"To most of you, capital means bank account, one hundred shares in IBM, assembly lines, or steel plants......These are all forms of capital in the sense that they yield income and other useful outputs over long periods of time. But I am going to talk about a different kind of capital....
Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality and honesty are capital too in the sense that they improve health, raise earnings, or add to a person's appreciation of literature over much of his/her lifetime. Consequently, it is fully in keeping with the capital concept as traditionally defined to say that expenditures on education, training, medical care etc are investments in capital....
However these produce human, not physical or financial capital capital because you cannot separate a person from his or her knowledge, skills, health, or values the way it is possible to move financial or physical assets while the owner stays put....."
Chapter II, Human Capital revisited, Human Capital 3rd edition, 1993
Gary S. Becker, Professor of Economics and Sociology at the University of Chicago
continued...
So did Gary Becker eloquently defined the case for the term 'human capital' - the original version being written in 1964. Of course, Gary Becker is a Nobel prize winner for his pioneering work
'for having extended the domain of microeconomic analysis to a wide range of human behavior and interaction, including nonmarket behavior.' [official Nobel Prize wording]
The odds are that if you ask somebody in HR in the UK they will have never heard of Gary Becker. Which is sad. Some in HR in the US may acknowledge him........A Nobel prize winner in human behaviour!!! Of course if you do the HCMI qualification through the International School of HCM you will be exposed to a little of his thinking. Of course, we've revised the original meaning to incorporate more recent developments along with providing a definition of human capital management.
But the reason I quoted this this morning was to provide one of the more definitive pieces on human capital. So why do people rail so against this (what should be the) correct term?
Actually an insight lies with Gary Beckers original comments back in his first edition of 1964.........
"Passions are easily aroused on this subject and even people who are generally in favour of education, medical care, and the like often dislike the phrase 'human capital' and still more any emphasis on its economic effects. They are often the people who launch the most bitter attacks on research on human capital, partly because they fear that emphasis on 'material' effects of human capital detracts from its 'cultural' effects, which to them are more important..."
Actually I would say these people are just biased. You need both (or more) perspectives for a balanced viewpoint. And even then how can you deny that capital (to be utilised) is a far more positive term than resources (to be used)?
"To deny your past........." (anonymous)
