Human Capital, Organic Capital, and the (Labor) Economy of Human Beings as a Race

We are accustomed to thinking of the concept of “human capital” as a product of the conditions of neoliberal labor, or the reinvestment of the economic thinking of neoliberal economists by the state and private sector since the 1970s. As I have written before on this blog, looking at Foucault’s lecture on human capital in The Birth of Biopolitics, the concept works to makes labor itself into a form of capital, a resource that lives in the human organism’s body. An array of social and biological practices and processes are hence recast as investment practices, and labor can symmetrically be solicited from even the most supple processes of life and embodiment, collapsing the meaningful distinction (if there ever was one) between work and life-making activity.

There are, however, interesting precedents to the neoliberal theory of human capital, whose genealogy I will briefly review below. In the generative interwar generation in Austria, where the oft-named “Red Vienna” generated a startling number of intellectuals who would continue to cast long shadows on the twentieth century and beyond (one of them, for example, is Freud), figures an early sociologist and economist, Rudolf Goldscheid (1870-1931). His work has yet to be translated into English and, full disclosure, I am not lucky enough to read German, so I am relying here on some well done scholarship by a German speaking demographer, Gudrun Exner. Interestingly, it seems that prior to the elaboration of human capital, a certain social democratic, reformist theory of life as a resource for a humanized capital was already in circulation. That it was taken up in interwar Vienna by major proponents of positive eugenics adds an important layer to the genealogy of human capital: the investment in and enhanceability of the modern racialized body as a project of improving the qualitative output of labor.

But first, and briefly: human capital was introduced into neoliberal economics in the 1950s by Jacob Mincer, who worked, famously, with Gary S. Becker to elaborate the concept over the ensuing several decades as a theory of familial economics. Mincer’s doctrinal basis is a carefully selected passage in Adam Smith’s Wealth of Nations discussing “fixed capital,” a form of capital held as stock for the production, but not the circulation, of commodities (viz., “of which the characteristic is, that it affords a revenue or profit without circulating or changing masters”). According to Smith, there are four types of fixed capital: machines, buildings, land, and, in his words, “the acquired and useful abilities of all the inhabitants and members of a society.” This last type is what comes to be called by Mincer human capital. As Smith continues:

The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit.

Of course, this will greatly annoy Marx, who takes a moment in the second volume of Capital to ridicule the exact sentence that Mincer would later elevate to a neoliberal dogma. For Marx, Smith is mistaken in dividing capital into fixed and circulating components in the first place, in that he thereby effectively ignores the actual operation of labor power: because labor power as such does not become a commodity for Marx but retrospectively, precisely when it circulates on the market, the value of the worker’s human capital is for him always already an element of variable capital, not fixed capital:

The “acquired and useful abilities” which Smith mentions under the head of fixed capital are on the contrary component parts of circulating capital, since they are “abilities” of the wage-labourer and he has sold his labour together with its “abilities” (Capital, Vol II, Chapter 10)

As Morgan Adamson clarifies in an excellent genealogy of human capital, however, it is precisely the historical collapse of the distinction between fixed and variable capital that Foucault details in The Birth of Biopolitics, challenging the traditional Marxist view of labor. As a biopolitical measure, what she calls “the strategy of human capital” literally works insofar as it measures the “economic vitality” of populations. The actual value assigned to human capital is in part a violent imposition of objective measure, a claim to establish as fixed capital something as vague as, say, education or innate aptitude and skill (or race, as I want to argue). Yet it is also, in the same breathe, and attempt to manage the economic potentiality of populations through their measure, through the measure of their human capital (274).  It is undoubtedly never a fully successful imposition upon the body and populations, but its lack of precision is actually generative of the activating force of its measure, its ability to solicit more and more from life.

Several decades before Mincer’s, Goldscheid’s roaming interdisciplinary work, which mixes demography, sociology, philosophy and social democratic style political economy, formulated a concept of “organic capital.”  The problem to which organic capital was posed as the solution was the declining birth rate in Western Europe following World War I, which had combined earlier Malthusian anxieties about the poor match between demographics and resource distribution with increasingly popular, hardline social Darwinist eugenics. With the added threat of degeneration of those being born, the lack of quantitative increase in population was cast as nothing less than race suicide.

In marked contrast to this negative eugenics, Goldscheid’s “Economy of Human Beings” suggested a completely different strategy. Instead of trying to quantitatively increase the labor supply by increasing the overall population, a qualitative approach could focus on intensifying the investment in and care for the children that were being born, hence eventually increasing their future labor-output to compensate for the decline in births. In one and the same reformist move, the problems of Malthus and Francis Galton would be overcome, while simultaneously and humanistically uplifting the living conditions of the working classes, particularly in the realms of health and education.  Not only would qualitative output be increased by caring for living bodies, but various drags on the economy would also be lifted to further encourage production, such as disease and premature death.  As Goldscheid put it in 1908 (this is Exner’s translation):

The generation of human labour force is not only a technical, but first of all an organic problem. If the quality of the labour force decreases due to an increase of the birth rate, or if this quality threatens to deteriorate over the course of time, the production of working material will soon prove to be uneconomic…we can only speak of profitable breeding of men if the workers, in their period of productivity, produce more than they have need of during their entire lives, including in the unproductive ears, to satisfy the necessities of their development [Entwicklung, a word also used in contemporaneous biology and evolutionary science].

Exner, for his part, downplays the language of eugenics in Goldscheid’s writings, but it seems that perhaps he conflates negative and positive eugenics and thus hopes to avoid associating organic capital with the former. I in fact first came accross organic capital in the work of contemporaneous Austrian physicians, endocrinologists, and municipal officials who, in interwar Vienna, aimed to put the theory into practice through a massive social welfare state that would improve the individual body and the body politic through a form of race hygiene involving hospitals, schools, and other public projects for the working class.

What this brief comparative genealogy helps to do, first of all, is displace some of the self-referential authority of neoliberal economics, in that the economic problematization of the living body as a repository of capital was also a socialist concern (it would be interesting, for example, to look at how the concept was negotiated in the Soviet states after World War II). Moreover, it reenforces the centrality of race to the project of human/organic capital, underscoring its eugenic origins in Europe–with colonial counterparts that merit study. This is useful not only as a historical exercise, but also in light of the problematization of the racialized body under contemporary neoliberal conditions, particularly in the United States, where race functions as a definitively important variable in the unequal distribution of investment in human capital, as well as the coerced premature social and biological death assigned to bodies of color, particularly black bodies. Understanding contemporary labor practices as inheritors of a genealogy of a eugenic economy of the human might go some way to reminding us that race is not a supplement to understanding neoliberal and financialized capital. Race is rather there from the beginning.


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