Human Capital: A Brilliant Idea or An Ideological Dead End? (Steve vs. Steve)

Group Submission Type: Special Session

Description of Session

In the early 1960s, economists like Gary Becker and Theodore Schultz developed a new economic theory, human capital theory, which offered a different understanding of labor. Prior to the 1960s, the field of labor economics did not fit with the neoclassical economics framework that understood market economies in terms of its abstract analytical framework of competition among small consumers and small producers determining supply and demand of goods and services. Human capital theory changed all that by developing a way that labor could be analyzed as if it were similar to other commodities, through its supply and demand.

The “brilliant idea” thesis is captured by the title of a seminal article by economist Mary Jean Bowman in 1966: “The Human Investment Revolution in Economic Thought.” The “revolution” was a rather simple concept – that improved education, health, and other phenomena were investments in human capital, analogous to investments in physical capital, that had payoffs to the individual and to the society. This has led to more than 60 years of research into the nature, circumstances, and extent of that payoff, especially for education investment to what economists call “society as a whole.”

Yet there have been criticisms since the inception of the human capital framework, even by neoclassical economists. Over time, critical political economists and those from other disciplines, particularly sociology, have raised fundamental questions about its underpinnings and utility. In this debate and discussion, Stephen Heyneman and Steven Klees will ask each other questions as well as reserve time to respond to questions and comments from the audience.

Sub Unit

• General Pool

Chair

• Dana Burde, New York University

Presenters

• Stephen P Heyneman, Comparative-Education.com

• Steven Klees, University of Maryland