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Management Series: expert-comment

What is human capital theory?

Cass academic explores key economic term which influences how we work today.

by Amy Ripley (Senior Communications Officer)

Human capital theory was invented as a ideological weapon. Cass academic Professor Peter Fleming examines how it is now Uberising the world of work.

"Chicago, 1960. The United States is bogged down in a long, expensive and dangerous Cold War with the Soviet Union. Inside the Economics Building at the University of Chicago, two academics are engaged in a private, intense conversation. Theodore ‘Teddy’ Schultz is tall and lanky. Raised on a South Dakota farm and pulled out of school by his father, he’d still managed to scale the heady heights of academia, first as chairman of the Economics Department in 1944 and then as president of the American Economic Association in 1960. Schultz has strong connections with the Ford Foundation, an important front for CIA programmes during the Cold War.

"His younger sparring partner is Milton Friedman who in 1946 joined what became known as the ‘Chicago school’. Although Friedman was of diminutive stature, measuring only 1.52 metres tall, he already enjoyed a fierce reputation as a verbal opponent. Friedman will flirt with the CIA in due course too, training Chilean economists in the art of neoliberal ‘shock therapy’. His know-how came in handy after the US-sponsored overthrow/death of Chile’s Marxist president Salvador Allende in 1973. Richard Nixon said he wanted to hear the Chilean economy scream.

"As the two men faced each other in that dark, oak-panelled office, they had a big problem on their hands. University economists were being recast in a new light by US state authorities; no longer bumbling professors (sporting a pipe and tweed jacket) but the creators of ideational weapons, just as important as the intercontinental ballistic missiles being readied at Vandenberg airbase in California. Members of the Chicago school were confident they could make a significant contribution in the struggle.

"But how exactly?"

This article is published in full on Aeon.  Read it in full here.

About Professor Fleming

Professor Peter Fleming is Professor of Business and Society at Cass Business School. His research focuses on the changing relationship between business and society, with special emphasis on new patterns of conflict in the workplace, the evolution of management ideologies and the rise (and fall) of Corporate Social Responsibility. He has also extensively studied the causes of organisational corruption in the private and public sectors.

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