The idea of natural capital seems to be derivative of the work of people
like Eugene Odum, who tried to calculate the value of the services of
wetlands and other natural phenomena. Destroy the wetland and you will
have to substitute expensive infrastructure to try to replicate what the
wetland did, but the wetland was not capital.
Here is an extract about human capital from my Invisible Handcuffs:
modern economists have the tendency to classify everything productive as
capital. The concept of human capital, mentioned in chapter 3, is a
case in point.
Some early economists understood the importance of workers' productive
capacities. For example, Adam Smith, in listing the kinds of fixed
capital stock of the country, included machines, buildings used for
commercial reasons, improvements of the land, and finally:
... the acquired and useful abilities of all the inhabitants or members
of the society. The acquisition of such talents, by the maintenance of
the acquirer during his education, study, or apprenticeship, always
costs a real expense, which is a capital fixed and realized, as it were,
in his person. Those talents, as they make a part of his fortune, so do
they likewise of that of the society to which he belongs. The improved
dexterity of a workman may be considered in the same light as a machine
or instrument of trade which facilitates and abridges labour, and which,
though it costs a certain expense, repays that expense with a profit.
[Smith 1776, II.i.17, p. 282]
Elsewhere, Smith defined the worker as a "living instrument" and
compared educated workers with "expensive machines" (Smith 1776,
IV.viii.44, p. 659, and I.x.b.6, p. 118), as might be expected from
someone who conflated workers and laboring cattle. These observations
were made in passing and had little effect on the core of Smith's
theory, except to reinforce the idea that appropriate individual
behavior would open up the road to success.
For more than a century, those economists who tried to look at workers'
productive capacity followed Smith's lead in not going beyond vague
speculations about how the qualities of the workforce increased a
nation's capacity to produce. Often economists would frame such
discussions in terms of the racial and ethnic heritage of the work
force.
Within this aggregated mass, considerations of the potential
capabilities of individual workers are nowhere to be found. By the
1960s, statistical models that were explaining the growth of the Gross
Domestic Product by increases in capital and labor needed some sort of
adjustment. Economists began using measures of education as a
reflection of human capital.
In what was called "the most comprehensive effort to develop an estimate
of the value of human capital in the United States" (Haveman,
Bershadker, and Schwabish 2003, p. 68), Jorgensen and Fraumeni
calculated that human capital comprised over 70% of U.S. capital stock
(Jorgenson and Fraumeni 1987).
But what is this human capital that seems to merge human existence and
inanimate objects? Economists tell us that "human capital refers to the
productive capacities of income producing agents in the economy" (Rosen
1987, p. 681). Note that restrictive nature of the term "productive":
limited to people in their role as "income producing agents."
Capitalists are free to sell or rent their machines, buildings, and
land, but how does somebody sell human capital. People can "rent" their
human capital for a wage, but wage labor puts them in a subservient
relationship with the employer.
In addition, human capital is a static concept. A person can accumulate
more human capital -- for example, by following an educational program
-- but for the moment that individual's human capital is fixed.
Consider the fate of a person without education condemned to a career of
drudgery. The lack of human capital seems to confirm the
appropriateness of the position that person holds, even though education
is largely rationed by race, class, and (until fairly recently) gender
rather than merit.
Besides human capital, economists analyze many other capitals. One
article even complained of "a plethora of capitals" (Baron and Hannan
1994, p. 112). Another study found 16 capitals, including, besides the
familiar economic terms (financial, real, public, venture, human, social
capital, etc.): "religious, intellectual, natural, digital,
psychological, linguistic, emotional, symbolic, cultural, moral,
political, endogenous, network, family, knowledge, and organizational
capital" (Svendsen and Svendsen 2003, p. 627). Two Nobel Prize-winning
economists have also used consumption capital to indicate consumers'
capacity to engage in more productive forms of consumption (Becker and
Stigler 1977, p. 78). Nor should we forget self-command capital. This
tendency to try to reduce all dimensions of human existence into
capitals helps to reinforce Thatcher's TINA. Nothing has meaning except
insofar as it fits into the logic of the market.
Notice that capital is a static concept. Measures of human capital
emphasize what has happened -- almost passively -- to the worker prior
to entering the workplace. The possibility of learning on the job does
not enter into the picture. In the first place, quantitative
measurement would be virtually impossible. Years of schooling, which
may be irrelevant, are far more convenient from a quantitative
perspective.
On a deeper level, the potential for learning on the job presents an
even more difficult challenge, which the idea of human capital avoids by
conveniently simplifying the concept of the working people. The concept
of human capital, in effect, dehumanizes the human and collapses
everything else into something akin to the sort of inert capital goods
that might be found on the factory floor. To the extent that people
exist solely as human capital, they should merely adapt themselves to
the demands of their work.
Even more threatening than recognizing that workers are not merely
passive instruments is an understanding of human beings with hopes and
desires, who have capacities that go far beyond simply taking orders.
That realization would undermine centuries of economic theory that have
studiously avoided looking at work, workers, or the labor process.
Bill Watson's coworkers, described in the previous chapter, had little
human capital -- at least in the way economists conceptualize it. They
probably lacked a dozen of the other aforementioned capitals as well.
Even so, they knew more about the products being produced than the
management, which was running the automobile industry into the ground.
Unfortunately, management denied them a modicum of dignity and denied
the firm the benefit of their potential contributions.
In return, the workers subjected management to their pranks. Although
such behavior probably appeared to be nothing more than immaturity to
their employers, it was more likely a statement of their humanity. By
expressing their creativity in this way, they were stating emphatically
that they were much more than human capital.
Just as Watson's employers shut down the line rather than respect their
employees' humanity, economists, since the time of the rebuke of Jevons,
have shut down research regarding the inner workings of the labor
process, including workers' subjective concerns.
Dignity as a Factor of Production
Following the economic practice of considering everything productive as
capital, this book is a tongue-in-cheek call to acknowledge "dignity
capital," or dignity as a major factor of production -- that stilted
economic jargon for a form of capital. Of course, economists'
traditional factors of production -- land, labor, and capital -- are
narrow conceptualizations, focused merely on furthering production for
the market, mostly to the benefit of a relatively narrow group of
people. The same restrictive focus limits the usefulness of the more
recent factors, such as human capital.
In contrast, dignity -- reaching back at least as far as Aristotle --
emphasizes the value of individual people as part of society rather than
treating them as nothing more than abstract agents engaged in market
activities. Certainly, dignity implies breaking out of the narrow
confines of a Procrustean economy.
Of course, dignity is not really capital. In fact, dignity may be the
opposite of capital -- a form of anti-capital. Unlike dignity, capital
is naturally scarce. If you burn a ton of coal, that coal is no longer
unavailable. In contrast, dignity, like respect, can be contagious. If
I have a sense of dignity, I have no need to demean you; instead, I can
treat you with dignity. In addition, a sense of dignity can empower
people to resist the entreaties of the market.
Even so, dignity does have something in common with capital in the sense
that acknowledging people's dignity would probably go a great way toward
increasing the productive potential of society. Watson's employers
should have learnt as much.
The concept of dignity is not exactly new to economics -- even
conventional economics. Adam Smith credited the displacement of the
feudal economy by the market with increasing dignity, although he did
not use that term. Certainly, Smith rankled against the remnants of the
caste-like hierarchy of the feudal economy he saw around him. He
celebrated markets' potential to rupture the stifling constraints on
less fortunate, but deserving people. Surely he even hoped that less
deserving people, such as those in the urban mobs that disturbed him so
much, would eventually embrace and be embraced by the market system. If
so, Smith's hopes were never completely fulfilled.
Just as Smith's market did succeed in rupturing feudal society, this
book is calling for a new rupture -- one that would break down the new
restraints on human existence created by the corporate market economy.
Economists tell the story that the rupture of feudalism elevated the
productive activities of mankind from pervasive drudgery to hard work.
The next stage in human development will go as far as possible in
elevating work to pleasure -- the kind of pleasure that scientists enjoy
when making a discovery or the thrill that athletes or artists feel
after a great success.
More than a century ago, the British novelist H. G. Wells, while
capturing the technical shortcomings of Procrusteanism, certainly
exaggerated, suggesting:
#... were our political and social and moral devices only as well
contrived to their ends as the linotype machine, an antiseptic operating
plant, or an electric streetcar, there need now be no appreciable toil
in the world and only the smallest fraction of the pain, the fear, and
the anxiety that now makes human life so doubtful in value. [Wells
1905, p. 102]
Life, of course, will always contain a certain amount of hard work --
and even drudgery -- but modern technology is rapidly diminishing the
necessary amounts of both. This decline would be far greater in a more
rational society without the unnecessary trappings of Procrusteanism.
Going beyond Procrusteanism, a more sophisticated society would make
work conform more to the needs of the workers rather than the reverse,
which is the norm today. The resulting freedom and creativity could
unleash a burst of productivity, which could diminish the need for
drudgery even further.
Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
www.michaelperelman.wordpress.com
_______________________________________________
pen-l mailing list
[email protected]
https://lists.csuchico.edu/mailman/listinfo/pen-l
