For decades, human capital theory has dominated the way economists explain income and productivity. It suggests that individuals who earn more do so because they are more productive — their skills, education, and abilities are framed as “capital” that generates higher returns.
But a closer look reveals deep flaws in this way of thinking. In fact, as Blair Fix argues in The Rise of Human Capital Theory, this approach mirrors the old logic of eugenics: it isolates traits in individuals while neglecting the wider social environment that truly shapes human potential.
So, what lessons can Academy members draw from this?
1. Productivity Is Social, Not Just Personal
Fix points to experiments with chickens: when breeders selected the most productive hens, the flock descended into violence and output plummeted. But when they selected the most productive groups, egg production soared.
The lesson for us? Human productivity, like wealth, isn’t an isolated trait. It emerges in the right social context — families, workplaces, and communities that support cooperation and trust.
2. Inequality Is Not “Natural”
Human capital theory has long been used to justify inequality, suggesting the rich simply “deserve” their income. But history shows that wealth and income are driven less by individual merit and more by power and hierarchy. Pharaohs weren’t thousands of times more productive than their slaves — they simply controlled the system.
As planners, we must avoid equating wealth with virtue. Our work is to design strategies that empower people at every level, not reinforce myths of meritocracy.
3. Every Person Has Value
Both eugenics and human capital theory flirt with the idea that some people are a “burden.” This is not only morally corrosive, it’s factually wrong. The reality is that human flourishing depends on interdependence, care, and inclusion.
Our profession must flip the script: everyone carries unique capabilities, and when nurtured in the right environment, those capabilities create value for all.
4. From Extraction to Empowerment
Economics rooted in human capital theory often leads to extraction: seeing people only for their financial productivity. The Academy’s mission is the opposite — empowerment. We help people identify and grow their human capabilities — health, knowledge, self-discipline, caring — alongside their financial resources.
That is how we move toward sustainable, collective well-being.
The Policy Parallel for Planners
Just as governments use human capital theory to justify austerity and inequality, planners can fall into the trap of treating clients as isolated “units of capital.” But our role is bigger. We can pioneer a new approach that blends financial planning with human development, showing people that real wealth lies in cooperation, empowerment, and structural trust.
Final Word
The rise — and eventual fall — of human capital theory is a warning. If we build our models only on individualistic assumptions, we risk missing the deeper truth: wealth is social, and empowerment is collective.
At the Academy of Life Planning, we stand firmly for a different path. We are here not to extract, but to empower.
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