Valuing knowledge: The political economy of human capital accounting

Abstract

This article analyzes recent attempts to integrate the value of knowledge into global economic statistics. It outlines how emerging human capital accounting (HCA) standards apply concepts developed to value physical capital goods to the skills embodied in national populations, making its value dependent on lifetime labor market incomes. The intellectual legacy of neoclassical capital theory thereby frames the way in which the value of knowledge is understood in contemporary global governance in politically consequential ways. Drawing upon Karl Polanyi and recent literature on the political economy of measurement, it argues these methodologies reproduce the ‘economistic fallacy’, as they assume the exchange value of educational investment can be meaningfully isolated from its broader economic, cultural and social functions. Such metrics consequently naturalize politically contestable assumptions, reflecting comparative institutional factors rather than the substantive contribution of education to human welfare. A case study of the influence of HCA on the World Bank's Human Capital Project demonstrates how the diffusion of these valuation methods has implications for which national policy agendas are deemed ‘sustainable’, particularly within debates on the future of welfare policy. This case illustrates the wider importance of global accounting practices in constructing national economic policy space.