WASHINGTON , DC – In recent decades, economists have been struggling to make use of the concept of human capital, often defined as the abilities, skills, knowledge, and dispositions that make for economic success. Yet those who use the term often assume that to conceptualize a phenomenon is a first step to manipulating it. And, indeed, “human-capital policy” is now much in fashion. But what if many of the abilities and dispositions in question are a product of history, capable of being understood and explained but not readily replicated?
Simon Kuznets, one of the twentieth century’s great economists, was a pioneer of human-capital theory. Not long before he died, Kuznets recommended to a young colleague that one ought study the role of Jews in economic life.
By and large, economists and other social scientists have neglected the history of Jews and capitalism, for reasons that are understandable, though unconvincing. For most economists, the extent to which modern capitalism has been shaped by earlier cultural predispositions is a source of puzzlement at best, if not merely a factor to be dismissed.
Such cultural considerations simply do not fit into the categories in which equation-fixated economists are predisposed to think. When economists examine “human capital,” they prefer measurable criteria such as years of schooling. To the extent that human capital involves character traits and varieties of “know-how” that are transmitted within the realms of the family and the community, rather than by formal education, it becomes both methodologically elusive and difficult to manipulate by public policy.