Living Reference Work Entry

Encyclopedia of Educational Philosophy and Theory

pp 1-4

Date: Latest Version

Human Capital Theory and Education

Throughout Western countries, education has recently been retheorized under Human Capital Theory as primarily an economic device. Human Capital Theory is the most influential economic theory of Western education, setting the framework of government policies since the early 1960s. It is seen increasingly as a key determinant of economic performance. A key strategy in determining economic performance has been to employ a conception of individuals as human capital and various economic metaphors such as “technological change,” “research,” “innovation,” “productivity,” “education,” and “competitiveness.” Economic considerations per se in the past, however, have not determined education.

In The Wealth of Nations (1776) Adam Smith formulated the basis of what was later to become the science of human capital. Over the next two centuries two schools of thought can be distinguished. The first school of thought distinguished between the acquired capacities that were classified as capital and the h ...

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