Why a Broad Conception of Human Capital is Needed

I first encountered the subject of human capital (HC) in 1968 when I was a PhD student enrolled in Monroe Berkowitz’s Human Resources class at Rutgers University. Berkowitz assigned Gary Becker’s Human Capital (1964) as the most important reading assignment. After that class, I began to see many opportunities to apply the HC concept, as well as to see opportunities to modify Becker’s conception of HC. In my PhD thesis (Tomer 1973), I used the HC concept to depict one kind of outcome (or product) resulting from the management consultants’ work with their client firms. These consultants, I discovered, were helping their clients’ firms create a type of HC (I labeled it organizational capital) that enabled them to produce more goods without the addition of more labor or tangible capital (Tomer 1981 and 1987). And I estimated that this organizational capital formation contributed a small but measurable amount to the annual rate of economic growth of the United States. This was estimated utilizing methods similar to those developed by Edward Denison and his collaborators (see Denison 1962). That was the beginning of my HC research. Since the 1960s, the HC area has become an even more important area of research.