Human Capital - The Ignored Asset
Everybody has it, very few allocate and capitalize it well
Walk into a conversation between two friends, or partners and there is a high probability of investments and financial capital being a topic of conversation. We obsess with markets, generating alpha, asset allocations, and compounding all in an effort to ensure growth, security and resilience of the financial capital we have accumulated.
There are two specific attributes about this form of capital, tho:
Depending on how rich or poor you are born, you have to earn this financial capital before deploying it
A lot of what happens with it, is outside your span of control. You can make the best decisions but you can not actively dictate the outcome.
So even with this little ownership by default, and little influence over what happens with it - we give immense importance and effort considering it our ticket to safety and resilience. Ironically, taking this extreme economic view of our lives, we systematically ignore and underinvest in another form of capital despite it being the foundational layer of long-run growth, and resilience - The Human Capital.
Human Capital is perhaps the most abundant, yet most misallocated and underinvested form of capital
Perhaps for many of us, we associate human capital with some policy and society or nation level capital than taking an individual level view of it. At an individual level, we can think of human capital as the sum of the physical, intellectual, and emotional/passion strength that we are bestowed with. Ultimately, these are the ingredients we leverage to transform through our actions, and create or produce something. To be productive members of the society, as we say!
If human capital is indeed the input to all our actions, and ultimately our participation, engagement and growth in the society - then why might so many of us be not putting it in the center of our lives, and optimizing everything around how we use, deploy and grow this capital.
It is a complex question and there is no one reason for it, but historically, many societies actually took that view where human development, character, and communal contribution often sat at the center. In the vedic and historical indian context, the education and employment system was rooted in self-mastery, and duty leveraging one’s strengths. Vocation in such a system was aligned to one’s mental and physical constitution and a broader societal and moral path, than purely market first and economic identity.
However, mechanization, factories, and time-discipline reframed people as standardized labor inputs. Taylorism optimized tasks, often decoupling skill, autonomy, and identity from work. Education and skills were modeled as investments to raise earnings and productivity. Useful for policy, but it narrowed the human story to an economic one and thus the lost focus on human capital, and obsession with the economic capital.
The fact that human capital is also not a tangible, visible form of capital like financial capital makes it hideen and therefore, while it does not need to be earnt like financial capital - it does need to be discovered and understood. That makes it a requirement that there is a seed of self-awareness and agency as well as time for one to start exploring and uncovering this capital.
Unfortunately, the world we live in has many of us so engulfed in our survival and short term focus that we barely catch a breath to take a long term view, and have the time and agency to the abundance of human capital each of us have been bestowed with.
But perhaps, if you do have the seed of self-awareness and are lucky enough to have the time and agency to start discovering, nurturing and more optimally allocating this form of capital - there are many valid reasons to do so.
First and foremost, you already have abundance of human capital that you can start capitalizing on. You do not have to earn it, you only have to discover and acknowledge it. This is what entrepreneurial people do best, they take what they know of themselves and capitalize on that strength to create an effectuation loop, creating something out their talent, that only amplifies their own personal growth, but also leads to perhaps more economic growth than ignoring their human capital would.
Secondly, you are not at the mercy of someone as to the outcome of allocating human capital a certain way. If you allocate your time, intellect, and passion to something - it is predominantly in your hands what you make of it. Ofcourse, life and market conditions influence the outcome, but you are not outsourcing the active agency of the outcome to someone else as you’d in allocating your financial capital by investing in equities or other forms of capital markets. In that sense, you have agency over how you capitalize on your talent.
Thirdly, as we move into a superintelligence era, increasing automation and complexity means that growth pathways are concentrated in human judgement, abstraction, relationship skills and value-creation is increasingly about problem-solving, direction, co-ordination and creativity. All pathways that are human-capital intensive!
Growth pathways for an individual in a super-intelligence era are increasingly human capital intensive
Therefore, if we take the view of our physical, intellectual, and passion/emotions as that of an allocatable portfolio of human capital, perhaps we can start allocating it with the same thoughtfulness and active engagement that we do with our financial capital.
And if we have to seed this perspective shift towards taking a long term, compounding and resilience development of our human capital with tangible initial actions - let them be of treating time and attention as investable capital, prioritizing choosing experiences that increase our learning and development rate, and choosing cultures, environments and people that offer high evolutionary yield.
Until next time!
If you have feedback or thoughts, would love to hear them - hit reply to this email or send us an email at team@withcareventures.com
If you’d like to book a call with us to explore how to best allocate your human capital and find your ‘person-market’ fit - find a time here for an intro call. https://calendar.notion.so/meet/sohrabkalra/connect