Human capital theory was invented as an ideological weapon in the Cold War. Now it is helping to Uberise the world of work
With the elections of Margaret Thatcher and Ronald Reagan, human capital theory found hospitable political environments in the Anglo world. What followed in the UK, the US and other countries could best be described as a massive decollectivisation movement. Society no longer existed. Only individuals and their families did. Hayek in particular was a major revelation for the Iron Lady, who endlessly praised him.
The story of human capital theory in Western economies has been about divesting in people
In this new vision of the economy, workers can’t be seen as a specific class with shared interests. They didn’t even belong to a company … too communal. For sure, perhaps they weren’t even workers! Homo economicus qua human capital was instead somehow external to the firm, pursuing his interests alone and investing in his abilities to leverage the best deal. This ‘free-agent nation’ fantasy often bordered on the uncanny. Airport pop-management books from the 1980s and ’90s are hilarious for this reason. According to Charles Handy’s The Age of Paradox (1994), for example: ‘Karl Marx would be amused. He longed for the day when the workers would own the means of production. Now they do.’ Peter Drucker even felt comfortable announcing the arrival of the ‘post-capitalist society’, labelling the US the most socialist country around because all workers owned some capital after all.
What isn’t a joking matter, however, is the brave new world of work that has followed in the wake of neoclassical ideas such as human capital theory. Only when the employee is framed in such an ultra-individualist manner could the regressive trend of on-demand (or ‘zero-hours’) employment contracts ever gain a foothold in the economy. What some have called the Uberisation of the workforce functions by reclassifying workers as independent business owners, thereby shifting all employment costs to the employee: training, uniforms, vehicles and almost everything else.
That’s because it was born within an extreme period in 20th-century history, when many believed that the fate of humanity was hanging in the balance. It should therefore be approached as such, a rather eccentric and largely unrealistic relic of the Cold War. Only in that highly unusual milieu could mavericks such as Hayek and Friedman ever be taken seriously and listened to. In the face of communist collectivism, the Chicago school developed a diametrically opposed account of society, one populated by capsule-like individuals who automatically shun all forms of social cohesion that isn’t transactional. These loners are driven only by the ethos of self-serving competitiveness. Blindly attached to money. Insecure and paranoid. No wonder we’re so unwell today.
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