The Evolution of Human Capital and its Progressive Impact on Economic Growth

The Evolution

It has been said by various scholars that the evolution process of the human capital accrual and supply is largely ruled by two strapping, contrary powers: value and depreciation.

An important element of value would be the accumulation in numbers of human capital. Another factor would be the added value of investing in the education of the available human capital, partly attained through skills training, and partly attained by hands-on experience according to their employment purpose.

The obsolescence or depreciation of human capital occurs when this resource can not be employed anymore, in part, or completely. Elements of depreciation can vary; they can be the natural consequence of biological aging of the workforce; premature obsolescence brought about by unabsorbed advances and changes in technology development, or simply, by shortage or lack of employment.

Since ancient times and all the way through the history of human civilization, influential leaders or leaders in a position of power have been able to manage to organize and set in motion the human capital at their service to exploit its power of deliverance. This powerful influence and ability to muscle intellectually or emotionally the human capital at their dispose, has engendered invariably in the essence of this vulnerable human capital, the exceptional strength and state of mind to overcome the impossible task. The vulnerability of the human capital resided in that it was less educated as a whole and had a more of a heard mentality then, but that has also evolved.

The unmeasured might of the cohesion of the human resource can be detonated like a nuclear explosion when a clever leader from a position of power over human capital recognizes its full potential, and unleash it to his benefit. The person in charge now formulates strategies and means to direct this obliterating energy for its use within an inclusive plan.

Some examples of this can be seen in ancient Egypt where the Pharaohs mobilized their human capital to accomplish the construction of structures of colossal proportions, such as the pyramids.

The era of building pyramids lasted until the Ptolemaic period. The Ptolemaic period was the ruling of a Hellenistic family that reign Egypt from 305 BC to 30 BC. However, the most prolific period of pyramids building was from the third dynasty until the closing stages of the sixth dynasties, where only 4 pharaohs ruled (Teti, Pepy, Merenre Nemtyemzaf, and Pepy II – 2345 – 2184 BC). In total, over 100 pyramids were built in Egypt. One can only imagine the size of the stock of human capital utilized in this trade during that flourishing period of mankind history, and the convincing power of the influential leader in charge.

We have spoken of paradigms of utilization of the human capital theory throughout history, however, the modern hypothesis and concept of human capital has been conceived as such only over the past half century or so. Our contemporary “concept of human capital” has been under development for a while now. It has been traced all the way back to the 17th century where values were started to appear attached to laborers, and their impact on large economies, and economies of scale. Furthermore, value was placed in future “commodities” of this labor force such as earnings, savings, net worth, risk, and education to name a few. Since, the theory of “human capital” seems to have become an intricate, mobile, and quickly evolutionary non-stationary science.

So, does human capital requires leadership, or is an amorphous essence that can evolve, adapt, and direct itself? I think that the answer to this question is both. It is as simple as it is logic: The smaller the work force is, the less guidance requires, the bigger, the more leadership and competence is needed to control and manage successfully this awesome power.

The destabilization of the inter-dynamic relationship between the buildup of human capital, indiscriminate or not, and a balanced vehicle (source of employment) which channels, focus, and directs this monstrous force can be anarchic and catastrophic This destabilization takes place when the endogenous accumulation of high-tech and low-tech human capital is developed beyond its utilization.

When human capital is undirected, it evolves and adapts to the local and current economic circumstances that is being object of. It diversifies into smaller clusters, which integrates local economies at the minute level. It is like a big organization working together for a common goal, and suddenly, its fragments and disperses itself in order to survive.

However, the legacy of a learning process, and the wealth of skills and knowledge is not lost. As soon as that agglutinant conduit (the source of work) becomes available again, these clusters are able to pull together again from their scattered universe, rejoin, and continue working as they were doing it before, as a single unit. Nevertheless, the human capital now knows something it didn’t know before, and it has become more aware and knowledgeable about uncharted, disabling changes, their devastating impact, and its consequential effects.


Internal Evolution

Human Capital is a delicate and expensive commodity. Skilled individuals who form an intrinsic part of the fabric of human capital are born, they grow, they learn, they execute their duties, they become old, and finally, they die. In this eternal cycle, there is a continual replacement of individual components on the human capital body, but its technological skills and knowledge levels can not be inherited, sometimes transferred, replaced, but never repeated.

Even though human capital it is like a gargantuan on-the-move live sponge and it can absorb and rummage knowledge, skills, variations in economy, educational differentials, heterogeneous race idiosyncrasies, cultural intricacies, lack of correspondence for its own value, and the ever-changing technological rollercoaster among many other absorbable trends, human capital can depreciate. Perhaps the factor that has the most impact on human capital stock is technology change. The progress of technology is an unstoppable energy that nothing or no one can impede. It can be delayed, obstructed, hindered, harassed, stalled, assailed, disagreed with, but technology will always prevail. No witch hunt will ever stop it. Without technology, the human race can not grow and progress. It is the quintessence of our mechanical evolution, and our most valuable ticket to the future.

Because of the lightning advance of communications and the inexorable pace of developments in transportation, our civilized globe has become tiny, and every point of it, reachable. This singularity has hasten and made possible the colligation of an assortment of human capital stocks from diverse places, and organizations and business conglomerates all over the world are being threaten with an looming shifting in the established order of cultural rules which sculpts the focal point of their organized human capital.

This human capital organized in a cohesive workforce, now it is being gradually pushed into focusing on individuals, rather than the group. Despite the fact that life-long employment with the same company used to be the norm, employees are now more skill-versatile and aware of it; therefore, they are changing jobs or occupations more often, and are continuously prospecting for better employment opportunities.

According to results of employee turnaround trend research, a frightening turnover rate is anticipated in vital and strategic specialty roles, comprising managerial and entry level positions during and throughout the upcoming decade. Businesses have being also forced to surrogate seniority-based employment in reaction to new instated policies that are focused on results, performance, and economics.

The need to reinvent the way we do things is being imposed on us by our own era. We must quickly synchronize our economic development goals, the technology currents that move our business, the delicate and ever embryonic human capital, and our intellectual capacity to adapt, all in order to survive in this sophisticated fast-paced twenty-first century jungle.


The Impact on Economic Growth

Economic growth is created, maneuvered, and dominated unswervingly by human capital. No human capital, no economic growth. It is that simple.

Economic growth is the definite upsurge in the amount of the goods and services produced by an economy over a period of time, and are a direct effect of the human capital that produces it. The more prepared is the human capital, usually the better quality the products and services are. The bigger the human capital, usually the bigger the potential output.

A rapid growth of an economy creates all kind of challenges. An early and important one is having a sudden shortage of appropriately skilled workers, shortage that grows increasingly urgent, generating a destabilization in labor rates. The less skilled workers available to fill the vacancies, the more expensive become the labor. This paradigm occurred in the US during the e-commerce fever when a huge shortage of software developers occurred during the late 1990’s, while the housing infrastructure where the flow of the e-commerce communication was going to run, was being constructed.

At the same time, software to engine a myriad of applications and services was being developed. The indiscriminate proliferation of e-commerce related applications and services exploded in such way, that a shortage of software developers forced the economy to “import” labor from overseas, and also forced the government to legislate in order to open the gates to the great flood of software engineers and programmers marching towards this new developers’ “Mecca”. The prices that were paid for labor were exorbitant to the limit with the ridiculous.

Branding is another impact on economic growth. Branding is an anthology of images, descriptions, and concepts that describe the inherent attributes, symbols, and ideas such as a product, company, or service mark. These names, marks, logos, slogans, and artistic designs that express and communicate to the public, in an audio-visual and sensorial perception the essence of a product, a service, a business, or a concept, are called brands. The actions and undertakings to produce a brand are called branding. What does all these possible? The human capital behind is the originator of the cause and effect of the produced brand. A person recognizes and embraces “brands” because he or she associates quality to it, and ascribes worth to what the brand represents. This inclusive economic concept of “added value” makes a brand “valuable” and marketable.

The brand, branding, and brand equity that separates one product form another have become central to the cultural neo-apparatus and its economic collectivism, which our cosmopolitan society labels it now a "cultural gadgets for a personal philosophy of individual expression". Nowadays, semantics will articulate it as “groupies”.

When the economy grows, it is predominantly through escalating numbers in the workforce, and the resultant economic growth it is based on workforce progression. In a developing economic system of great interchange, skill shortages and weak human capital will not sustain a rational and balanced economic growth.


The Future. What is in the bucket?

Today the human capital stock has reached a level of sophistication and knowledge far above what it had accomplished until the 1960’s. Because of its struggle surviving the pan demonic integration of full global connectivity, human capital has turned less vulnerable to sudden technological changes, to market impacts, and more resistant to changes in demographics. Today’s workforce in general, is smart, educated, highly skilled, aware of its strengths and vulnerabilities, conscientious of its impact on economics, responsive to its own human capital configuration and governance, and finally, has developed an extraordinary adaptive capacity.

What will keep the human capital validated and in closed quarters with its evasive future? The answer will reside heavily in its ability to keep learning, the capacity of retraining itself, and its competence to swiftly embrace change and maintain its level of productivity, and quality output.

The many aspects of human capital evolution discussed here are deep-seated factors that stimulate and compel the human capital to constantly evolve, thus impacting progressively on the frail equilibrium of economic growth.

Finally, the Human Element, this fundamental piece of civilization, this original cornerstone, and eternal foundation of everything, must prevail over the unmistakable and troublesome quandary of getting along with each other, specifically with those who are different from them, and undertake a promissory route to the remedy of these diminishing difficulties.