Humanizing Capital and Capitalizing Humans: A Gilded Age History

In 1958, economist Jacob Mincer published his epochal article, “Investment in Human Capital.” In the following decade, the term “human capital,” exploded onto the American scene, becoming the most dominant approach by labor economists for not only quantifying people but explaining inequality. Human capital went on to become not just a dominant economic theory but also a hegemonic cultural conception. Google the term “invest in yourself” today and you will find 14 million entries. The top hit explains how “investing in yourself may be the most profitable investment you ever make. It yields not only future returns, but often a current pay-off as well.”¹

Yet while the use of the expression human capital is a child of the mid-twentieth century, the “investmentality” behind this concept has far deeper roots. In this paper, I trace the origins of our current neoclassical theories of human capital and economic distribution back to the Gilded Age. The paper will examine how a diverse group of late nineteenth century physicists, chemists, economists, self-help gurus and businessmen came to conceive and quantify human beings as capitalized investments. Placing these ideas in their larger historical context, the paper will explore the social, political, intellectual and economic forces which shaped these ideas, from Henry George’s Progress and Poverty to the second industrial revolution.

In so doing, the paper will argue that Gilded Age Americans “capitalized” humans by imagining them as money-making machines whose productivity was determined by personal investment in one’s skills. I will also argue, however, that these very same theories served to “humanize” capital by presenting a generous and kind narrative of capitalism which argued that every man and woman earned what they deserved and that there was no such thing as economic exploitation.

1) http://www.lifehack.org/articles/lifestyle/3-valuable-ways-to-invest-in-yourself.html