CErrkee es ‘+ To analyse what the key concepts of the capability approach — capability, functioning and agency — imply for educational theory and practice. ‘+ To examine education as a human development dimension and in its role in promoting other valuable dimensions. ‘+ To understand the differences between the human capital and human development approach to education Pom ‘+ Human capital theory sees the role of education a being instrumental to economic «growth, Education provides people with the necessary productive skis that an industrialized economy requires. Education isan investment that yields economic returns ‘© In contrast, the human develonment and capability approach sees education as {ulfiing three roles: itis instrumental, empowering and recistibutve. ‘© Education nurtures critical reflection and has crucial links with a healthy democracy. '* Applying the capability approach to the field of education puts the emphasis on capabilities and not only on functioning. It stresses the importance of conversion factors and diverse institutional arrangements for educational inputs to be translated into valuable outputs. Education has critical links to socal justice. Previous chapters have examined the human development and capability approach and how these ideas affect our understanding of central development topics, such as economic growth, equality, measurement, markets and demo- cracy. Ideas are central to shaping policies and, indecd, ‘changing history’, as Chapter 3 has discussed." 208 | Torics But no new ideas can emerge without educated minds, Education is the driving force of change in the world. Education (which is not always the same as schooling) brings empowerment. Without education, people can be subject to abuses by the most powerful. For example, illiterate peasants can be driven off their land by those who have access to legal instruments which they cannot influence. A woman, who does not have access to other points of view, may never come to question the arbitrary authority her husband has over her. Without education, people may be constrained to find menial jobs that do not fulfil them and others will look down on those who perform these jobs.falfil them and others will look down on those who perform these jobs. Without education, those who are marginalized or oppressed may not have the resources to denounce the injustices they suffer from and to chim their rights Education is thus central to human flourishing. It not only opens the mind to further horizons, it also opens the way to acquire other valuable capabilities. ‘The Human Development Reports accounted for the central importance of education by incorporating an education indicator ~ literacy rates ~ into the first Human Development Index; later versions have included education indicators hased on enrolment rates. There is, however, much more to education than a literacy or school enrolment statistic. This chapter analyses education as a key dimension of human development. It starts by examining how education became a concem for development in the 1960s. Education was seen as an instrument for economic productivity. This approach ~ known as human capital ~ is still prevalent today. The chapter then contrasts human ‘capital with the human development and capability approach to education. It describes how its key concepts of agency and capability introduce new ways of ‘considering the role of education in development. Human capital Like other ideas, ideas about education policy are closely connected to their historical context and the narratives that inform them. In the 1960s, ideas about the economic value of schooling were expanded upon and they have had ‘considerable impact ever since. The idea of ‘human capital’ originates from the observation that schooling develops certain qualities in people, and that these qualities enhance economic productivity and cconomic growth, just as an increase in physical capital or investment does. This idea has been particularly ‘compelling in policy circles, as it points to how and why governments should wtervene in social policy to connect the social and economic aspirations of individuals, families and nations.Gary Becker's classic work, Hiwnan Capital (1964), elaborates on the n of human capital in the context of neoclassical economics, It registers fnvestment in humans could be viewed as similar co investment in other means of production, like factories or mines. Investment in human capital, just ike investment in physical infrastructure, would yield a rare of return, which could be calculated. Becker's study set out to estimate the return to college and high school education in the US, but he was able to show that it was not only: schooling per se that was significant for growth, but that it was influential in a range of other educational investments, such as scientific and technological knowledge. Becker’s findings found a receptive ear in capitalist, co developing countries alike. Box 9.1 reproduces an extract from i study. Economic analysis has no trouble explairing wy, throughout history, few counties have ‘experienced very long periods of persistent growth in income per person. For if per capita income giowth is caused by the growth of land and physical capital per werker “diminishing retuens from additional capital and land eventually eliminate futher gronth, The puzzle therefore, isnot the lack of gfowtn, but the fact that the US, Japan and many European countries have had continuing grawth in per capita income dering the past 100 Years or more. Presumably, the answer ies in the expansion of scientific and technical knowledge that raises the productivity of labour and other inputs in production. The knowledge that rases the productivity of labour and other inputs in production. The ‘systematic application of scientiic krowlecge to production of goeds has great increased the value of education, technical schooling and on-the-job training, as the ‘growth of knowledge has become embodied in people — in scientists, scholars, tech- Picians, managers and other cantrburors to output. Howevet even aconemists know the ‘ference benween corelation and causation, and have developed rater straightforward methods for determining how much of income growth is caused by growth in human ‘pital. In an excellent study fo the US, Edward Denison (1985) ind thatthe increase in ‘schooling of the average worker between 1929 and 1982 explains about one fourth of the rise In per capita income during this petiod He % unable to explain much of the remaining growth, | lke to believe, because he cannot measure the effects on earinas ‘and improvements over time in health, on-the-job traning ard other kinds of human capital rato Gay Beka Maman Cpa Unnary of Cage Re, 3a, 1993, -23-26 ‘This extracr expresses some of Becker’s key ideas regarding the ways in which investment in schooling was associated with levels of growth, and the ways in which he distinguished between different forms of investment — ic. in school, higher education and training ~ suggesting that these might have different rates of return to people and countries. Developing Becker's work further, another economist, Theodore Schultz, set out to map how ates of retum from education could be calculated in ‘countries with differenc levels of income, different variables concerning wage patterns, and different human attitudes to forgoing earnings to develop human capital. His argument is that education has an important economic value and that economic thinking has thus far tended to ignore the productive rerums that education has had on economies.In thinking about economic growth, one does not ask the traditional query: what isthe ‘area of land, the siz ofthe labour force, and the number of machines and structures? In allocating investment, one asks: what is the marginal increase in production from a particular additional investment? The productive services of land can be augmented by investment; investment in man can increase both his satisfactions and the productive services he contributes when he works; and the productive services of machines and structures Can also be augmented in this manner. I addition, and to an increasing extent, ‘thereis the investment in organized research to acquire new infomation, a source of new sills and new matetals (techniques), which can significantly alter the investment oppor- ‘tunities in land, man and machines In line with this approach, there is no assumption of a rate of technical change but a search to determine the rate of return to organized research; no assumption with regard to population growth to account for the rate of increase in the labour force but a search to determine the rate of return to children (child ‘apita) and to the acquisition of useful skills; no assumption of a fixed supply of natural resources but a search to determine the rate of retum to investment in land improvements ‘and in discovering and developing other natural resources; ard similarly there is the ‘analyical task of determining the rate of return to investment that changes the ‘composition of the reproducible forms of material capital as new and better forms become availzbe from the production actirties of organized research. It is my contention that ‘economic thinking has neglected two classes of investment that are of critical importance Under modern circunstances. They are investment in man and in research, both private ‘and public fvactrom Theodore Schult, The Econom Value of Eaucaton, Colombia Univesity Pes, 1963, 9922-23. Ir can be seen that Schultz's hypothesis was that calculating rates of return from investment in human capital would confirm the importance of investment in schooling and research for the productivity of the labour force and the economy’s capacity to grow.Detailed work investigating rates of return from education to families and national economies was undertaken by George Psacharopoulos in the 1970s and 1980s. In his Returns to Education (1973), he brought together data from many countries on the role of education in economic growth and set out to examine how the profitability of investment in education compared with profits from investment in physical capital, symbolized in the rhetorical question about whether it was more profitable to invest in schools or stecl He was also interested in whether inter-country differences in human capital could explain differences in per capita income, what the rate of return by level of education was across countries, whether there were differences with regards to the level of public subsidies in education, and whether subsidies reduced or increased incentives in the long-term. Psacharopoulos’ findings, as detailed in Box 9.3, were to have a profound significance on intemational policy with regards to i jestment in education. [Rlates of return decline by the level of education. Looking first at the sacial rates of return, the average for primary education is 19.4 par cent, for secondary 13.5 per cent ‘and for Figher 11.3 percent. This pattern proved to ke statistically significant when tested by means of individual country obsenations. Private rates show a smilar pattern between the primary and secondary level (23.7 per cent and 16.3 per cent respectively), while the rate of return to the university level is 17.5 per cent. The second pattern in aur data shows, ‘that the private returns to investment in education are about 3 to 6 percentage points higher than the social returns. The diference between private ard social rates is even ‘more pronounced in developing than in advanced countries, showing that the formermore pronounced in developing than in advanced countries showing that the former ‘group of countries subsidize their educational sector more heavily. ....On the question of ‘whether investment inthe education of men is more proftable than thatn the education ‘of women, the examination of 8 casestudies where the returns for males and females are tepored separetely shows that, on average, males stow higher retum by atout 2 percentage points at both the higher and the secondary levels. The average return fer males for primary school s 163 per cent while that for females is 9.8 per cent... The widely debated issue abcut whether a county should emptasize technical secondary rather than general education was not resolved ‘aact tom George Psactaropouls, fetus to Eaicaton. An nenatonal Comparson Amstedam, sei, 1973, 95-6. Although there was considerable criticism of the way Psacharopoulos calcu- lated rates of return and reached these conclusions, the policy implications of his work were enormous. It led the World Bank and other major institutions to engage in development assistance and many governments to emphasize the importance of investing in basic education because of these high rates of Before turning to look at the ways in which writers working within the ‘capability approach paradigm have posed questions about the notion of hhuman capital, it is useful to ask some questions about these canonical works in human capital theory. How do they conceptualize the nature of the labour market and estimate the value of an economy? What assumptions do they make about the nature of schooling and its outcomes? To what extent do they take note of different social groups and relationships based on social division? What are the implications of analysis based on human capital for government policy in education? Generally, work within a human capital framework assumes that labour ‘markets work rationally and efficiently and that, once schooling has developed certain aspects of human capital, the labour market will allocate people to occupations that are appropriate for their level of skills. The framework does not take into account segregated labour markets where people, irrespective of their level of education, are allocated to particular jobs on the grounds of race, ‘gender, or assumptions about class or caste. The framework tends to viewschoolingas something like a machine, which children enter and exit with their human capital appropriately topped up. The ways in which different schools provide different learning environments for different children with very di outcomes is not considered. Thus, writers interested in human capital will generally consider whether the school is efficient. In other words, how many hours of instruction ate provided? In addition, what is the level of teacher qualification? Can children pass? These writers are generally not interested in debates about the content or cultural dynamics of schooling, the social lives of teachers or learning processes. The ways in which inequalities in education are associated with race, class or gender and persist over generations are not a key focus. Social division is only a matter of concern with regards to whether it supports or impedes the development of human capital appropriate for economic growth. While some of the writing on human capital noted differ- catial rates of return for women and men, and for those in communities that experienced segregation, their general conclusion was not that the institutional structures of gender or race inequality in schooling and the labour market should be considered. Human capital theorists concluded instead that more education should be provided for these groups to improve levels of economic ‘growth. It can therefore be seen that what is important for human capital theorists is to understand the economy 2s a system that will support growth. In this framework, schooling assists growth, and a major social obligation is thus to increase access to schooling so as to facilitate this very growth.