The measurement of human capital
(continued)
The Practical Application of HCE
Within the legal sphere, a Forensic Economist relies heavily on the methodology and intellectual weight of Human Capital Economics. However, the measurement of Human Capital without higher vision runs the risk of degeneration into Cicero’s instrumentum vocale. Even though maintaining intellectual and emotional clarity is not easy in the face of the human tragedies that call for our professional services, Forensic Economists need to maintain an empathy with the human condition that we measure. Steiner emphasizes that, in our struggle to be free, it is people, not machines, that we must be.
In part, clarity and vision come to all of us through the metaphysical understanding of Human Capital as verbalized by Fuller and through the esoteric Anthroposophical intuition of human and spiritual freedom proffered by Steiner, along with any path that espouses goodness in the world through the teachings of wise and holy men and women throughout the ages.
Maintenance of clarity and higher vision must accompany us as we remain firmly grounded, plying the economic tools derived from the practicable works of Becker and Mincer. Their theories, derived from empirical research, support time-tested ways of measuring and determining economic damages.
Though less than perfect in their ongoing development, these tools continue to work for all of us. The United States Departments of Labor and Education utilize the formulae of Becker, Mincer, and others to arrive at published estimations. The U.S. Congress relies upon researchers who use these same economic tools as a means for testing the future impact of current federal programs. On a more immediate level, we who work as Forensic Economists use specific forms of HCE in our determination of losses in cases of wrongful death, personal injury, and employment law.
It behooves the Forensic Economist to implement the social philosophy of Economics, which stands as the bridge between the social science of Economics and human behavior based upon deeper beliefs or, at least, upon “Animal Spirits” (an ancient term reintroduced by English economist John Maynard Keynes in the early Twentieth Century to describe the naive optimism of putting aside the thought of ultimate loss in any venture). However, the source of Animal Spirits remains something of a mystery. Therefore, let us consider an illustrative example for the purpose of clarification—a conundrum posed many times throughout human history.
We find this conundrum in the dilemma that a soldier faces in understanding his/her decision either to fight or to take flight. The seemingly contrasting dimensions of Human Capital Theory cannot explain fully why this soldier makes an instantaneous decision in the heat of battle: Should s/he stay at his/her post and face certain death rather than flee? What exacerbates the issue is that the soldier may be serving with comrades-in-arms on the battlefield. If the soldier is alone, s/he may run. However, when serving with others, the soldier may decide to stay, even if it means laying done his/her life for the sake of fellow soldiers. Embracing the unity of both dimensions of Human Capital helps to clarify our understanding of such a difficult and instantaneous decision. American director Steven Spielberg presents his study of this dilemma quite effectively in his film “Saving Private Ryan” (Amblin Entertainment, 1998).
Takeaway
In summary, much of the work performed in the field of forensic economics involves the valuation of human life. Practicality in courts of law demands that we determine a measure of individual worth to self and to family as accurately as possible. Therefore, our concept of Human Capital Economics has developed and continues to evolve.
If we heed the adroit warning provided in the writings of Cicero, then we must avoid considering human beings as mere tools that talk, lest we retrace the exoteric path that led to the denigration of humanity that occurred in Europe during the 1930s and early 1940s as well as elsewhere throughout the world in the succeeding decades. The measurement of human value must embrace both sides of human nature, which should be taken as a whole rather than as two separate, opposing parts. This challenge remains as a matter of ultimacy to us as the human species. In closing, let us recall the words of English economist Alfred Marshall, the great-grandfather of Modern (Neo-Classical) Economics, who stated in his “Principles of Economics” (Macmillan, 1892), “The most valuable of all capital is that invested in human beings.”
————————
Dr. John F. Sase teaches Economics at Wayne State University (www.saseassociates.com, drjohn@saseassociates.com).
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a supervisory editor at Gale Research Company (now Cengage) for over twenty years. Currently, he edits books for publication (www.senick-editing.com).
Julie G. Sase is a copyeditor, parent coach, and empath. She earned her degree in English at Marygrove College and her graduate certificate in Parent Coaching from Seattle Pacific University. Ms. Sase coaches clients, writes articles, and edits copy (royaloakparentcoaching.com).
