Adam Smith on Human Capital
I shall examine Adam Smith's treatment of human capital under five heads: the optimizing system of natural liberty; the nature of human capital; its sources; its unnecessary costliness; and obstacles to its optimum use. His recourse to cost-utility criteria in assessing educational practice (134) will be touched upon but not his somewhat analytical history of educational practice over the centuries.1 Smith (89, 164) was aware of the past improvement in average income (89), of the elasticity of man's wants (164), and of the impact of the gradual improvement of arts, manufactures, and commerce (755). He did not, however, anticipate that income increase might transform educational personnel and facilities into suppliers of consumer-oriented rather than essentially producer-oriented services (164), probably because he was concentrating on then current problems.
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