The Price of Human Capital

In his oft-quoted Fifth Report to the Massachusetts Board of Education (1841), Horace Mann sought to popularize the idea that education had individual as well as collective economic benefits. This report became one of the most well-known of Mann’s twelve reports to the board, though Mann himself worried that such an appeal would exacerbate the materialism that he hoped the common schools would combat. In 1841, however, the Massachusetts Board was under attack from opponents of a centralized school system, and Mann thought that by showing how schooling benefited the economy he might convince the board’s opponents of the value of the state’s investment in public education. Accordingly, he replaced his usual arguments about its moral and civic value with a demonstration of its monetary value to workers and manufacturers in the Commonwealth. Arguing that the key to prosperity was an educated populace, he even sought to calculate the rate of return to the state’s investment in education by asking a small sample of Massachusetts businessmen to assess the difference in productivity between literate and illiterate workers.

Though Mann’s argument about economic efficacy helped save the Board of Education, until the end of the nineteenth century most common-school promoters continued to prioritize the civic and moral purposes of education. Since then, however, those ideas have been eclipsed by ones like those Mann articulated in his Fifth Report, particularly about the school’s role in the production of what we now call human capital. Arguments about the school’s civic and moral purposes have not disappeared, of course. They appear regularly on political leaders’ lists of desirable educational goals. But over the last hundred years those ideas have been increasingly subordinated to the notion that the primary purpose of education is to equip students with the skills they presumably need to improve their own economic opportunities and to make the nation more prosperous and secure.

Nowhere has the influence of this way of thinking about education been more evident than in the history of federal education policy. It is especially evident today, for example, in programs like President Barack Obama’s Race to the Top, which explicitly links federal aid to his desire to restore the nation’s competitive edge in the international marketplace. But the influence of ideas about human capital formation on federal education policy began nearly a century ago when they provided the chief justification for passage of the Smith-Hughes Vocational Education Act in 1917. And they have provided the main rationale for nearly all the federal government’s most important educational initiatives ever since—including the National Defense Education Act (NDEA) in 1958, the Elementary and Secondary Education Act (ESEA) in 1965, and, most recently, the No Child Left Behind Act (NCLB) in 2001. Indeed, given the longstanding opposition to federal in...