Cultivating Human Capital

May 1 st 2001

A State of Minds: Toward a Human Capital Future for Canadians by Thomas J. Courchene (Montreal: Institute for Research on Public Policy, 2001, 323 pp., $24.95)

Thomas Courchene has been lauded as "one of [Canada's] most provocative, and best, policy thinkers," and "one of the most interesting visionaries this country has produced in recent years." He is Jarislowsky-Deutsch professor of economic and financial policy at Queen's University, Kingston and senior scholar at the Institute for Research on Public Policy, Montreal.

In his book A State of Minds, Courchene asks, "What happens when the world changes in ways that make Canada's physical capital, natural resources and geography—once the ultimate competitive advantages—less important than knowledge, information, technological know-how and human capital?"

According to Courchene, we live in the dawn of a new socio-economic order as a result of "globalization and the knowledge/information revolution," or GIR, as he prefers to call it. This revolution constitutes an historical change with momentous consequences: "The information revolution will do for human capital what the industrial revolution did for physical capital." Central to this revolution would be "the emergence of information- and knowledge-empowered citizens as the lead actors and agents of future societal progress."

The challenge facing Canada is that of shifting from an economy and society based on resource and physical capital to one based on human capital. This would require "privileging the human capital of Canadians" on the public policy agenda. That is, all policy must help Canadians increase their human capital and enable them to employ it in Canada. Courchene's slogan for the process is: "Canada must become a state of minds."

The author performs his analysis within a framework that presumes the primary influence of this revolution to be on the building blocks of society (which are identified as citizens, governments, and markets), and on the interfaces between these building blocks (that is, the citizen-market interface, the citizen-government interface, and the government-market interface). The central challenge within this framework is to determine what these influences mean for policy, governance, and institutional design.

Within this framework, Courchene identifies the primary result of GIR for governments to be a process of, as he calls it, "glocalization": a shift of power away from central governments with the most mobile policy areas shifting from the control of central governments to supra-national structures (such as NAFTA and the EU) and other policy areas shifting to more local control (including lower levels of government, markets, and individuals). One result of these shifts is the emergence of powerful city-regions which can function globally with a considerable degree of independence from their central government.

The primary result for citizens is that individuals are gaining tremendous power as consumers while at least for the interim losing power as citizens. The most disconcerting developments for Canada, however, is a couple of changes in income distribution. First, a polarization of market incomes between knowledge workers and routine workers. Second, the increasing mobility of knowledge workers and their consequent option to exit Canada.

With regard to markets, GIR is internationalizing production while changing the structure and functioning of business enterprises. For Canada, the most important shift—closely linked not only with broader developments but in particular with NAFTA—is from trade flows that are primarily east-west and inter-provincial to trade flows that are primarily north-south and inter-national. (Among Canada's provinces, only Nova Scotia and Prince Edward Island still export more to other Canadian provinces than they export internationally.)

This results in a quandary that Courchene poses as follows: "How do we Canadians preserve our east-west social union in the face of a progressively north-south trading nexus?" In this context, Courchene considers the implications of Ontario's emergence as a powerful North American region-state for Canadian federalism, for example, with regard to the east-west transfer system and economic infrastructure, and personal income tax.

In addition to directly considering the "building blocks of society," Courchene looks at the interfaces between them.

With regard to the market-government interface, he considers the key question to be that of how it can be ensured that "international economic integration does not lead to domestic social disintegration." Courchene follows Manuel Castells in anticipating the emergence of an "extraordinarily dynamic, flexible, and productive economy with an unstable, fragile society and an increasingly insecure individual."

At the citizen-market interface, a worrisome development, according to Courchene, is the "simultaneous integration of work and the disintegration of workers as a collective." The policy challenge lies in forging a link in this context between the increasingly mobile skilled elites and the considerably less mobile, less-skilled working people. In Courchene's opinion, training is a key consideration in addressing this challenge.

Courchene argues in conclusion to his analysis that with regard to the citizen-government interface, because of a shift away from the importance of resource-based economic development, the conventional Canadian approach to central economic policy is losing currency to policy instruments in the hands of provincial governments, with significant implications for the relative balance of power between the federal and provincial jurisdictions.

Against the background of this analysis, Courchene argues that Canada must "design and implement creative social and socio-economic infrastructure that will resonate well with both our own policy aspirations and the dictates of GIR." When considering Canadian policy aspirations, however, he emphasizes that it is important to distinguish between goals and instruments. While Canada should retain its traditional policy goals, the means to achieve these goals should not be sacrosanct.

The most important way Canada can address both the income-distribution implications of GIR and the citizenship/democracy potential of Canadians, claims Courchene, is by enhancing human capital. With the need to enhance human capital in mind, he offers a "mission statement for 21st-century Canada" that, in his opinion, "captures the essence of what being a Canadian must mean in the 21st century":

Design a sustainable, socially inclusive and internationally competitive infrastructure that ensures equal opportunity for all Canadians to develop, to enhance and to employ in Canada their skills and human capital, thereby enabling them to become full citizens in the information-era Canadian and global societies.

In the remainder of the book, Courchene considers what this means in terms of policy. The underlying theme of the concluding chapters is that

global forces are sufficiently pervasive and powerful to ensure Canada will eventually become competitive on the economic front. However, what is far from clear is that we will forge a societal commitment to implement a GIR-consistent social infrastructure. Thus, the fear is that as we fall into line competitively with the Americans, our social policy will drift south as well. . . . The dynamics of the new global order are such that Canada would drift toward the Life, Liberty and Pursuit of Happiness philosophy and reality of the United States. . . . The vast majority of Canadians would much prefer to have Peace, Order and Good Government inform the manner in which we embrace the information age.

The way to counteract an Americanization of Canadian social policy, according to Courchene, is shift Canada's societal priorities by ranking a "social capital future" highest. He goes on to claim that "Canadian public policy has no meaningful alternative except to strive toward the societal goal of remaking Canada into . . . A State of Minds."

This shift in priority would mean, in policy terms, making a "societal commitment" to a "human capital bill of rights" for children, recognizing "that the family is the effective locus for the production of human capital," and rethinking and restructuring government bureaucracy by means of "an overarching super-ministry for a human capital future."

Courchene's analysis rests on his evaluation that the historical changes now taking place are of an epochal stature. This view is probably the mainstream position among academics, and has been for a good five or ten years.

Many academics insist that the present changes are on a par with those of the Renaissance or Enlightenment. These academics claim we are changing from a modern to a postmodern historical epoch, just as earlier we changed from a premodern to a modern epoch.

Courchene claims the present information revolution is on par with the Industrial Revolution. Whether this puts him in the same camp as those who claim we are moving into a postmodern epoch depends on the extent to which he gives primacy to either worldviews or technology in understanding historical change.

If, Courchene gives primacy to the role of ideas in shaping history, like most Hegelians, then his evaluation of the present changes is not on par with the postmodernists. The present change is still important, but does not constitute the start of a new era. If, he gives primacy to changes in organizational forms, the use of tools, and the development of techniques, like most Marxists, then he is indeed evaluating the present change to be of epochal stature.

The technical and organizational changes in our time are certainly significant. Anyone who has lived through the rapid permeation of e-mail into everyday life will know that this tool alone has made a significant difference. But the change from before e-mail is no more significant than the change brought about by the introduction of the telephone. The information revolution is a continuation and expansion of a change brought about by earlier electronic communications media, such as the telephone and the fax machine, rather than a discontinuous disruption.

The changes in our time are certainly not epoch making, such as a shift from modern times to postmodern times. They are not even on a par with the changes of the Industrial Revolution. This may not make a big difference to the detail of Courchene's analysis, but it certainly means that his rhetoric is overheated.

Courchene presents for general consideration a mission statement for Canadian society. Who is responsible for pursuing this mission, however, is unclear, although the assumption is government. He works with an understanding of society as a whole with parts. The parts—or building blocks—are citizens, governments, and markets. Among these parts, governments have the leading function. Thus, for society to pursue a mission, governments would have to lead, primarily through innovative policy.

But society is not a whole with parts. Human interaction is far more complex and human responsibilities far more differentiated than Courchene's presentation allows. Admittedly, any analysis must abstract a few relatively simple generalizations from a complex state of affairs, but Courchene simplifies to a point where it affects the credibility of his subsequent proposals.

A less over-simplified picture of society would show it to be an historical assemblage of distinct though interdependent spheres—such as the spheres of the state, the economic market, family life, organized religion, and so forth—each deriving meaning directly from the design of reality, rather than from an encompassing whole. Within this complex array of societal spheres, each has particular, differentiated responsibilities.

Courchene's over-simplification of society into an encompassing whole with government providing leadership leads to his proposal of a single mission statement for all of Canadian society and to his recommendation of a set of government policies as the key means by which this mission can be accomplished.

Canada is neither a single society nor a single nation. The romantic, nationalist ideal of a nation-state is singularly useless for anyone trying to make sense of Canada, which is a unit only in the political sense. This is not to say that Canada is irrelevant. But its relevance is political, not social or cultural. Anyone wishing to propose a mission statement for Canada must craft that statement so as to direct Canada as a political community, rather than as a society. And such a mission statement formally exists—however debatable its content might be—in the form of the Canadian constitution.

This leaves businesses, families, communities, and other spheres of human life free to pursue their own distinctive missions and responsibilities.

While Courchene allows that families have "other valuable roles," he insists that against the background of his analysis "the time has come to view families (however defined) as the principal locus for the production of human capital." Courchene over-estimates the importance of the economic aspect of human life but raises an important point: families have among their distinctive responsibilities the education of children, even though much of that responsibility is delegated to schools. The primary responsibility for the development of character, however, rests undeniably with families. And the early development of character—much more so than the early acquisition of skills—makes a big difference in whatever sphere a person exercises responsibility.

Government policy might help families exercise their responsibility, but the impetus for families to take care of their children cannot come from government policy or through bureaucratic intervention. It must come from responsible parents.

Even then, a mission statement for families in the twenty-first century is less likely to have as its highest priority the development of human capital. However defined.

Topics: Business Culture

Gideon Strauss was the editor of Comment from 2000 to 2010. He is currently Associate Professor of Worldview Studies at the Institute for Christian Studies, a graduate school of philosophy in Toronto, and a senior fellow with the Center for Public Justice in Washington DC. Gideon also facilitates vocational discipleship in churches in his native South Africa.