Abstract
This chapter reviews the history of the “human capital” concept to argue that its contemporary neoliberal present has a nineteenth-century liberal past. Focusing on its role as a measure for education, the chapter explores the political assumptions underlying its scientific claims, which have their roots in Victorian ideologies. Thomas Hardy’s 1895 Jude the Obscure operates as both evidence and forecaster, for it not only limns the exhaustion of the nineteenth-century liberal ideal of self-cultivation but also outlines an emergent human-capital subjection formation, and thereby warns about the impoverishment implicit in Chicago-style economics and its recasting of human effort as a form of capital investment.
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Notes
- 1.
The author would like to dedicate this chapter to Mary Poovey, in honor of her retirement. Thanks also to Jonathan Levy. Jude the Obscure was composed around the time of some key publications of the neoclassical tradition: The Philosophy of Wealth: Economic Principles Newly Formulated by John Bates Clark, in 1888; the first edition of Alfred Marshall’s Principles of Economics, 1890; Eugen v. Böhm-Bawerk’s Capital and Interest, also 1890; J. S. Nicholson, “Capital and Labour: Their Relative Strength,” 1892; and Philip Wicksteed’s An Essay on the Co-ordination of the Laws of Distribution, 1894.
- 2.
“Education health” is an odd term that Pierce presumably draws from the biopolitical approach of Foucault, which he adopts throughout his book. It is, however, a bit confusing or perhaps ironic that he uses it to define human-capital measures of education, which typically rely on mechanical rather than organic metaphors.
- 3.
Mill’s differentiation between human resources and wealth marks the moment that comes in nearly every discussion of human-capital theory up to its consolidation in the mid-twentieth century: its reckoning with slavery. Branko Milanovic´, among others, notes that in transforming labor into human capital, the concept ignores its difference from inhuman capital, which like property can be alienated (Milanovic´ 2013). For Mill, as it proves to be so with Thomas Piketty 170 years later in Capital in the Twenty-First Century, the potential conflation between human capital and slavery renders it a persona non grata. Later economists were not so fastidious; most simply insisted on using the term anyway but noting this one difference from fixed capital. As will be argued later in the chapter, human-capital theory does not purge slavery as a topic nor as a conceptual girder.
- 4.
Peter Spiegler, in his trenchant examination of mathematical modeling in economics: “the objects under investigation must plausibly be stable, modular, and quantitative, with no qualitative differences among instantiations of each type” (2015, 45).
- 5.
Schultz’s work addressed a quirk apparent in calculations of economic growth. In the twentieth century, economists noticed a sizeable residual, as Goldin defines it: “the residual is that portion of economic growth the researcher cannot explain by the increase in physical productive factors such as the capital stock, the number of workers and their hours and weeks of work” (Goldin 2016, 58). In other words, inputs of machinery and labor did not add up to the total sum of measured growth, indicating another factor of production was missing. Schultz demonstrated the missing factor was the skills and education of labor.
- 6.
Not enough has been made of Obama’s early years at UChicago’s law school and the network of associations he made with business economists at the Booth School at UChicago.
- 7.
Pierce (2013) guides my work on the modern “liberal” politics of human-capital educational policy. The scholarship of Kevin Murphy (Murphy and Topel 2016) and James Heckman (Carneiro and Heckman 2003) will give some taste of this scholarship. Also see the website of The Center for the Economics of Human Development: https://cehd.uchicago.edu/. In this context, of course, “liberal” refers to the American label of Democratic politics, not the Victorian liberal ideology of negative freedoms, laissez-faire policies, and a favoring of liberty over equality.
- 8.
Foucault on Becker: “That is to say, any conduct which responds systematically to modifications in the variables of the environment, in other words, any conduct, as Becker, says which “accepts reality,’ must be susceptible to economic analysis” (Foucault 2008, 269).
- 9.
Mirowski and Van Horn (2009) also argue relatedly that the ambition of human-capital theory was an intentional component of its development.
- 10.
See also Mirowski (2009) on its normative impulses.
- 11.
- 12.
Bröckling quotes Becker: “Corresponding to the economic approach, most (if not all) deaths are to some extent suicides in the sense that they could have been postponed if more resources had been invested in prolonging life” (2011, 257).
- 13.
Mirowski (2009, 436) seems right to suggest that these mid-century neoclassical economists were not classically laissez-faire; rather, they supported government measures that instantiated their vision of the market—student loans, corporate welfare, etc.—while denuding the domain of social supports. In its historical context, neoclassical economics seems a pointed political project.
- 14.
Pareto efficiency or optimality occurs when a preference or individual cannot be made better off without making at minimum another individual or preference less so. In a state of equilibrium, Pareto efficiency is presumed to occur, but efficiency is not equality, nor necessarily justice.
- 15.
Fogel was not defending slavery as an institution, but was defending the economics of the institution insofar as it responded to market forces, which only shows how he considers the “moral” considerations as something outside and independent of the institution’s inner workings—exogenous. Efficiency is the fundamental value undergirding neoclassical economics. Pierce (2013) is helpful on the role of slavery in human-capital theory, and Gutman (1975) was the first thorough critique of Fogel’s book. Caitlin Rosenthal (2018) also espies the early lineaments of the human-capital concept in the slavery era, but she emphasizes the ways in which slave owners valued their slaves as capital rather than the ways in which slaves could be implausibly imagined to be engaged in self-investment. See also Berry (2017). Fogel and Engerman did revise and respond to critics in a second edition.
- 16.
I am not suggesting that “separate sphere” ideology is a synonym or exact equivalent for the division between free labor and the domains of social reproduction as Feher describes them (he rather fails to give gender its due), but that separate sphere ideology is perhaps a social elaboration of this theoretical description.
- 17.
The narrative does appear to show a devolution into a human-capital framework, but it lurks close to the surface even early in the novel. When Jude’s immature desire for Christminster is most idealistically naïve, it also shows him to be attempting utility maximization: he constructs a mechanism on his wagon so that he can deliver goods and study/train at the same time. And from the beginning, he appears to calculate quite often about long-term returns—years of patient learning and study culminating in the coveted entry to Christminster.
- 18.
The employers in this novel are largely invisible, true to the way that market agents are not in direct contact in neoclassical exchange.
- 19.
See Welch (1999) for a classic neoclassical study of the college premium that argues that education was the primary explanation for increasing levels of inter-class and inter-race equality at mid-century and beyond, without remarking on the impact of either the Civil Rights or Women’s Rights movements.
- 20.
Feminist economists Carolyn Shaw Bell, Marianne Ferber, Bonnie Birnbaum, and Isabel Sawhill noted the unchanged gender roles of Beckerian economics as early as the 1970s.
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Hadley, E. (2019). Human Capital. In: Hadley, E., Jaffe, A., Winter, S. (eds) From Political Economy to Economics through Nineteenth-Century Literature. Palgrave Studies in Literature, Culture and Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-24158-2_2
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