There is a debate on the economics blogosphere on whether human capital is really capital?
Capital is one of the most ubiquitous terms in our modern economy. But what does it mean? My take is that capital should be defined very broadly; however, in doing so, it is crucial to be aware of the important differences among the various forms of capital. In that sense, I agree with Noah Smith's view that depending on the context, we can lump different forms of capital together or keep them separate.
I would define capital broadly as: if by investing in something today, it rewards you with higher consumption / utility in the future, that something can be called capital. Capital captures the important trade-off between consumption today and potentially higher consumption in the future. For example, many goods /services we purchase (e.g. food, TV, clothes, entertainment) are not capital. In a capitalistic system, private property rights protect individuals' ownership of capital.
By this definition, there are many forms of capital: financial capital, physical capital, land capital. human capital, social capital, knowledge capital.
However, there some very key differences among these different forms of capital.
1) Both social and knowledge capital have positive externalities and are non-rivalous
2) Physical and land capital depreciate the more you use them; human and social capital appreciate the more you use them
3) Human and social capital cannot be bought and sold
4) To reap the returns from human capital requires effort, which is a dis-utility
"This distinction has some direct implications regarding individual welfare. $10,000 of income from human capital means I have to work x hours of work; $10,000 of income from my financial [or physical or land] capital, imply no work. Since work, in turn, implies effort and creates disutility (for otherwise, how would we explain upward sloping supply curves of labor?), it is obvious, I think, that in utility terms, $10,000 from human capital will bring fewer utils than the $10,000 collected from owning other forms of capital."
So I dont have much of an issue with calling labor as "human capital" but ignoring the differences across types of capital can be misleading or wrong depending on the context.
