Investing in People – Through Education for the Creation of Human Capital

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Knowledge is the potential power to utilize one’s cognitive capacities for the transformation of the existing things around oneself. Creation of knowledge has empowering capacity which has multi-dimensional impact on the different aspects of society.

Education is the basic mode of acquiring knowledge which has the revolutionary capacity of social transformation. A simple example of this process can be given as, if children are provided basic education about the significance of good sanitary and hygienic practices, which can save them from the many common preventable diseases. If we want, we can monetise this transformation generated by empowering potential of education by the comparing the amount of money government have to spend on the prevention  of various preventable diseases which can be prevented by the adoption of better sanitary and hygienice practices.

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Another example of the empowering aspect of knowledge can be given in the field of agriculture. In India although more than 60%of the total population is employed in the agriculture and allied sectors but education (knowledge) of agriculture is limited in the universities.

The introduction of agriculture as a discipline from the early age would have opened up the new vistas of knowledge generation at the rural level. Framers would become far more capable of relating their practical knowledge with the theoretical knowledge which they would have gained in the school education and this would have generated new inventions form the below. Therefore the cost incurred while providing education to the people cannot be measured in simple monetary terms. Many a benefits of sound education cannot be measured by short-term measurements they have multi-dimensional impacts on the human beings and the economy.

The process of commercialization of education some time becomes a hindrance in the distribution of the empowering aspects of knowledge. The society in which commercialisation of knowledge is dominant education becomes a mode for profit generation. The commercialization of education is not bad in itself but this should not lead to the erosion of the ethical aspect of the education. But at the same time commercialization of education has helped in the expansion and creation of the educational infrastructure which has been beneficial for the society as well as for the growth of knowledge. It helps in the resource mobilization and creation of assets for the further growth of education.

But the problem arises when the commercialization becomes the sole motive of the education. Education is reduced to the process of profit generation. Education is the process that chanellizes our creative potentials in different dimensions which have the potential of unleashing new resources of production and wealth creation. At the same time society and nation just cannot underestimate the redemptive and transformative capacity of this gift.

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The great American educationist John Dewey (1859-1952) argued that education and the learning are social and interactive processes thus the school itself is a social institution through which social reform can and should take place. Dewey says that, “the purpose of education is to prepare him for the future life which means to give him command of himself, to train him so that he will have full and ready capacities.”

Dewey goes on to acknowledge that education and schooling are instruments for the creation of social change and reform. He notes that, “Education is a regulation of the process of coming to share in the social consciousness and that the adjustment of individual activity on the basis of the social consciousness is the only sure method of social reconstruction.”

Dewey believed that education is the creator of social consciousness and it has the capacity to modify the individual behaviour which would ultimately lead to the process of social reconstruction.

There is another aspect in which education and knowledge can be linked with the generation of human capital. Among all the different types of capitals the human capital is the most neglected by the economists. Although no one denies its importance but when it comes to investment on the human capital the logic of fiscal discipline is put forward. Although it cannot be denied that wasteful, excessive and unproductive expenditure on the name of human capital cannot be justified in the era of global capitalism but we cannot undermine the creation of competitive and productive generation of the human capital without putting the long-term interest of the country into jeopardy.

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For the creation of human capital the expenditure on education, skills and knowledge creation is only one part of the process and the other part is the creation of such kind of regulative environment which will ensure the competitiveness of the human capital.

Arthur Cecil Piguo was the first to discuss it in detail. According to Pigou, “there is such a thing as investment in human capital. So soon as this is recognized, the distinction between economy in consumption and economy in investment becomes blurred. For up to the point, consumption is investment in personal productive capacities. This is especially important in connection with children, to reduce unduly expenditure on the adults, after we have descended a certain distance along the scale of wealth, so that we are beyond the region of luxurious and unnecessary comforts, a check to personal consumption is also a check to investment.”

In this context the austerity measures like sharp cuts in public expenditures without understanding their long-term implications on economy of an indebted economy is not the part of good economic policy. Because by reducing expenditure on the process of human capital generation can really dent the long-term development potential of the economy. There can be a debate on the efficiency of per-capita expenditure on the human resource creation but radical cuts in this process cannot be justified by any economist.

Pigou’s analysis about the investment in the human capital is very broad it will include food, health, education and employment. But even education can be separately analyzed as an important aspect of investment in the generation of human capital. There is a very unique and revolutionary feature of the human capital.

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As Marx explained in ‘Das Capital’ that capacity to work is different from the work assigned to a labourer. It is only by working the worker increases, his capacity which gradually outpaces his designated work and it leads to the generation of surplus value. But this cannot be accepted without the presence of such kind of circumstances and work culture which forces the worker to work to his full capacity and this increase the productive capacity of the worker can be explained by the concept of Competence.

Unlike other factors of production machinery, land, capital, competence is expandable and self-generating with use; ‘as doctors get more experience, their competence base will increase, as will their endowment of human capital the economics of scarcity is replaced by the economics of self generation. Competence, especially knowledge is sharable and transportable, can be moved and shared. This transfer does not prevent its use by the original holders. However, the transfer of knowledge may reduce its scarcity –value to the original possessor.’’

The commercialization of education is that process which will have an important role to play in the growth of education which is the main source of generation of ‘human capital’. On the one side there is the danger that commercialization will make education in particular the higher education out of reach of the larger section of the society while on the other side, it will have a negative impact on the growth of higher education. There is a danger that process of commercialization will make higher education in particular nothing but as a source of employment generation. When the pursuit of education will be reduced to employment generation it will have negative impact on different disciplines.

Management, Engineering and other professional degrees will increase but the basic science and social-sciences will be neglected. It is very crucial for the long term benefit of the society that social-sciences and basic sciences should not be neglected. Social sciences are very vital for the understanding of different social phenomena’s which   will have impact upon our society and basic science will remain the base of any kin of research in the field of science and technology.

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Monetary value of there disciplines cannot be assessed by the short term perspective of commercialization and job creation. These disciplines have to be pursued for the long term interest of the society, so that amount of knowledge generated by these disciplines can be used for the long-term benefits of the society. Neglect of these disciplines for the short term benefits can cost a society and nation dearly. The world is becoming more and more complex and interdependent, different variables are influencing the growth of the society. The correct analysis of this complex interdependence is not possible by a single perspective, inter-disciplinary and integrative approach is essential requirement for the sustainable growth.

The process for the creation of human capital is interrelated with the ‘generation of knowledge’ and prosperity of society. Investment in education is one of the most basic and sounds way to capitalize on the human resources of any country. In the final analysis it is the human resource which has the potential to revolutionize the use of other resources and unleash the new productive potentials of an economy.

By

Sumeet Thakur

Email: sumtha4-at-gmail.com

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