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In Theodore W. Schultz’s Presidential Address to the American Economic Association (1960), he proclaimed that human capital would revolutionize Western capitalism and the fate of developing nations. He told his audience that labour should no longer be treated as a factor of production like land, machines or factories, as investment in education was the key to improving individual life-chances, productivity and economic growth. Gary Becker later declared that we live in the ‘age of human capital’. Globally, trillions of dollars continue to be spent on education and training by governments, companies, families and students, in the belief that it will deliver economic growth, higher productivity and individual prosperity. At the same time, it is estimated that student debt in the United States alone has reached a staggering $1.3 trillion.

It may seem surprising to talk about the death of human capital given the global expansion of education and rapid advances in digital technologies. We are not arguing that human labour is less important or asserting the end of work in a world in which robots will take over. Our argument is that we are witnessing the death of ‘orthodox’ human capital theory, and despite attempts to update the theory, it remains inextricably  linked to a labour scarcity model, with a primary focus on supply-side solutions.

This talk will describe how we have reached a structural tipping point where education and the labour market no longer work in the way they've done in the past. It describes how the human capital equation of ‘learning equals earning’ doesn’t add up, and offers a revisionist history of orthodox theory, explaining why its early popularity was based on a ‘happy accident’ and why Schultz’s human capital revolution has contributed to a ‘revolt of the elites’. It will outline a ‘new’ theory of human capital based on job scarcity (rather than labour scarcity), to address today’s challenges presented by global competition, new technologies and economic inequalities, that have reigniting longstanding debates about income redistribution, the nature of work, and the role of job markets.

The talk is based on the forthcoming book The Death of Human Capital? Its Failed Promise and How to Renew It, by Phillip Brown, Hugh Lauder and Sin Yi Cheung (forthcoming, New York: Oxford University Press).