The lens of human capital

Nov 09 2010 by Philip Whiteley Print This Article

Whenever I write about politics or economics, right wingers accuse of being left wing, and vice versa. And what does any of this have to do with management and human capital, which is what I'm supposed to be sufficiently knowledgeable to write about?

I don't inhabit a compromised world in the middle, half way between left and right. I think both are wrong and actually very similar to one another. You can begin to understand this if you look at the world through the lens of human capital.

Some basics. Firstly, the economy does not consist of money. The economy consists of human beings. Secondly, human beings are complex, social creatures.

Yet the core belief behind right and left-wing thinking; behind the way in which our corporations and our trade unions are run, is the following: that the best way to boost our vested interests is screw the people we do business with.

Not only is there no evidence that this does help in negotiation, there is a considerable amount of evidence that it damages the workers and the organisations simultaneously.

The two dominant theories that govern the way organisations are run are agency theory (right wing) and social dumping (left wing). They look like opposites, but they are actually both variants of the same, cynical assumption about human nature that people can never be trusted.

Agency theory asserts that only bribery and fear can motivate people. Designed to curb executive pay, it has led instead to increases, as trust and job security erode and individuals seek monetary recompense.

Social dumping is based on the belief that the way to maximise profits is to worsen working conditions. Trade unions use it as a pretext for more and more rules in the workplace, and as a justification for often gratuitous militancy.

In the real world, organisations depend on very high levels of trust and co-operation between different stakeholders. This doesn't make their interests the same just recognises that they overlap. Always.

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