Neo-liberalism and Theories of Human Capital: Neither Population, Nor Class

We may now return to the alternative sketched by Foucault: “either population or classes.” It is clear that this involves choosing not only between a metaphysical principle and the historical dynamic peculiar to capitalism but also between a territorialized conception of population/nation and an economic analysis of the demographic phenomenon whose horizon is now global.⁵³ More precisely, it involves reformulating Malthus’s question about limits to growth on a global scale that Marx alone had hitherto proved capable of imagining. As I have shown elsewhere, Foucault was probably not unaware of the debates between “Malthusians” and “Marxists” about the “limits of the planet.” But it is likely that rather than participating in them, he chose to engage in a kind of archaeology of the “Malthusian moment.”⁵⁴

That is why the definition of population given by him in 1978 in the Security, Territory, Population lecture series reads more like an attempt to reveal the conceptions of his own time than those of the eighteenth century. In his interpretation, population is neither a kind of biological organism that regulates itself automatically in terms of resources nor an ideological “construct”, but a set of various forms of behavior, multiple, non-totalizable habits, which can nevertheless be grasped thanks to a behavioral invariant—interest: “Desire is the pursuit of the individual’s interest (...) The production of the collective interest through the play of desire is what distinguishes (...) the naturalness of population.”⁵⁵ This talk of interest which “tames” society’s destructive passions actually has its roots in the eighteenth century, in the political economy of enjoyment that subverts the juridical discourse of the “transfer of rights” to the sovereign, of obligation and obedience.⁵⁶ But the originality of Foucault’s reading consists in presenting the immediate political reality of population, whose appearance attests to a new political semantics displacing the level of pertinence of government action from obedience to interest as an individual, atomistic, and non-transferable choice by the subject in the form of an immediate subjective volition.⁵⁷ The new political rationality, acting on the “social” as well as on the biological existence of human beings, must now respect a set of natural givens that are resistant to complete manipulation: morbidity, birth rates, migration and so on. Governing will mean acting on a whole series of variables that condition demographic changes (surroundings, material conditions, habits and customs) through calculated judicious techniques: acting on the conditions of possibility of action by men and women. Government action will be more effective to the extent that it restrains itself, thus allowing a certain freedom of action to individual or collective subjects and permitting the operation of the principle of free competition between interests and the “natural selfregulation” of the price system. It is clear that in Foucault’s interpretation, the “nature” of population consists neither in its “catastrophic” geometrical progression nor in the effects of the international division of labor: it is a kind of matrix of government action on the environment of individuals driven by their interests (see Taylan in this volume).⁵⁸

That is why, in fashioning a kind of archaeology of the Marx-Malthus debate, Foucault in fact discloses the characteristics of a new art of governing which rejects that alternative: neo-liberalism (the 1978 lecture series might almost be read as an introduction to that of 1979 on The Birth of Biopolitics). In the vast contemporary debate on the legacy of neoliberalism and Foucault’s interpretation,⁵⁹ the new economic approach to population by the neo-liberals, and their critique of the classical model, has not been sufficiently registered.⁶⁰

The key point of Thomas Schultz’s analysis is that the enormous stock of physical capital in the rich countries in the post-war years prompted neither significant diminishing returns, as Malthus would have it, nor wage compression under the pressure of the reserve army of the unemployed, as Marx had it. Quite the reverse, encouragement to undertake remunerated work and the existence of significant manpower requirements in Europe and the USA translated into an increase in real hourly wages, which depended on improvements in labor productivity. In its turn, this result derived from a particular type of economic growth, which, in contrast to classical economics, was now based not on the exploitation of natural resources but on investment in human capital, that is, treated as “attributes of acquired population quality, which are valuable and can be augmented by appropriate investment.”⁶¹ The increase in the stock of skills, and hence of human capital, through education or experience translated into an increase in the “quality” of the population—for example, a less numerous population but one more qualified to perform certain tasks or jobs. The growth in population quality in its turn implies an increase in labor productivity and the economic value of labor time, translating into higher income. According to Schultz, this virtuous circle demonstrates that “increases in the acquired abilities of people throughout the world and advances in useful knowledge hold the key to future economic productivity and to its contributions to human well-being.”⁶²

In other words, classical economic theory supposedly did not take into account the fact that the human being is a form of constantly expandable capital, a source of value which is almost infinitely renewable, making it possible to reject the idea of an economy condemned to the exploitation of scarce, disputed resources. Thus, it is no accident if criticism of Malthus is a leitmotif of neo-liberal analyses. In a “quantitative theory of population,” he reduced quality of life to “the subsistence of the rank and file of the population”⁶³ without realizing the importance of acquired aptitudes, skills and forms of competence that can be improved.

Gary Becker’s micro-economic approach is often presented as an example of the “new demographic economics.”⁶⁴ In fact, the Malthusian approach was incapable of explaining the negative relationship between fertility and income characteristic of higher and average households in the USA at the end of the baby boom. Becker shows that couples’ fertility is subject to economic variables and can be studied within the same framework as analysis of demand for consumer durables. Demand for children exists in just the same way as there can be a demand for real estate, and a child has a price, which depends on investment in education. Like other goods, a child produces a utility for the parents, more particularly, a “psychic income.” In other words, the number of children is subject to a choice about the way to allocate resources: “The demand for children would depend on the relative price of children and full income. An increase in the relative price of children (...) reduces the demand for children and increases the demand for other commodities (if real income is held constant).”⁶⁵ The greater the rise in household incomes, and the higher the price of children in terms of investment in time, education and so on, the greater their “utility” for parents and for the labor market. This is the case until the point when parents have to arbitrate between income impact and price impact, which can have negative consequences for fertility, especially if, in order to preserve optimal conditions of equilibrium between different kinds of goods, parents choose to reduce the number of children, either in order to increase their consumption of different goods or so as to increase the utility of the children they have already had. Through this micro-economic tour de force, Becker arrives at a causal explanation of the relationship between the increase in human capital and the drop in fertility but, above all, at an economic measure of human capital based upon the relationship between investment in children, returns on investment (salary benefits) and “population quality.” This theory proves decisive when it makes it possible to interpret spending on education, health and training as so many forms of investment in human capital, whose purchase costs are covered by past remuneration.⁶⁶ It shows that the Malthusian error consists in interpreting such expenditure as non-recoverable consumption, whereas it involves “roundaboutness” generating economic benefits.⁶⁷

While this theorization recalls Marx’s concept of “expanded reproduction,” neo-liberal theoreticians obviously also attack the other pole of the alternative. Where Marx conceives the wage as reproduction of the labor power, which is a source of profit to the capitalist, Schultz interprets wages as a source of “self-investment.” The neo-liberal individual who is the bearer of a non-liquid human capital, which he therefore cannot alienate, but whose services he can only sell is a capitalist: “Laborers have become capitalists not from a diffusion of the ownership of corporation stocks, as folklore would have it, but from the acquisition of knowledge and skills that have economic value.”⁶⁸ Foucault’s analysis discloses a figure of subjectification whose complexity is much greater than that of the emblematic figure of the “capitalist”: an individual who constructs himself by continually assessing his skills in order to enhance or augment them by making life itself a constant test of his human capital.⁶⁹ In any event, the objective of the neo-liberal economic analysis that defines each individual as the owner of their human capital is to dissolve the very concept of class, making generalized competition the only economically justifiable reality in which social actors move.

The stroke of genius by theoreticians of “human capital” is to have created a tool for assessing the value of existence which is without a scale, measurement of the cost of investments in human capital equally applying to the “skills portfolio” of an individual and the human resources of a firm, nation or continent. A unit of measurement perfectly suited to the knowledge society, the concept of “human capital” makes it possible to circumvent the population/class alternative, challenging both the quantitative rigidity of the first category and the explanatory relevance of the second in the era of the “entrepreneur of the self.”⁷⁰