch Korean dramas, scroll through your phone, or play games, then after 7 years, you will become a bystander of life. Your best skill is to talk about others' successes and failures in detail, but you can't find anything to say about yourself.

Take 1 minute to think about what you most wanted to do, and then do it every day. After 7 years, you will find that you can rely on this to make a living.

Even if you like shopping, try setting a rule to shop 3 hours a day? At first, you may be happy, but every day, you will find it boring. If you persist, you will start to think: What else can I discover while shopping? What new tricks can I come up with? **Persist, and after 7 years, you may become a fashionista, image design expert, street photographer, clothing buyer...**

How do you plan to spend the next 7 years of your life, the next 10,000 hours?

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