Humane Capital: A Reexamination of Catholic Social Teachings in Light of the Shift to Human Capital

• DOI: http://doi.org/10.1111/ajes.12354
• Date: 01 September 2020
• Published date: 01 September 2020
• Author: Andrew Beauchamp

Humane Capital: A Reexamination of

Catholic Social Teachings in Light of the

Shift to Human Capital

By Andrew BeAuchAmp*

ABstrAct. Human capital is the set of productive knowledge, skills, and

traits that individuals possess. Productive knowledge and skills are

typically learned through education and work experience. Character

traits matter both for the application of knowledge and skills and

for their acquisition in the first place. In the past 100 years—and

with enormous social consequences—the economy has transitioned

to human capital being the most important resource for individual

and social outcomes. Societies responded by emphasizing schooling

as the means to develop this resource. In recent decades, however,

researchers have discovered that human capital acquisition depends

on certain character skills best developed early in life before

schooling starts, typically within families. Current research and policy

are investigating which combination of early life schooling and

improvement in family circumstances can best help people acquire

the character skills, and then human capital, needed to flourish. These

changes have important implications for the social teachings of the

Catholic Church, including moral insights into the distribution of

resources, emphasis on the active subject in human work, and the

role of civil society in promoting ideas and institutions conducive to

an ideal human ecology.

Introduction

For much of human history, labor was relatively homogenous. Land

and natural resources, followed later by physical and financial capital,

were the dominant means of production. Their level and distribu-

tion determined the level and distribution of income. The owners of

land and capital were able to dominate agrarian and early industrial

American Journal of Economics and Sociology, Vol. 79, No. 4 (September, 2020).

DOI: 10.1111/ajes.12354

© 2020 American Journal of Economics and Sociology, Inc

*Department of Economics, Wright State University. Email: andrew.beauchamp@wright.edu

1210 The American Journal of Economics and Sociology

economies. When ownership of physical capital and land were con-

centrated, inequality was enormous. This was especially significant

in the late 18th and 19th centuries, when the development of large-

scale industrial enterprises devalued the productive capital of skilled

craftsmen and initiated the rise of a substantial working class without

ownership of any significant means of production. Inequalities in the

distribution of productive capital, income, and power arose. Owners

of capital collided with largely unpropertied masses of workers and

triggered intellectual and physical conflict. Social policy in capitalist

countries developed in response to the fear that capitalism would

either create a permanent oligarchy or lead to a socialist revolution

and state ownership of the means of production.

Prior to the 20th century, labor was often equated with manual

labor, without substantial differences in knowledge or development

across people. Even economists downplayed or ignored productive

capacity embodied in people. As Gary Becker (1993: 392) wrote in his

Nobel acceptance speech:

Until the 1950s, economists generally assumed labor power was given and

not augmentable. The sophisticated analyses of investments in education

and other training by Adam Smith, Alfred Marshall and Milton Friedman

were not integrated into discussions of productivity.

At the high point of these debates, the social teachings of the Catholic

Church were launched with Pope Leo XIII’s (1891) Rerum Novarum.

This papal encyclical shared the perspective of the time. It empha-

sized social and economic justice as a moral counterweight to eco-

nomic disparities in productive capacities. In that way, the Church

attempted to moderate the conflict between labor and capital.

By the latter half of the 20th century, however, circumstances in

industrialized countries had reversed. In fact, most of the means

of production were now in workers’ hands, and especially in their

heads and hearts. Today, “human capital,” as economists refer to

these capabilities, is the central determinant of individual well-being

and the wealth of nations. Hamilton et al. (2005) estimate that 80

percent of all wealth in OECD countries arises from some variation

of human capital. To get at this abstract sense of knowledge, skills,

1211Humane Capital

character traits, and institutional arrangements, the World Bank uses

the term “intangible capital.” Many aspects about people and social

relationships factor into human-based productive capacity: knowl-

edge, skills, capacity to work with others, and institutions such as

the rule of law and representative governance. By far the most sa-

lient dimension of human capital for social and economic policy has

been knowledge obtained through education. Thus, in an effort to

increase both individual and social wealth, nations around the world

have provided increasing levels of education for more and more of

their citizens.1

But knowledge cannot be mass produced and spewed out of a

factory. Knowledge is socially embedded. Human capital consists of

more than knowledge. It also includes the willingness, ability, and

motivation to learn, apply, and maintain knowledge in the first place.

The emphasis in recent economic research has shifted to the influ-

ence of character on the capacity of children to build human capital

through their formal education. Character is deeply shaped by local

communities and especially by families. These institutions and social

connections are relevant for children long before they attend formal

schooling. In large measure, character development determines a

person’s trajectory through life.

If human capital has become the dominant means of production,

then knowledge matters. But, as the Nobel Laureate economist James

Heckman has demonstrated, knowledge is a multidimensional object

that takes character as a prerequisite, and character itself has a de-

velopment process of its own. If we want people to have increased

productive knowledge, we need to understand those underlying pro-

cesses. The current emphasis on human capital is a vast change from

an earlier era when the material factors of land and physical capital

dominated. Policies and moral reflection will need to adjust to this

newer reality.

Some of this transition is incorporated in the Church’s social com-

mentary. Catholic social teachings (CST) initially focused, in 1891, on

the distribution of material and productive resources when addressing

poverty, wages, income inequality, unionization, and other aspects

of economic arrangements. By the end of the 20th century, however,