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Human Capital

ARTICLE | | BY Orio Giarini, Ivo Šlaus, Garry Jacobs


Orio Giarini
Ivo Šlaus
Garry Jacobs


Society is a teeming ocean of human energies and capacities, unorganized but latent with unlimited productive potential. The organization of social energies and capacities converts social potential into Social Capital. Each member of society is a microcosm of human potential – an unorganized reservoir of energies, aspirations, and capacities. The organization of the energies and capacities of each member of society converts human potential into Human Capital. The formed Individual is the summit of social evolution where Human Capital and Social Capital intersect and become infinitely productive. The Individual is a product of the past evolution of society who internalizes its accumulated knowledge and capacities, attunes himself to the emerging aspirations and potentials of society, and applies his energies at critical points for personal accomplishment and collective progress. Thus, we find repeatedly in history that one individual can change the world.

The potential human energies of society are immeasurable. Society enhances the productivity of its energy by a progressive process of differentiation. It begins by a division of tasks through specialization of function. This makes it possible to raise the level of skill in each functional area and facilitates transmission of specialized skills from one generation to the next. Further society differentiates those functions into different segments of social activity – defense, governance, transport, communication, agriculture, crafts, commerce, education, healthcare, entertainment, religion, etc. – thereby facilitating the development of specialized expertise, systems and organization within each segment augmented by systems linking each sector with all the others. Thus, the differentiation of function into production, distribution, marketing and finance has generated the ever-expanding commercial energies of the global marketplace. Multiplicity is energy multiplied.

This segmentation of social function is complemented by the development of the differentiated structures of family, community and tribe and the geographic differentiation of rural and urban activities, giving rise to cities as the focal point for the development of civilization and later to city-states and nation-states as intermediate levels of organization linking individual human beings with the whole of humanity. As every structure and function of an infant’s body grows proportionately and in concert with the rest to maintain the integrity of the whole while enhancing its capacities, the segments and aspects of society expand in unison to progressively augment social power and capacity.

Simultaneous with this process of differentiation is a process of increasing organization and integration. Organization converts energy into power. The social energies are thus directed into specialized activities for production, trade, governance and so forth. The proliferation of specialized social organizations such as money, markets, banking, factories and educational institutions convert the energies into productive and commercial power, enormously multiplying efficiency while expanding the reach and range of capabilities. The further development of specialized practices, procedures, systems, laws – Hindu numerals, double-entry bookkeeping, mass production, patents and copyrights, scientific associations and journals, myriad academic disciplines, technical and professional colleges – further augments the productive power of social energy exponentially.

At each stage and level, different segments and activities spawn other activities, systems and organizations to enhance coordination and integration. The power becomes more sophisticated, cultured and refined as the expanding diversity continues. Thus, raw human energy gradually evolves from labor intensive agriculture and local crafts to culminate in the inconceivable political, economic, educational, social and cultural power of the global Internet. Thus, in less than a decade Wikipedia has become a global encyclopedia with 21 million articles in 283 languages, a hundred thousand contributors, and 400 million active users. Thus, a Stanford University professor, Sebastian Thrun, recently resigned his job teaching artificial intelligence to 200 university students in order to establish a free, internet-based course in which more than 500,000 students have enrolled globally.1 Each activity and segment generates a different form of social power, each interchangeable with all the others, as money, social status and political power are universally interchanged.

“As society is an unlimited reservoir of productive potential, each individual member is an infinite with unlimited power to think, create, discover, invent, and initiate actions that enhance the power and direct the destiny of the collective. Thus, one individual can change the world.”

This process of differentiation and integration enormously augments the knowledge, skill, technology, organizational efficiency and productive power of the social collective. Each progressive stage multiplies the force. Socially, this process generates established behavior, customs, procedures, laws, and ways of life that govern how human beings interact to accomplish shared goals. Law compels the primitive energies of our animal ancestry to function within socially permissible boundaries and forms, replacing physical violence and force by social and political authority. The incalculable immensity of the latent social energies reveals in times of popular uprisings such as the Arab Spring.

Culturally, this process gives rise to a set of universally shared values which are accepted and internalized by members of the society as invisible guidelines governing their interaction with other members. Values express social character. At a more subtle level it gives rise to collective self-confidence and can do attitude. Ultimately, it inspires the adventurous spirit of originality and creativity which are the highest expressions of human potential. Collectively, all these elements constitute the warp and weft of the social fabric known as Social Capital.

Social Capital represents the capacities of the members of the society to relate, exchange, cooperate and coordinate with one another for the benefit of all. Constraints on the sharing of social resources, such as the centralization of political power in monarchy or authoritarian state, the restriction of social privilege to an aristocracy or other elite, the concentration of wealth among a small minority, the monopolization of knowledge by church or corporation, are artificial constraints on the full development and exploitation of social capital.

The power and productivity of society ultimately depend on the development of each of its individual members and its capacity to harmonize and integrate their aspirations and actions with the aspirations, goals and values of society as a whole. As Society is the macrocosm, the Individual is the microcosm. As society is an unlimited reservoir of productive potential, each individual member has infinite potential with unlimited power to think, create, discover, invent, and initiate actions that enhance the power and direct the destiny of the collective. Thus, one individual can change the world.

As democracy universalizes and exponentially multiplies the political and social power of a nation and as education universalizes and infinitely multiplies the power of knowledge in society, human capital universalizes and multiplies the power of social capital. As former World Academy President Harold Lasswell explained, law and human rights evolve in response to ever rising value demands by the people. All of these are expressions of the rapid development of human capital in recent decades. Human aspiration seeking out social opportunity converts social capital into social accomplishment: political, economic, social and spiritual.

As Social Capital reflects the development and organization of the energies and capacities of the collective, Human Capital reflects the development and organization of the energies and capacities of each member of society. The ultimate capacity of the individual human being for original thinking, creative imagination, knowledge and skill acquisition is unlimited in potential, even though it is limited in actuality at any point in time. Indeed, as Harlan Cleveland often observed, unlike material resources, the more human capital is utilized and shared, the more it grows and develops.

Human energy is the fuel for all human accomplishment, both individual and social. Energy depends on aspiration. The more intense the aspiration, the greater the urge for accomplishment, the greater the energy and potential result. Harlan’s perception of the “revolution of rising expectations” that followed World War II was an auspicious harbinger of the phenomenal achievements of the last half century. Rising aspirations release energy and mobilize capacities for expression. But the capacity of society to direct and organize those energies for productive purposes is a crucial determinant of their result. Thus, Jasjit Singh perceived the rising gap between expectations and social opportunities as a source of tension, social unrest and violence. Human aspirations are awakened today as never before, as the insistent clamor for democratic freedom, social equality, education, employment, healthcare and all forms of human security indicates.

The differentiation of the collective is reproduced in the differentiated development of its members. Each acquires a specialized set of capacities in accordance with his own aspirations and circumstances. As energies of society are progressively organized in terms of activities, functions, systems, rules, laws, institutions, segments and cultural values, so the energies of each member are progressively organized in successive stages and degrees in terms of forms of conduct, social behavior, character, personality and individuality. The individual is the most complex and marvelous product of natural and social evolution with unlimited capacity for further development – physically, socially, emotionally, mentally and spiritually. At each stage the intensity and productivity of energy multiply and so too the power for accomplishment. Social Capital is infinite in its potential for creative expansion. Human Capital is infinite in the layers, qualities and complexity of its potential.

The ultimate power of social and human capital reveals when they are harmonized and integrated with one another – when the society is fully committed to the development of its individual members and those members are in turn committed to the progressive evolution of the entire humanity. The capacity of individuals to acquire and express their human potential depends on the supportive atmosphere of political and social freedom and the supportive social institutions dedicated to the full development and expression of human potential. As society evolves, it places increasing emphasis on the free and full development of its members as the means for its own development. Political, social and economic human rights and human security are preconditions for the flowering of human potential. When commercial banking systems in developing countries served only the interests of business and the wealthy, Muhammed Yunus understood the importance of tailoring social systems to the needs of people and linking them through effective strategies. He devised Grameen Bank as a new social system to extend credit to the poorest section of women. He also devised a strategy of group guarantee attuned to the social values of the village and built a financial system with a better repayment rate than the commercial banks. Thus the potentials of human and social capital were effectively linked through a micro-credit system.

So too, the evolution of society depends crucially on the initiative of its most conscious, development elements – the formed individuals who have best assimilated the amassed endowments of the collective and whose aspirations encompass not only their own personal benefit but also the greatest possible benefit for society as a whole – two aims which are not only compatible but inextricably dependent on one another. Society advances by enhancing the security and expanding the opportunities for its members. Those members advance by more fully discovering and developing the latent potentials of the society. Thus, Martin Luther launched the Reformation with his 95 theses, Mahatma Gandhi shook the mighty British Empire by calling on his fellow Indians to make salt without paying tax, a middle aged black woman named Rosa Parks launched the American Civil Rights Movement by refusing to move to the back of the bus, and Gorbachev ended the Cold War. In 2011 a retired Indian soldier rocked India’s entire political establishment by raising hundreds of thousands of citizens to demand stricter laws to eradicate corruption.

Human and social capital are the source of social power for unlimited accomplishment. All problems of humanity arise from constraints on the full development of these most precious and perishable of resources. All solutions arise from a progressively freer and fuller development of their potential. There is no problem humanity cannot solve if it foregoes outmoded behaviors that are directly detrimental to our individual and collective future. The madness of 70,000 nuclear warheads must terminate in the complete and immediate eradication of nuclear weapons. The economic devastation wrought by unbridled speculative greed has to be outlawed and banished the way slavery was abolished in the past. The unconscionable cost of widespread unemployment must be eliminated by recognizing employment as a fundamental human right. The hypocrisy and ineffectiveness of the institutions of global governance have to be rectified by democratizing the UN. Then and only then we will be fully free and empowered to fully develop the potential of human capital in each and every human being. These obstructive anachronisms, atavisms from our more primitive past can and must be given up, abandoned wholesale, now!

A fuller understanding of the significance of human and social capital and a reorientation of social theory and public policy on that basis will revolutionize humanity’s understanding of itself and unleash its potential for higher accomplishment.


Ivo Šlaus, Chairman           Garry Jacobs, Managing Editor        Orio Giarini, Editor-in-Chief


1. Felix Salmon, “Udacity and the future of online universities,”  Reuters 23rd January 2012

About the Author(s)

Orio Giarini

Director, The Risk Institute, Geneva, Switzerland; Fellow, World Academy of Art & Science

Ivo Šlaus

Honorary President, World Academy of Art & Science; Member, Club of Rome, European Leadership Network and Pugwash Council; Dean, Dag Hammarskjold University College for International Relations & Diplomacy, Zagreb.

Garry Jacobs

President & Chief Executive Officer, World Academy of Art & Science; CEO & Chairman of Board of Directors, World University Consortium; International Fellow, Club of Rome; President, The Mother’s Service Society, Pondicherry, India.