The meaning of human capital and the future of the humanities (28 March 2010)

Is college just for the credential, or do people actually learn anything? What improves the college graduates "human capital": what they learned in class or the mere fact of the diploma? Considering the policy of lax grading, just getting in to the "elite" schools seems to function as proof that a student deserve a permanent competitive advantage in the labor market. But that would seem to make the entire edifice of secondary education a big charade, and the professors who are involved with it clearly aren't that cynical or in such colossal bad faith. And motivated students seem to appreciate learning for its own sake, whether or not that helps them gain an economic footing in society. But if we learn for the sake of fulfilling our human potential, but the economy denies us a way of making that fulfillment socially meaningful, we become drop-outs of a different sort, free-loading off society pursuing our own esoterica while contributing nothing. Or the alternative is that we are being trained into a condition of inevitable frustration, "overqualified" for whatever socially necessary but soul-crushingly dull tasks fall our way.

So what is the deal with higher education under capitalism? Is it a consumer good (entertainment for students) or a raw material of production (inchoate knowledge transmitted and transformed into human capital to be applied practically in the economy at large)? Is it a mandatory furlough period to ease job market pressures? A way to stock individuals with useful modes of information processing and a diverse base of more or less random learning that may or may not yield surprising ideas for innovation? A period during which the critical networking skills for the "social factory" are honed? Is it a way of sorting workers into their various destinies based on their ability to figure out the game of capitalism (how to acquire status that can masquerade as hard capital) and master its strategy (figure out who is worth knowing and how to manipulate them into helping you)?

Mark Thoma linked to this post by Frances Woolley, which questions whether human capital is a myth, and highlights what is at stake.

For example, if what is taught at universities actually makes people more productive, then simply taking university courses should be enough increase earnings. In fact, to get much of a payoff from university education, you have to finish your degree (the “sheepskin effect” ). One reason education pays is that completing a degree “signals” your ability, determination, competence and general stick-with-it-ness.
Perhaps we should think of human capital as a fairy tale, a reassuring bedside story. But the power of fairy tales is that they reflect certain elemental truths about the human condition. People who teach economics may find it deeply comforting to think that their pay is justified by their high levels of human capital.
But human capital is more than a comforting story – it is a myth that shapes our understanding of the world and thus public policy. Ontario’s government is urging universities to increase retention rates, so everyone who starts university completes a degree. If the human capital theory is true, then this is sound policy: more students completing university means more human capital means a more productive economy. If, however, the value of university education is as a signal of ability, then one of the most important things that universities do is fail students. Unless some students fail, the ability to complete a university degree confers no special distinction on the graduate.
Whether or not human capital theory is true determines the best response to the demographic challenges ... If education makes people more productive, then more education can increase the productivity of our economy – possibly enough so that fewer workers are able to support the large number of pensioners. If, however, education is basically about sorting workers – if people are getting more and more degrees in hope of eventually capturing that one elusive stable professional job with benefits – then the best way of responding to the demographic crisis is to scale back post-secondary education. Doing so would effectively increase the size of the working age population substantially, easing demographic problems.

Scaling back education is hard to accept from that utopian point of view that it enriches human potential independent of its social benefits -- it helps people live richer lives. Thoma's autobiographical anecdote in his response to Woolley is a pretty good example of that. He defends education for its own sake rather than for productivity, and concludes: "I believe education is the key to a better future and I will not give up trying to increase access to as many people as possible. I don't care at all if it dilutes the signal to employers, they'll just have to figure out some other way to cull the herd."

That echoes a point Marcuse makes in Eros and Civilization:

Productivity ... expresses perhaps more than any other idea the existential attitude in industrial civilization; it permeates the philosophical definition of the subject in terms of the ever transcending ego. Man is evaluated according to his ability to make, augment, and improve socially useful things. Productivity thus denigrates the degree of the mastery and transformation of nature: the progressive replacement of an uncontrolled natural environment by a controlled technological environment. However, the more the division of labor was geared to utility for the established productive apparatus rather than for the individuals -- in other words the more the social need deviated from the individual need -- the more productivity tended to contradict the pleasure principle and to become an end in itself.

But, he argues, historical conditions are so improved by productivity that individuals can begin to see the way back to their own needs, afforded enough leisure to conceive strategies for ending "the subjugation of man to his labor." Education begins to push in two contradictory directions, honing productivity while teaching people not to waste that productivity on meaningless work and channel it instead into their own potential.

At its heart, Eros and Civilization celebrates education for its own sake and not as preparation to reproduce the existing social order. When you strip away the Freudian claptrap, Marcuse's argument is basically that we misapprehend the needs of the system for our own wants and needs. In other words, we become convinced that we need to go to college to get a job rather than to learn, that the job market will reveal to us what we should do with our lives and our time. This he calls "surplus repression," as it directs us toward alienated labor (working for somebody else and not on something that we are personally invested in) that is not really necessary any longer for survival (at least in developed nations -- whether we are obligated to perpetuate capitalism in the West so its benefits can trickle down and liberate the poorer countries is a different question). Marcuse: "The elimination of surplus repression would per se tend to eliminate not labor but the organization of the human existence into an instrument of labor." That is basically what's at stake in defining the purpose of higher education: either it is worker training and sorting, supported by capital and carried out for its benefit, or it is a refuge from that organizing logic, a place where one learns what it can mean to be a human. (Hence, the humanities.)