HUMAN CAPITALISM
How Economic Growth has Made us Smarter - and More Unequal
Brink Lindsey
Princeton University Press
136 pages; $14.95
There is a common belief that economics dominates everything, but now contrary evidence is attracting attention. In the United States, as well as in other Western nations, economic growth is enhancing inequality. The assumed inverted-U-shaped relationship between national income and income disparity has taken a U-turn, so to speak. In America, a persistent 10 to 15 per cent level of poverty has been found to exist. What is more, this persistent and growing economic divide is strongly associated with the educational and racial attributes of the population.
Brink Lindsey, a senior fellow at the Kauffman Foundation, tries to explain this unhappy correlation by analysing the cognitive demands made by the modern-day knowledge-driven economy. Computerisation and globalisation have by degrees either eliminated or offshored the middle rung of skilled workers, leading to a polarisation of the labour market. This gives rise to another U-shaped curve, which is the graph mapping relative employment growth to job skill level.
The cognitive demands made by an increasingly complex world are generating survival strategies that lead to labour polarisation. Complexity is a product of the application of technology and commerce, the twin pillars on which the modern capitalist economy stands. This complexity is leading to increasing specialisation and differentiation. How we perceive and understand the world via intellectual, social and personal abstraction - respectively by the use of symbols, role-playing and by projection of our persona to a future self - is the stuff of cognitive survival fitness. Mr Lindsey calls this particular ability "fluency with abstraction". His thesis is that this fluency is what makes the difference between the 30 per cent of Americans who hold a college degree and the 70 per cent who do not.
What has culture to do with all this? See, for example, the trend in IQ scores. The Flynn effect refers to the striking increase in the IQ scores across different countries over the last century. Does this mean that people who lived a century ago were intellectually challenged? Of course not. Thus, the Flynn effect is a consequence of growing social complexity, which is reflected in the subjects' ability to deal with abstraction and problem solving. IQ scores are themselves a cultural artefact. IQ scores reflect skills that represent adaptation to specific external circumstances - in this case the "novel and utterly exotic conditions of modern social complexity".
If you flatten out the typical pyramid model of society, what you get is akin to a solar system model: a dense central core of the intellectual and economic elite, surrounded by different levels of fluency with abstraction, and finally the working class at the periphery. The centre is characterised by high material and social status, earned by directing, co-ordinating and analysing. This core is flush with human capital, that is to say, investment in skills and competencies that are required by the modern complex system. At the periphery, by contrast, are those with significantly less amounts of human capital formation, far less adapted to deal with complexity and engaged in routine tasks with little scope for advancement. In the "cephalisation" of the modern industrial society, the brain-to-body ratio rises, driving up the demand for highly skilled and specialised workers vis-a-vis the others. This "brain" segment in the US is currently at about 35 per cent. What is unsettling is that the people in the two segments are more or less trapped in their respective segments, and there is little evidence of people on the periphery migrating towards the centre, or of the centre expanding further to absorb more and more of the periphery.
The core and periphery in the above model are clearly demarcated in educational attainment and along racial lines. African Americans and Hispanics are today disproportionately represented in the lower ranks. Cultural attitudes have arisen that reinforce these groups' marginalisation. The cultural predilections in terms of associating importance or utility to certain types of knowledge and behaviours over others are inhibiting upward mobility, according to Mr Lindsey.
The author goes on to propose many reforms. These include enabling entrepreneurship and liberalising K-12 education, while reducing subsidies for higher education. Some of these suggestions are indeed counter-intuitive. The author himself acknowledges that most of these types of tinkering with the system do not yield any social impacts; there are as many failures as successes. Moving children to higher-income schools, for example, did not yield any result, nor did the government's massive pre-school programme. Thus, the complexities of society and culture outweigh purely economic incentives and outwit well-intentioned social engineering schemes. The author concludes by saying that it will all ultimately depend, as Keynes said, on what people choose to do when their basic needs have been met.
How Economic Growth has Made us Smarter - and More Unequal
Brink Lindsey
Princeton University Press
136 pages; $14.95
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Brink Lindsey, a senior fellow at the Kauffman Foundation, tries to explain this unhappy correlation by analysing the cognitive demands made by the modern-day knowledge-driven economy. Computerisation and globalisation have by degrees either eliminated or offshored the middle rung of skilled workers, leading to a polarisation of the labour market. This gives rise to another U-shaped curve, which is the graph mapping relative employment growth to job skill level.
The cognitive demands made by an increasingly complex world are generating survival strategies that lead to labour polarisation. Complexity is a product of the application of technology and commerce, the twin pillars on which the modern capitalist economy stands. This complexity is leading to increasing specialisation and differentiation. How we perceive and understand the world via intellectual, social and personal abstraction - respectively by the use of symbols, role-playing and by projection of our persona to a future self - is the stuff of cognitive survival fitness. Mr Lindsey calls this particular ability "fluency with abstraction". His thesis is that this fluency is what makes the difference between the 30 per cent of Americans who hold a college degree and the 70 per cent who do not.
What has culture to do with all this? See, for example, the trend in IQ scores. The Flynn effect refers to the striking increase in the IQ scores across different countries over the last century. Does this mean that people who lived a century ago were intellectually challenged? Of course not. Thus, the Flynn effect is a consequence of growing social complexity, which is reflected in the subjects' ability to deal with abstraction and problem solving. IQ scores are themselves a cultural artefact. IQ scores reflect skills that represent adaptation to specific external circumstances - in this case the "novel and utterly exotic conditions of modern social complexity".
If you flatten out the typical pyramid model of society, what you get is akin to a solar system model: a dense central core of the intellectual and economic elite, surrounded by different levels of fluency with abstraction, and finally the working class at the periphery. The centre is characterised by high material and social status, earned by directing, co-ordinating and analysing. This core is flush with human capital, that is to say, investment in skills and competencies that are required by the modern complex system. At the periphery, by contrast, are those with significantly less amounts of human capital formation, far less adapted to deal with complexity and engaged in routine tasks with little scope for advancement. In the "cephalisation" of the modern industrial society, the brain-to-body ratio rises, driving up the demand for highly skilled and specialised workers vis-a-vis the others. This "brain" segment in the US is currently at about 35 per cent. What is unsettling is that the people in the two segments are more or less trapped in their respective segments, and there is little evidence of people on the periphery migrating towards the centre, or of the centre expanding further to absorb more and more of the periphery.
The core and periphery in the above model are clearly demarcated in educational attainment and along racial lines. African Americans and Hispanics are today disproportionately represented in the lower ranks. Cultural attitudes have arisen that reinforce these groups' marginalisation. The cultural predilections in terms of associating importance or utility to certain types of knowledge and behaviours over others are inhibiting upward mobility, according to Mr Lindsey.
The author goes on to propose many reforms. These include enabling entrepreneurship and liberalising K-12 education, while reducing subsidies for higher education. Some of these suggestions are indeed counter-intuitive. The author himself acknowledges that most of these types of tinkering with the system do not yield any social impacts; there are as many failures as successes. Moving children to higher-income schools, for example, did not yield any result, nor did the government's massive pre-school programme. Thus, the complexities of society and culture outweigh purely economic incentives and outwit well-intentioned social engineering schemes. The author concludes by saying that it will all ultimately depend, as Keynes said, on what people choose to do when their basic needs have been met.