The Key Ingredients of Intellectual and Human Capital

The last fifty years of the 20th century saw great changes. The time period has been aptly termed the post-industrial society. In 2000, the World Bank defined post-industrialization as the decline of industrialism. Within America, this decline of industrialization has been ongoing since the end of World War II – it’s not a new event.

I explain in Inert America – Chapter 3 that the post-industrial society period was not only a decline in the industrial society; it also marked the rise of the information society of 21st century America. If America has now entered a new epoch of human history, then there are a number of questions that beg to be answered. What is an information society? What is the infrastructure needed to support an information society? What are the key ingredients for this type of society? How is this important to the current energy crisis?

As I pointed out in an earlier post entitled Education, The Pathway to Prosperity III, an the information society is defined as one whose infrastructure is closely defined by information technology and characterized by the development of a large service sector that is heavily dependent upon professional and technical occupations denoted by the increasing intellectualized nature of work which can only be performed through ongoing educational endeavors where the knowledge theory of value gets translated into information and treated as commodity.

With the rise of the information society came many technological and social changes. One of those changes was marked by the dot com boom era of the late nineties which made major capital investments in the information society infrastructure such computers, electronics, telecommunications, and most importantly, the Internet. Another change was a shift from an industrial society economy based on natural resources as commodities to an information society knowledge economy that is based on human capital.

The knowledge theory of value translated into information and treated as a commodity can more simply be described as intellectual capital. Intellectual capital is a resource that creates a competitive advantage when that capital is leveraged in the value creation process, i.e. production of an information commodity. In this type of production process, intellectual capital is a key ingredient that requires human capital, organizational and relational resources.

As Andriessen and Stam note in their 2005 paper on intellectual capital, human capital represents anything related to the people within an organization such as employees and their tacit knowledge, skills, experience and attitude. Human capital represents the most important part of intellectual capital. Organizational resources are everything of value created by the production process like codified knowledge, procedures, processes, goodwill, patents, and culture. Relational resources represent the relationship with customers, suppliers and other external stakeholders. These are the ultimate consumers of the information commodity.

Peter Drucker maintained in Post-Capitalist Society in 1993 that human beings are now the owners of the means of production. As the owners, it’s human capital that fuels the production process, i.e. the individual. Human capital is knowledge, education and competencies of individuals in realizing national tasks and goals. Human capital cannot be developed without education; it’s the basic building block. The end product is commercialized intellectual capital that is treated as a commodity and sold in the marketplace.

This brings us to one final question. How are the changes in 21st century America as we transition from an industrial society to an information society related to the current energy crisis? To answer this question is beyond this post. I’ll attack it over the next couple of days. You may be surprised as to the answer.

Stay tuned.


Gary