Revisiting Human Capital

There was a time when human beings were just that-human beings distinguished from other animals. Then came the industrial revolution and the ‘capitalists’ took centre stage of civilization. They distinguished humans from ‘capital’ eventually leading to the Marxist class war.  The struggle continued between the capitalist class and the labour class to establish relative prominence. In the recent decades some management practitioners tried to place the labour class (of course within the labour class there are many sub classes-uber, upper, middle, lower and ‘BPL’-Below Poverty Line) as part of the capital stock and started calling human beings as ‘human capital’. 

Most classical economists and even some of the modern economists like Thomas Piketty would not approve this extreme turnaround in thinking. Some socialists thought that the reason for all economic value is labour or human endeavour and capital is just a consequence of labour.

Which one to pick- the capitalists or the socialists? Is that a catch 22 situation?

We do not have to necessarily reduce every duality into Newton’s third law of motion. Everything need not have an equal and opposite force, at least in the realm of thinking or human imagination. We all know that capital, tools and ‘apps’ have greatly enhanced the human potential and made life a lot easier for most people, though making parents of gizmo-loving millennial children a lot anxious. Terming capital an exploitative weapon is at the least biased thinking in a progressive society. Human thinking, imagination and efforts led to path-breaking inventions and vast accumulation of capital, albeit in the hands of a few, not always in the hands of the inventors though. Counting human beings as part of the capital stock is to equate the producer with the tools of production or at the least, poor economic accounting.

In an interview published in the now long extinct ‘Illustrated Weekly of India’ the late Osho (Acharya Rajneesh) once jovially said ‘Jesus saves, Moses invests and Rajneesh spends’. In a society there are people who save, others who invest and almost everyone who spends. Probably, the Acharya did not want to give any particular significance to any one of the three or wanted to justify all that money spent on the multitude of Rolls Royce cars. Yes, savings and investments lead to creation of capital. But capital is of what use if there is none to buy the products of capital, including the Rolls Royce cars?

Re-imagining people as human beings rather than resources or capital may be reinventing the wheel or even going far back in the past when the wheel wasn’t yet invented. What would that mean to HR practitioners? For one, this may prompt organizations to start viewing people as different from other asset classes. Assigning a price tag or even a rental value to human beings is devaluing human ingenuity and freedom of choice. Companies can hire the ‘services’ of employees, buy ideas and even inventions, still retaining the freedom with the seller.

In the not so distant future, 'hiring' people may sound derogatory and probably illegal just as trading slaves became illegal; 'full time employment' too may become impractical, if not illegal. Who can utilize a human mind full time, if at all available for hire? Surely, the owner cannot; leave alone the buyer. Employment is becoming ‘employmind’ expanding human possibilities and making human accounting evermore error-prone.

Is there a killer app waiting to solve this accounting problem?  

“Business is about profit, yes and it is about more than profit. At its best, it is expanding the possibilities of humanity.”- Jon Miller