How the cottage industries in class ideology did themselves in

Trade unions’ survival-based strategy has left them reliant on an outdated ideology of class conflict. AAP/Dean Lewins

The Conversation is running a series, Class in Australia, to identify, illuminate and debate its many manifestations. Here, Chris Peers argues that the union movement and academics debased the currency of their beloved industrial-era notions of class.


What we Australians so neatly clump together as neoliberalism is a kind of intellectual debate marked by an over-dependence on statistical evidence and a gross incapacity to engage in critical self-analysis. Strangely enough, the label should apply equally to small-l liberals and conservatives. What is absent from social analysis as promoted by the prevailing intellectual elite is an ability to balance the redundancy of socialist thought with the obsolescence of utopian philosophy.

To drive a middle path between what remains of the left and the prevalence of the right, it may be necessary to consider more carefully the prevailing wisdom for traces of moral and philosophical bias. The concept of human capital is a case in point. It is a relatively new idea, generated effectively from modern economic theory, which projects two different things.

First, it promotes an imaginary humanity that is simplistically composed of a species-being (the human) whose characteristics are generic. Second, it ties humanity to a form of wealth or value. It does so by extending the notion of labour and transforming it into an infinite resource.

An economy first, society second

Class has an element of moral risk – conflict, rank, hierarchy – that human capital defuses. Human capital says: “we’re in an economy first and a society second”.

Accordingly, the politics of human capital are the politics of an economically productive individual and the system in which she lives. Further, the direction of social policy ought to follow from the refinement of economically productive citizens.

Human capital theory is not just a new way of describing what used to be known as civil society. Rather, it is a new way of promoting the kinds of civil liberties that the market provides to those who engage in commerce. As such, it is a way of displacing notions of human freedom that derive from a conflict between capital and labour.

Some proponents of human capital theory see their work as an improved means of distributing wealth to the disadvantaged. The market is viewed as a more realistic model for analysing social relationships. It allows for a sharper sense of the risks that individuals face when they do not know how to invest efficiently in their own future.

Sociological debate has tended to conceptualise social groups in terms of income ranking and/or aggregations of taxable revenue per household. When human capital theory addresses sociological concepts it isolates variables and submits them to statistical analysis.

For example, what forces prevent women from entering the labour market? The proponents of human capital theories on the family, such as Gary Becker, Jacob Mincer and more recently James Heckman, transform ideas like “breadwinner” and “head-of-household” so that they can be applied generically – that is, as a constant, instead of as a characteristic of gender or class.

From an economic perspective this form of analysis is a way of emancipating disenfranchised individuals. They may not have the capacity to invest in themselves and develop their own skills and resources, so as to contribute effectively to the economy.

What underpins this theory is rather more interesting, however, than the kinds of neoliberal policies that it produces.

Human capital theory has repositioned people in the context of economy first, society second. Rafal Olechowski/Shutterstock

Moral vision lost on left and right

On one hand, there is an interest in isolating and developing constant factors that can be controlled, predicted and measured in terms of population growth and gross productivity. On the other hand, there is an image of humanity that draws on the same ideas of collectivity and freedom that informed the utopian socialists in the late 18th and early 19th centuries.

For example, Adam Smith’s views of commerce relied entirely on a moral position. The “Author of Nature” provided rational creatures with an original purpose – in other words, a Destiny. This teleological view of history results in a “human happiness” that is “the end” of a “spontaneous order” or Nature.

Political scientist Lisa Hill has noted:

Smith’s approach could be described as a kind of ‘system-utilitarianism’.

Hill also records the similarity between the work of Smith and that of Friedrich Hayek on this issue. As it has been approached since the 1980s, human capital theory extends the laissez-faire ideas of commerce to the family and the child. Thus human capital makes work about individual self-maintenance first and about vocational opportunity second.

Ironically, the hidden moral vision of human capital theory sets aside the interests of individuals, despite its practical emphasis on self-improvement. The utopian vision of the market on which it draws is one of “system-building”.

The system is not, however, of human origin, but of general laws of Nature ordained by God. Smith disparaged those capitalists who greedily obtained benefits at the expense of their fellows. For him this contradicted the moral basis for civil society.

Much of this moral vision remained consonant with other views on social progress that dominated British political debate into the 20th century. This includes ultimately the British Labour Party. Leaders like Ramsay MacDonald revered an image of the citizen-worker whose moral role in the world was as patriarchal benefactor to women and children.

The morality of the labour movement was largely predicated on the notion that a man’s capacity to provide for his family was as important as, if not more important, than the responsibility of the state to offer social welfare and address income equity between capital and labour.

But this morality is clouded when “human capital” is absorbed into political rhetoric of both the right and the left. Neither comprehends the image of an infinite, natural and divinely ordained resource that it conveys. The risk includes an implication of freedom: to choose a better school, better opportunities, better jobs, et cetera.

Socioeconomic fragmentation hits home

Two kinds of social and economic fragmentation belie this kind of pseudo-marketing of human capital.

The first is the increasing volatility of men’s wages since the 1930s. That has corresponded with an erosion of a head-of-household’s capacity to earn enough, by himself, to provide for his family.

As industrial wages kept pace with inflation, so in the post-war era industrialists sought ever-cheaper sources of labour. They exploited older colonies in the “Third World” and also women who could be rented at lower rates than their husbands. Capital cashed in on sexual liberation to bring women into the labour market, which to this day remains unsafely stratified in terms of gender.

This led to the second form of tension. Utopian visions of human “freedom” collapse when, as Giovanni Arrighi once explained, existing capital cannot be redeployed safely into a business and must be withdrawn from the market. Overlooking such risk is fatal. Understanding the way this expresses itself at a cultural level, strangely enough, might be shown by the labour movement.

Trade unions have turned themselves into de facto insurance agencies. As a result of adapting their structure toward their own survival as organisations, rather than recognising successive shifts in the labour market as a withdrawal of surplus capital, trade unions have missed the symptoms of their own historical demise.

By doing so, trade unions have exposed their constituency to an empty and redundant ideology of class conflict. Utopian ideas tend to homogenise social groups that are obviously fractured in many ways beyond the purity of, for example, income ranking in the case of disadvantaged, working-class poor in many different geo-political contexts.

The importance of properly analysing human capital theory against the rhetoric of class is to see that without careful study and analysis, utopian ideas eventually lose traction. There is as much risk of this happening in the case of neo-liberal intellectualism as in the historical failure of the socialist left.


See the other articles in the series Class in Australia here.

Expert Database

Want to write?

Write an article and join a growing community of more than 54,600 academics and researchers from 2,118 institutions.

Register now