Introduction
The traditional conceptualisation of human capital has, for decades, been centred upon economic utility, focusing on education, skills, and health as means to enhance productivity and, consequently, income. However, such a narrow interpretation is inadequate in addressing the broader dimensions of human flourishing. This article advances a holistic human capital theory, proposing that investments in human capital should not merely be evaluated in economic terms but should encompass the development of the whole person—mind, body, heart, and spirit—alongside financial security. This perspective aligns with the emerging scholarly discourse that extends beyond the neoclassical view, incorporating a more expansive understanding of human capability.
The Limitations of Traditional Human Capital Theory
Neoclassical economic theory has long defined human capital as the accumulation of education, skills, and health that enhances an individual’s productivity and earning capacity. Gary Becker (1991) extended this definition to include the economic value of household production. Yet, as England and Folbre (2024) argue in their seminal work on human capabilities, this framework is insufficient in capturing the full spectrum of human potential. Their critique highlights the reductionist nature of traditional human capital theory, which neglects the intrinsic and societal benefits of investing in broader human capabilities beyond mere economic output.
The fundamental flaw in orthodox human capital theory is its assumption that individuals invest in their own development primarily to reap future financial returns. This perspective not only overlooks the non-monetary benefits of human capital investment but also disregards the essential interdependencies within society that contribute to well-being beyond income levels.
Towards a Holistic Human Capital Model
A more comprehensive framework must consider human capital as an asset that supports not only economic productivity but also the well-being of individuals and communities. Drawing upon the reconceptualisation by England and Folbre (2024), human capital can be viewed through four critical dimensions:
- Physical Functioning – The development of health and physical capabilities is foundational. Physical well-being extends beyond economic productivity and contributes to an individual’s ability to engage meaningfully in all aspects of life, including personal relationships and civic responsibilities.
- Cognitive Functioning – Intellectual development is not merely a means to higher earnings but a crucial aspect of well-being. The ability to engage in problem-solving, critical thinking, and lifelong learning enriches personal and communal life, enhancing one’s ability to navigate complex social and ethical dilemmas.
- Self-Regulation and Emotional Intelligence – Traditional human capital models have largely ignored the significance of self-regulation, discipline, and emotional resilience. Yet, these attributes are integral to personal fulfilment, fostering stability in relationships, perseverance in adversity, and ethical decision-making in both personal and professional domains.
- Caring Capabilities – Economic theory has historically undervalued care work, often performed without financial remuneration. However, caring capabilities—empathy, compassion, and social responsibility—are indispensable for societal cohesion. The undervaluation of these capabilities leads to systemic inequities, particularly for those engaged in caregiving professions and domestic roles.
The Societal Implications of a Broader Human Capital Approach
By expanding the scope of human capital investment, we acknowledge that the benefits of such investment extend beyond individual earnings to the well-being of communities and future generations. The traditional model fails to account for positive externalities that arise from well-developed human capabilities, such as improved social cohesion, reduced healthcare burdens, and increased civic engagement.
Moreover, recognising human capital in holistic terms necessitates policy interventions that support lifelong development across multiple dimensions. This includes investments in mental health, early childhood education, community-building initiatives, and social safety nets that enable individuals to cultivate their full potential beyond economic metrics.
Conclusion
Holistic human capital theory offers a more profound and equitable approach to human development, acknowledging that well-being is multifaceted and interconnected. By shifting the focus from narrow economic gains to whole-person flourishing—encompassing physical, cognitive, emotional, and spiritual well-being—society can foster a more sustainable and inclusive model of progress. The reconceptualisation proposed by England and Folbre (2024) provides a robust intellectual foundation for this paradigm shift, challenging policymakers and educators to embrace a broader, more humane perspective on human capital investment.
Academy of Life Planning 