The Emergence of Intangible Capital

JYVÄSKYLÄ STUDIES IN HUMANITIES 285 Olli Turunen The Emergence of Intangible Capital Human, Social, and Intellectual Capital in Nineteenth Century British, French, and German Economic Thought JYVÄSKYLÄ STUDIES IN HUMANITIES 285 Olli Turunen The Emergence of Intangible Capital Human, Social, and Intellectual Capital in Nineteenth Century British, French, and German Economic Thought Esitetään Jyväskylän yliopiston humanistisen tiedekunnan suostumuksella julkisesti tarkastettavaksi yliopiston vanhassa juhlasalissa S212 huhtikuun 22. päivänä 2016 kello 12. Academic dissertation to be publicly discussed, by permission of the Faculty of Humanities of the University of Jyväskylä, in building Seminarium, auditorium S212, on April 22, 2016 at 12 o’clock noon. UNIVERSITY OF JYVÄSKYLÄ JYVÄSKYLÄ 2016 The Emergence of Intangible Capital Human, Social, and Intellectual Capital in Nineteenth Century British, French, and German Economic Thought JYVÄSKYLÄ STUDIES IN HUMANITIES 285 Olli Turunen The Emergence of Intangible Capital Human, Social, and Intellectual Capital in Nineteenth Century British, French, and German Economic Thought UNIVERSITY OF JYVÄSKYLÄ JYVÄSKYLÄ 2016 Editors Ilkka Nummela Department of History and Ethnology, University of Jyväskylä Pekka Olsbo, Ville Korkiakangas Publishing Unit, University Library of Jyväskylä Jyväskylä Studies in Humanities Editorial Board Editor in Chief Heikki Hanka, Department of Art and Culture Studies, University of Jyväskylä Petri Karonen, Department of History and Ethnology, University of Jyväskylä Paula Kalaja, Department of Languages, University of Jyväskylä Petri Toiviainen, Department of Music, University of Jyväskylä Tarja Nikula, Centre for Applied Language Studies, University of Jyväskylä Epp Lauk, Department of Communication, University of Jyväskylä URN:ISBN:978-951-39-6596-9 ISBN 978-951-39-6596-9 (PDF) ISSN 1459-4331 ISBN 978-951-39-6595-2 (nid.) ISSN 1459-4323 Copyright © 2016, by University of Jyväskylä Jyväskylä University Printing House, Jyväskylä 2016 ABSTRACT Turunen, Olli The Emergence of Intangible Capital: Human, Social, and Intellectual Capital in Nineteenth Century British, French, and German Economic Thought Jyväskylä: University of Jyväskylä, 2016, 379 p. (Jyväskylä Studies in Humanities ISSN 1459-4323; 285 (nid.) ISSN 1459-4331; 285 (PDF)) ISBN 978-951-39-6595-2 (nid.) ISBN 978-951-39-6596-9 (PDF) Since the late 1950s the concept of human capital, understood as the stock of knowledge, skills, and abilities that determine individual productivity, has become one of the central tools with which economists explain both individual success and economic growth. During the latter half of the 20th century complementing concepts such as social capital, meaning the value of social networks and norms of reciprocity, and intangible capital, meaning the investments in knowledge and innovation generation, have emerged. The term intellectual capital is sometimes used as a major concept to bind different forms of intangible capital. This study focuses on the conceptual equivalents of these ideas in 19th century English, French, and German economic thought in order to show that most of the phenomena now connected to human capital, intangible capital, intellectual capital, and social capital were already extensively discussed as capital in different phases of the long 19th century (1789-1914). Equally, many of the arguments presented since the late 1950s against the extension of the concept of capital to human beings, human attributes, knowledge, reputation, social norms, or social relations after the new emergence of these ideas were also part of the earlier discussion. A better understanding of past debates about the definitional scope and functional role of capital in economic theory should help to avoid unintentionally circular or repetitive argumentation which presents what were in fact once solid arguments of political economy as previously unattainable insights made in the past five decades. Keywords: history of economic thought, human capital, intangible capital, social capital, intellectual capital, conceptual history Author’s address Olli Turunen Department of History and Ethnology P.O. Box 35 (H) FIN-40014 University of Jyväskylä Finland [email protected] Supervisors Ilkka Nummela Department of History and Ethnology University of Jyväskylä Jari Ojala Department of History and Ethnology University of Jyväskylä Jari Eloranta Department of History Appalachian State University Reviewers Reino Hjerppe VATT Institute for Economic Research Sulevi Riukulehto University of Helsinki Opponent Reino Hjerppe VATT Institute for Economic Research PREFACE This book is an attempt to describe the emergence and development of the idea that acquired human attributes as well as various phenomena of the social sphere are similar enough to financial investments and material capital to be treated as capital in economic and social analysis. The idea is not wholly trivial, since such a capital framework offers a forward-looking perspective for invest- ing time and resources in education, health, science, governance, and institutions that work. It is followed by the idea that the real constraint on our exist- ence is our level of technology, and not land as has classically been perceived. As the reader will discover, the nineteenth-century discussion on these subjects was vibrant and diverse. While I have been working with this theme from the late 2000s to this date in March 2016, different aspects and variants of what (as will be explained later) I call the “intangible capital connection” have resurfaced and become topical. First, during the latter half of the previous decade, the publication boom on the subject of ‘social capital’ was still in full swing. Research looked for the secret of thriving societies and communities in social aspects such as trust, reciprocity, and healthy institutions. Secondly, at the same time, the UN System of National Accounts (2008, SNA) was being reformed to better account for investments in intangible capital (research and development). This has also meant revisions of contemporary and historical GDP figures to reflect the new accounting methods. Thirdly, the consequences of the financial crisis of 2007-2008 combined with the continued effects of globalization and automatization have created an environment of increasing inequality, which has prompted some prominent economists to challenge the promise of the human capital theory in the same manner as Karl Marx or Eugen Böhm von Bawerk challenged the liberal idea of Mitkapitalistentum of workers in the nineteenth century. Indeed, the fears that robots and automatization will wipe out jobs on a large scale have their coun- terpart in fears caused by early industrialization. Fourthly, the old resource constraint of classical economics has come to haunt us on a global scale. Wheth- er our investments in knowledge and technology are the key to helping us through this remains to be seen. All these themes had quite close parallels in nineteenth-century economic literature. While writing this volume, the availability of digitized eighteenth and nineteenth-century literature has been constantly improving. The digitization projects and libraries of Google Books, Archive.org, Calliga, Deutsche Digitale Bibliothek, DigiZeitschriften, Persée, Europeana, Econlib.org, and others have combined to give access to a library of proportions that few physical libraries can match. In this work, I have barely scratched the surface of possibilities that these resources are revealing; but at the same time, digitized literature has helped tremendously in locating and studying the relevant discourses. I would like to thank professors Ilkka Nummela, Jari Ojala, Jari Eloranta, Juha-Antti Lamberg, and Kustaa Vilkuna for their help and guidance. The reviewers Reino Hjerppe and Sulevi Riukulehto gave numerous constructive suggestions on how to improve the work. Unfortunately, there was not quite enough time to carry out all of these. The colleagues at the Department of His- tory and Ethnology have created a great work community, and reflective dis- cussions with Miikka Voutilainen, Pasi Saarimäki, Timo Särkkä, Matti Roitto, Sofia Kotilainen, Heli Valtonen, Maare Paloheimo, Ville Sarkamo, Pasi Neva- lainen, Heli Niskanen, Merja Uotila, Eerika Koskinen-Koivisto, and many others have provided diverse perspectives to the practices of scholarship. Thanks also goes to Alex Reed for greatly improving the language of the work. The Kone Foundation, the Emil Aaltonen Foundation, and the University of Jyväskylä (Rector’s Research Grant) have provided funding for this research, for which I am grateful. While writing this book, I have also been employed by Aalto University and two Academy of Finland projects. In addition, I have had the privilege to work with IEHA and MIT in preparing the World Economic History Congress (2018) in Boston. I would like to thank Matti Pursula and Mauri Airila at Aalto, Jari Ojala and Juha-Antti Lamberg here in Jyväskylä, Anne E.C. McCants at MIT, and Jari Eloranta at Appalachian State University for these much appreciated opportunities. Furthermore, my long-standing in- volvement with the Economic and Business History Society, especially with Dan Giedeman and Jason E. Taylor, has brought invaluable experience in or- ganizing conferences, scholarly publishing, and in the running of a scholarly association. Finally, I want to thank my wife Arja for her loving patience. I dedicate this book to my children Hilda and Tuure. I hope

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