Debt is bad, creditors are violent creatures that spoil everything and society should clear debt for everybody because some rich and powerful do not pay their debts anyway.
1 On The Experience of Moral Conclusion
Author starts by establishing his leftist credentials as participant of anti-globalization movement. As such he demanded abolishment of 3d world countries debt. In one of his encounters with civilians he bumped into a new and alien for him idea that debt should be paid. This started his research that produced this book about debt. Being leftist author considers debt as something very bad, but he is not satisfied with just moral side of it. He goes to history to trace debt origins and development.
2 The Myth of Barter
The first step of his review author is trying to disqualify typical economic idea of origination of money–based market: impracticality of barter leading to creation of money as universal exchange tool. The main point of this chapter is that barter in real primitive one-tribe economy was not used because there were no real exchange of goods and services, just mutual help and cooperation in survival process. However, when he turns to actual anthropological research he brings example of barter exchange, albeit not within a tribe, but rather between tribes as part of regular encounter. Even more interestingly he comes to conclusion that original medium of exchange was credit with money invented much later.
3 Primordial Debts
This is more detailed review of the Credit Theory of Money – theory that money was invented as unit of measure of debt. From here author links debt to the state power claiming that debt and consequently money were not created to meet exchange needs of people, but as tool of robbery forcing people to pay taxes with state issued money which could be acquired only by selling goods and services to representatives of the state. Another theory discussed is theory of primordial debt that was recently developed as part of intellectual foundation for Euro. The main idea is that all humans born already in debt to society because without it they could not possibly exists. The state and government is embodiment of the society and therefore every human is in debt to government and the only meaning of his life is to pay this debt back. To author’s credit he is capable to think it through to logically inevitable conclusion of individual being the slave of the state as in USSR. The final point is made that usual dichotomy of the market vs. the state is wrong. As author sees it states created markets and markets require states.
- Cruelty and Redemption
This is discussion of duality of the money: IOU on one side and commodity on another. Somehow it goes into discussion of economic ideas of Niezsche but then successfully goes back to evils of debt.
5 A Brief Treatise on the Moral Grounds of Economic Relations
Here author brings in anthropological research to establish qualitative and moral difference of debt comparatively to all other obligations. The first step he does is to try redefining communism as a system of mutual obligations that exists always and everywhere in compliance with slogan “from each to each”. He even states: “Communism is the foundation of all human sociability”. After that he is moving to “Exchange” treating it as an inferior method of interaction comparatively to Communism. Somehow he believes that exchange implies hierarchy so he tries to show that “exchange” produces “hierarchy”. At the end of chapter he goes into discussion of meaning of debt stating that it is just an incomplete exchange.
6 Games with Sex and Death
This starts with a strange statement that if we reduce human life to “exchange” only eliminating “communism” and “hierarchy”, we somehow move all humanity who is not adult males into background. He also introduces a new notion of “human economy” meaning “economic systems concerned not with the accumulation of debt, but with the creation, destruction, and rearranging of human beings. Then he goes into anthropological example of such economies running on blood debt, flesh debt, slavery, and such.
7 Honor and Degradation or On the Foundation of Contemporary Civilization
This chapter is about mainly non-material debts of honor and honoring one’s debts. Author brings it to an interesting point about “human economy” starting with slavery. He sees slavery not as primarily regular economic phenomenon, but rather as human relations phenomenon that he defines as “a human being ripped out of one’s contest”. From here he goes to defining slavery as “social death” and then to linking it to honor. He defines honor as “surplus dignity” often achieved by diminishing dignity of other especially by eliminating dignity of slaves. It is kind of human non-economical exploitation. Finally he links honor to money and debt by claiming that they are more measure of honor than actual economic tools. In conclusion of this chapter author comes up with a mind bugging and charming idea that we are masters and slaves at the same time and our freedom comes down to our ability to drive ourselves as slaves.
- Credit versus Bullion, and the Cycles of History
Here author returns to economy and money, looking at historic process of exchange development similar in multiple cultures from non-quantifiable Credit / Debt to Commercial loans to money exchange and quantifiable debt with term conditions. He believes that this process went in parallel in Mesopotamia, China, and Egypt and was completed about 750 BC in all these cultures with establishment of money exchange and formal debt processing.
9 The Axial Age (800 BC – 600 AD)
The next step was development of philosophies by such figures as Pythagoras, Buddha, and Confucius all living at the same time around 500 BC. German philosopher Karl Jaspers called it Axial Age and claimed that it was the age of philosophical awakening of humanity. Author is trying to link to invention and expansion of coinage to destruction of “human economies” by wide scope conquests such as Alexander’s and needs for easily transferrable and transportable media of exchange independent from human relations of credit. This need came from dramatic expansion of markets when individuals exchanging goods and services would have transactional encounters and may never meet again in their life times. Coins also where a great tool to support mercenary armies when soldier could carry acquired wealth wherever he would go. At the end of chapter author tries to combine historical development of interconnection between market, state, war, and religion into 8 steps process:
- Markets appear as side effect of government administrative systems and then provided logic and practical tools for mercenary warfare eventually subjugating government itself
- As result military-coinage-slavery complex emerges ideologically supported by materialistic philosophies
- As reaction and rejection of this materialism philosophies of humanity and soul are developed, creating foundation for ethics and morality
- Clash of these philosophies and elites supporting them led to prolong period of struggle between various ideologically based social movements
- Same social movements rejected war and aggression becoming peace movements
- The next step was development of market based philosophical ideas with non-material debt in foundation of many of them
- Rulers embraced these philosophies and managed to control empires on their ideological foundation such as Constantine’s Christianity
- Eventually the stability was achieved by dividing everything into separate spheres: one sphere of spiritual, religious, and human considerations and another one of crude materialistic, based on market, and driven by money and power actions.
10 The Middle Ages (600AD – 1450 AD)
The Medieval period saw the end of big empires and return to “human economies” in their feudal form either in smallholdings of European knights and kings or big bureaucratic Empire of China or Cast Aristocracy of India. It also produced new religion and civilization of Islam.
- Age of the Great Capitalist Empires (1450-1971)
Here author reviews West European development of contemporary capitalism and its expansion around the world. He divides it into several parts:
- “Greed, Terror, Indignation, debt” is about territorial expansion of European states based on superiority of actions of European adventurers and profit seekers often driven by debt who conquered America over potential competition like China who did not really care to compete.
- “The World of Credit and Interest” is about “break of old system of mutual aid and solidarity” and substitution it with market mechanisms of Cash, Credit and Interest.
- Development of the new system into “ Impersonal Credit-Money”
- Final formation of capitalism’s all financial features specific for this economic system occurring even before industrial revolution. Author is also claiming that capitalism was never based on free labor. His reason: slavery, Chinese laborers, and even all forms of wage labor (which author seems to believe is a form of slavery).
- Apocalypse: Author believes that capitalism, as economic system cannot stand idea of its own permanency and constantly in search of the new form of apocalypse looming ahead from world revolution to nuclear holocaust to global warming. He somehow manages to link it to accumulation of national debt that is infinite expansion of credit into the future.
12 The Beginning of Something yet to Be Determined (1971-)
The beginning of the end of capitalism and start of something new author assigns to the date in 1971 when USA stopped exchange of dollars for gold. Then he goes into discussion of national debt, fiat money, and comes with conclusion that it could not keep going on for much longer and will have to be changed by some mass movement based on new ideas. Interestingly enough he expects the new big idea that will turn world around to come from Iraq and Islamic tradition built around notion of debt, or maybe it would come from feminism, or from Islamic feminism.
In conclusion author declares that debt and credit drives economy and it is actually bad for two reasons: one is that only industrious individuals would prosper, while lazy would suffer, which is morally not acceptable; and the second reason is that the industrial prosperity and hard work lead to destruction of environment, global warming, and/or some other calamity yet to be defined. The author’s proposal to save the world therefore is to clear all debts and start again from the scratch as pure and moral society with no debt whatsoever.
MY TAKE ON IT:
This book is somewhat fascinated trip into leftist notions of economic history and finance. In this leftist worldview the economy is divided into good “human economy” where there is no money, no credit and consequently debt, and people just share what they produce without expecting something in exchange. Author even trying to bring back from dust been of history and beautify the old name for this – communism. It seems to me that there is lack of understanding here that finance is nothing more than automatic resource allocation to where it would produce most good, meaning under “good” goods and services. Therefore debt as integral part of finance is just a part of this process of allocation. Obviously when such allocation is done not by capitalist based on where it would produce most profit, but by politician or bureaucrat based on where it would be most beneficial for his/her career, then it would be unreasonable to expect increase in quantity and/or quality of goods and services. So I would suggest to keep in place all debt created in market economy and liquidate all debt created by politicians and bureaucrats. And since this debt is often to majority of regular people who for example paid into social security all their lives, lets cover this debt liquidation by confiscating wealth from politicians, bureaucrats, and other individuals who earned their living from government salaries, grants, and other transfers beyond minimal amount necessary for survival. We do not want anybody, even socialist professors to starve.
The language is the communication tool that makes humans what they are. Without language it would not be possible to achieve group cohesion specific to the humans, which gives them huge evolutionary advantages and more than fully justify huge brain and long period to maturity required for effective use of this communication tool.
Introduction: The Gift of Prometheus
Author defines language as tool and compares it with fire in its importance for human survival. The difference between fire and language however is that language is purely human invention and does not exists without humans. This tool allows handling problems created by need to maintain cohesion of human groups and effective communication it requires. The book reviews specifics of these problems, solutions provided by language, actual application of these solutions, and variety of such solution due to variety of cultures.
PART ONE: Problems
Chapter One: Language as a Social Tool
Author starts with description of problems he encountered as anthropologist and missionary in the new and completely unfamiliar environment. The discussion is mainly around issue whether language is the biological tool and inherent part of human personality, or it is an invented cultural tool used to respond to survival related pressures of environment.
Chapter Two: From Fire to Communication
This is about the nature of language as communication tool. It discusses whether it has genetic origin or just genetic predisposition for development, whether its grammar inherent for all versions of human languages or it could be different from language to language. There is also discussion about invention of language and its relation to use of fire. The fire created more need in cooperation and lead to discovery of other minds and development of language as tool to connect minds.
Chapter Three: Crossing the Communication Threshold
This discussion is partially about power of the words and partially about theory of communication when language services to overcome noise and deliver message. It also includes discussion on coherence of series of words and sentences build into a story capable to transfer highly complex message from one brain to another.
Chapter Four: Does Plato Have a Problem?
This is discussion about link between language and knowledge based on Plato’s ideas of an a priori knowledge and data supporting or debasing this idea. It also goes into more details about genetic base for language and human brain’s language related areas.
PART TWO: Solutions
Chapter Five: Universals and Faculties
This is about language being a tool that provides solutions for problems encountered in each specific culture. It again returns to discussion of language not being preordained faculty based on genes because there is no language organ to be found and even more important, Chomsky’s ideas not fit with expanded knowledge of diverse languages and their radically different grammars. Here author applies his extensive experience with various tribes and languages acquired during anthropological research. It also refers to the fact that language is learned from other people and all cases when individual were deprived of help from other humans they did not develop anything like language ability.
Chapter Six: How to Build a Language
This is somewhat technical discussion of language structure, its flexibility and continuing development. It applies an interesting way of analysis by using correct grammar and words in meaningless or unrealistic combinations. It also provides T-model of language with top being mental dictionary going down to sentences / semantics on one side and syntactic / sound structure on other side.
Chapter Seven: The Platforms for Language
This is about different platforms used for language from sound based on human anatomy to various writing methods, signs, everything else conceivable.
PART THREE: Applications
Chapter Eight: Aristotle’s Answer: Interaction and the Construction of Cultural Signs
This is about process of learning language and whether it is based on inborn instinct of language acquisition or it is specific use of general ability to learn new staff. One of interesting facts is that children seem to learn sentences as they learn signs as whole. It also discusses hierarchical structure of languages and human expectation of hierarchy in complex systems. Lots of space also allocated to links between culture, language, behavior, and underlying knowledge that defines it.
Chapter Nine: Language the Tool
Here author returns to his main concept that language is just a tool for communication and community building. It also includes discussion about situation when multiple languages used by people and how they interconnect. Author supports teaching Ebonics and bilingual education on the basis that to press with English puts children with diverse background into disadvantage. Finally link between language and culture is demonstrated by examples of parallels in culture and language acquisition by children and by linguistic impact of cultural notions about hierarchy of relatives in various cultures.
PART FOUR: Variations
Chapter Ten: Language, Culture, and Thinking
This time it is impact of language on the way of thinking that is reviewed. One of the most interesting examples is language without numbers and correspondingly complete lack of quantitative thinking in culture where it is used. Another example is of languages in which speaker’s body is not used as the center of coordinates so there is no left/right or up/down.
Chapter Eleven: YOU Drink. YOU Drive. YOU Go to Jail. Cultural Effects on Grammar
This is even more technical review of link between culture and grammar. It is discussed using example of recursion.
Chapter Twelve: Welcome to the Freak Show
The final chapter is an attempt to prove value of diversity of languages and call to save this diversity as much as possible. It also looks at various creoles, pidgins, and other languages as subsets and/or combinations.
Conclusion: Grammar of Happiness
The final conclusion of this book is that language reveals the engine of our souls, our mind and it is cognitive fire of human life.
MY TAKE ON IT:
I think that the main point that language is cognitive tool absolutely necessary for building understanding of the world internally in human mind and maintain communications and cooperation with other humans is very valid and I fully agree with it. However I think that value of diversity of languages is overstated because every language is inseparably linked to the culture and when culture gets destroyed by encounter with other technologically and politically more powerful culture, the language has little chances to survive. It could be maintained artificially or even restored from practically nothing as contemporary Hebrew, but it could happen only in exceptional cases when group of people is isolated and is under hostile pressure. The normal development leads to merge of cultures and consequently merge of languages so diversity of languages serves no other purpose then artificially maintain weaker culture. It is unfortunate because the real human beings pay price for this anthropological indulgence in form of less communications, less cooperation, and consequently lower quality of life due to unnecessary cultural and linguistic isolation.
The main idea of this book is that wars are not always bad, but rather often are necessary and benevolent part of human society’s development. Wars could be divided into productive wars, which increase power of state that allow rulers who are always basically bandits to suppress rival gangs, bringing dramatic decrease in violence and turning robbery into stationary prosperous business when people who are being robbed accept robbery as reasonable payment for protection. This situation is contrasted with bad wars when state power decreased or even completely destroyed resulting in substitute of one powerful stationary bandit who cares about future by multitude of roaming bandits who care only about maximizing current loot, destroying in process productive powers of society as whole.
Introduction: Friend to the undertaker: This starts with recollections of Cold war and recognition that violence and violent death consistently decreased over known history. The more detailed look at history led author to conclusion that wars relate to growth of state power: War makes the State and the State makes peace. As illustration author provided Ferguson’s table:
From here comes idea of separating wars into productive and unproductive with the following historical review.
- The Wasteland? War and Peace in Ancient Rome:
This chapter starts with battle between Romans and British tribes at the Craupian Mountain in 83 AD. The Romans won and dealt with losers with usual at the time cruelty. However historic record and archeological data show that level of violence in these areas went down dramatically afterword, while level of trade and prosperity was up. After reviewing a number of similar occurrences using not only historical, but also anthropological data author defines this situation as benevolent influence of stationary bandit who cares about long term rent that could be collected from conquered people. At the end the main question of this book defined as why in some cases it happens, while in many other cases it does not.
- Caging the Beast: The Productive Way of War
This chapter starts with critic of idea of special western way of war as characteristic of prosperous democratic agricultural societies. It states that 3 similar empires of ancient word: Roman, Parthian, and Han all coming into existence through conquest and merge of smaller entities were quite similar in many ways. They were similarly situated geographically in what author calls lucky latitudes: wide area from Atlantic to Pacific with good enough land and climate for extensive agriculture. In military affairs they went through similar technological phases presented in very neat graph:
The main point made is that these agricultural empires successfully suppressed violent ways typical for all small pre-agricultural societies of frequent small-scale confrontations between neighboring tribes. The small encounters were substituted by big battles with consequent cruel suppression sometimes at the level of genocide, eventually bringing peace and prosperity for remaining population.
- The Barbarians Strike Back: The Counterproductive way of war A.D. 1-1415
The next step came with development of big horses and tools to ride those, producing cavalry that made mobile forces much more effective and gave military superiority to barbarians who overtime successfully destroyed all big empires. Author defines it as counterproductive wars. Instead of the stationary bandit – the state that cared about prosperity of rent producers came military superior mobile bandits who cared only about the loot. The final result was break down of big empires into small feudal state mainly self-sufficient, military based on fortifications for defense, heavy armored cavalry for suppression of rent producers leaving on territory under control, and semi-ritualistic knight’s alliances constantly in competition to identify and define allocation of territories. Author defines such wars as counterproductive because they increased overall levels of violence and decreased productivity levels around the world.
- The Five Hundred Years’ War: Europe (Almost) Conquers the World, 1415-1914
This chapter is about European military dominance in the world that author explains by effective use by Westerners of two non-western inventions: guns and ocean going ships and navigation. Despite rather quick acceptance of guns non-European countries never were able to catch up with European development of new military technologies, tactics, and drilling. There is also a very interesting discussion about mingling of commerce and war. Overall the European conquest of the world should be treated as at least somewhat benevolent because it resulted in dramatic decrease in wars and violent deaths. It is also mentioned that parallel to this went dramatic improvement in productivity due to industrial revolution.
- Storm of Steel: The War for Europe, 1914-1980s
This is review of long World War between European powers that lasted from 1914 until 1990 with some intermissions and long phase of Cold War. This long war had not only military, but even more so ideological character putting not only countries, but also people inside countries against each other fighting over selection of the best way to prosperity. One side was looking for prosperity via freedom both political and economic, while other side was looking for unity and top down commanding management of everything. Eventual outcome was semi-working arrangement of welfare state with limited market economies in all developed countries.
- Red in Tooth and Claw: Why the Chimps of Gombe went to War
At this point discussion is moved to biological causes and functions of violence and war starting with discussion differences between war like chimps and peace and sex loving bonobos. Turned out that even bonobos become much less peaceful when they encounter deficiency of resources. However the chapter ends with idea that human brain combined with contemporary technology decreases chances of war due to its suicidal character.
- The Last Best Hope of Earth: American Empire, 1989-?
The final chapter is review of contemporary relatively benign situation when American preeminence suppresses any significant wars around the globe providing for relatively low levels of violence. However author see future threats that could come from raise of China, India, conflict between rich and poor countries, and population groups inside countries. In short our long history of wars and violence is not over yet.
MY TAKE ON IT:
I find concept of productive and unproductive wars interesting and generally sound. However war and violence, while being the ultimate shortcut to achieving goals in resource acquisition and psychological satisfaction, is wider phenomenon than just power play between bigger and smaller or stationary and mobile groups of bandits. As long as shortcut of war works, people would use it to achieve their objectives, but I believe that technology including technology of organization of society on the basis of voluntary exchange rather than violent transfer of resources provides some hope that eventually it will be overcome.
The most important part of capital necessary for production is human capital that is humans with accumulated knowledge and skills allowing such production. This human capital has all characteristic of any other forms of capital such as ability produce profit in form of earnings to owner of this capital, investment options in form of expenses on education, and so on. Human capital is probably the most important form of capital and should be consciously developed and expanded.
INTRODUCTION TO THE SECOND EDITION; INTRODUCTION TO THE FIRST EDITION: Introduction includes brief description of the structure of this book and content of its chapters.
II. HUMAN CAPITAL REVISITED: Introduction; Education and Training; Human Capital and the Family; Human Capital and Economic Development; Conclusions
This is introduction of the notion of human capital as combination of knowledge and skills obtained via education and training. It reviews formation of such capital starting with the family and its highly positive impact on economic development.
Part One: Theoretical Analysis.
III. INVESTMENT IN HUMAN CAPITAL: EFFECT ON EARNINGS: 1. On the Job Training: General Training; Specific Training; 2. Schooling; 3.Other Knowledge; 4. Productive Wage Increases;
This is analysis of educational investment based one separation of specific and general training with causal relation between accumulation of training and earnings rate. Sources of human capital defined as formal schooling and all other knowledge obtained outside of formal education. Finally wage increases that provide better access to goods and services including medical services are reviewed as methods for employers to increase human capital of their labor.
IV. INVESTMENT IN HUMAN CAPITAL: RATES OF RETURN: 1. Relation between Earnings, Costs, and Rates of Return (Addendum: The Allocation of Time and Goods over Time); 2. The Incentive to Invest; Number of Periods; Wage Differentials and Secular Changes; Risk and Liquidity; Capital Markets and Knowledge; 3. Some Effects of Human Capital; Examples; Ability and the Distribution of Earnings; Addendum: Education and the Distribution of Earnings: A Statistical Formulation; Addendum: Human Capital and the Personal Distribution of Income: An Analytical Approach; Supplement: Estimating the Effect of Family Background on Earnings
This chapter includes mathematical representation of relationship between earnings, costs and rates of return on human capital. This is followed by an analysis of dynamics of human capital in relation to age including variations of investment and returns. Overall, as expected investment decreases with age, while returns increase up to a point. It is especially typical for formal education when the length of remaining work life decreases value of investment. It also provides examples of such dynamics for various situations with detailed analysis of distribution of earnings.
Part Two: Empirical Analysis
V. RATES OF RETURN FROM COLLEGE EDUCATION: 1. Money Rates of Return to White Male College Graduates Returns; Returns 1939; Costs 1939; Rates in 1939 and 1949; 2. Some Conceptual Difficulties; Correlation between “Ability” and Education; Correlation between Education and Other Human Capital; 3. Rates of Return to Other College Persons; College Dropouts; Women; Rural Persons; 4. Variation in Rates of Return
This is an empirical analysis based on statistical data. The findings include: Return on college education for while male 11-13%. While high educational achievement strongly correlates with higher ability, author established that ability is responsible for proportionally smaller share or returns for higher levels of education. Rates of return declined from 1900 until 1940, but then grew up significantly despite increase in numbers of educated people. Rates of return are higher for white males than for black and higher for black men then for white women. Significant effort also allocated to analysis of returns causes broken down between abilities and education. It seems that ability as defined by high school rank and family background has increasing impact on earning with education, but it is not always consistent and depends of methods of analysis used.
VI. UNDERINVESTMENT IN COLLEGE EDUCATION? 1. Private Money Gains, Social Productivity Gains 3. Private Real Rates: This is analysis of comparative advantage of investment in education over other forms of investment. It also provides data about growth of investment ratio of human capital as share of total investment, indicating growing appreciation of its value.
VII. RATES OF RETURN FROM HIGH SCHOOL EDUCATION AND TRENDS OVER TIME 1. The Rate of Return from High School Education; 2. Trends in Rates of Return; After1939; Before 1939
This is analysis of returns on high school education. Unsurprisingly it was high before 1939 when it was relatively rare, but started going down with increase in numbers of graduates. However comparatively with dropouts it remains high as long as there are enough of middle level jobs for such people.
VIII. AGE, EARNINGS. WEALTH. AND HUMAN CAPITAL: 1. Age-Earnings Profiles; 2. Age-Wealth Profiles
This is an interesting analysis of relation between human capital of labor and its dependency on age. It is consistent with previous findings with income gap between people of different educational levels expanding up until middle age and then slowly decreasing. However total amount of wealth earned has obviously cumulative effect due to simple fact of disproportionally higher level of saving and investment rate for higher income individuals.
IX. SUMMARY AND CONCLUSIONS: 1. Summary; 2. Future Research; 3. Concluding Comments
This chapter is a brief restatement of previous chapters and suggestion for future research into quantitative impact of different kinds of abilities on earnings, social effects of higher levels of education, and also variation of effects of human capital development on various countries.
Part Three: Economy-Wide Changes: Introduction
X. HUMAN CAPITAL AND THE RISE AND FAIL OF FAMILIES: 1. Introduction; 2. Earnings and Human Capital; 3. Assets and Consumption; 4. Fertility and Marriage References; 5. Empirical studies; 6. Summary and Discussion
This is analysis of impact of human capital on wider condition of society as whole: it’s economic growth, foreign trade, family conditions and so on. It is also provides review of empirical studies on cross generation cumulative impact or lack thereof. Some interesting findings are: earnings regress to mean faster in rich families than in poor; Consumption is opposite; Fertility is higher for rich, but lead to dilution of wealth.
XI. THE DIVISION OF LABOR, COORDINATION AND KNOWLEDGE: 1. Introduction; 2. Division of Labor among Tasks; 3. Coordination Costs; 4. Knowledge and Specialization; 5. Extent of the Market; 6. The Growth in Specialization and Knowledge; 7. The Division of Labor Between Sectors: teachers and Workers•
This chapter is review of relation between division of labor and human capital. Overall higher level of human capital occurs when the knowledge is specialized and applied via extended division of labor. However it is limited by extent of the market: the wider market, the better return of human capital.
XII. HUMAN CAPITAL, FERTILITY, AND ECONOMIC GROWTH; 1. Introduction; 2. Basic Properties of the Model; 3. Fertility and Growth; 4. Comparative Advantage in the Production of Human Capital; 5. Discussion; 6. Concluding Remarks
This part is the detailed view of relationship between human capital, fertility, and economic growth. It analyzes returns on children vs. return on human capital with conclusion that it depends on overall level of human capital, division of labor, and economic conditions of society. In developed countries high level of all these factor leads to higher return from human capital than from children causing relative decrease in fertility, while in economies with low level of development return on children is higher causing preference for higher fertility vs. higher education.
MY TAKE ON IT:
I think that this research of human capital and its economic value is extremely interesting and provides a glimpse of future development when human capital could become by far the most important and valuable form of capital dwarfing all others. It should come as an inevitable consequence of access of each individual to reasonable levels of material well being when material staff could become much less valuable due to its triviality. Much more value would be assigned to satisfaction of intellectual and psychological needs that would come from complete merge of production and consumption of human capital.