Why Human Capital is Important for Organizations

People Come First

A. Manuti, P. de palma, A. Manuti, P. de palma, Kenneth A. Loparo, Pasquale Davide de Palma

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN:
  9781137410788
• eBook ISBN:
  9781137410801
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

This book encompasses eleven chapters dealing with some of the most important issues in the field of human resource management through the exploration of four key themes: drawing the scenario, the pivots of human capital, measuring human capital, and good practices from abroad.

Part I

Setting the Scene

1

Work between Fordism and Post-Fordism

Giacomo Pisani

Alienated work and reification

Work experience is an eminent stage in the process of self-actualization. It is exposed more than anything else to the influence of history, opening the essence of the person to its constitutive historicity. Therefore, work is the special element of individuals’ fulfilment expressing their essential forces in the outside world. This world is not something detached from the person, but it represents the domain of his/her own historicity in which the individual can only act as a social being. As Marx wrote, “society is the essential unity that allows the fulfilment of man in nature, the true resurrection of nature, the naturalism accomplished by the man and the humanism accomplished by the nature” (2004, 109).

The organization of capital, as we know, grew out of humans reifying their essential forces, determining them in the light of capital’s own interests. Capital is indifferent to human needs and reduces individuals to the status of instruments, breaking the relationship of mediation between humans and nature and transferring it to an abstract and alienated level. Capital on this level is organized in the form of private property, wages, and division of labour. As Marx wrote, “for the man who is nothing more than worker for man as worker, his human characteristics exist only for the existence of capital alien to him” (2004, 85). Work is not anymore, according to Marx, the expression of human needs and social activity of the individual, but only abstract labour, governed by the needs of capital, which enters human life in an estranged and unhistorical dimension. The dialectical relationship of the individual with his or her story, in fact, is broken by the alienating relations of production, which separate the individual from his or her historical exposition by assigning him or her a value in the capitalist mechanism.

We could argue that capitalist model constitutes a historically determined domain that, to the extent that human essence resides in its own historicity, determines forms and modes of existence and of work. But the strength of capitalism consists in eliminating the possibility of its overcoming, in presenting itself as the absolute model of reality. In doing so, capitalism began to determine univocally the existence of individuals, breaking the unique, one-to-one relationship that connects the individual and history. If it is true, in fact, that history opens up the possibilities in which each person is called to act, then history depends on the individual and his or her decisions. In the moment in which the decision is impoverished and relegated to a mere measure of activation of a preexisting mechanism, no choice no remodelling of the real is possible, and the individual becomes a mere cog in the functional preservation of the existing order.

Marx’s greatest merit has been to guess, long before Heidegger, that the absolutism of capital would have consigned to oblivion the historical premises of the relations of production through which capital can reproduce itself. These premises become from conditions of capitalism’s birth to results of its existence. As stated by Marx in the Grundrisse, “the conditions and prerequisites of the becoming, of the birth of the capital, they imply that it is not yet, but it is only in becoming; therefore they disappear in the presence of real capital, the capital which, starting from its own reality, sets itself the conditions of its realization” (1978, 80). This process seems to be what Lukács refers to when he defines reification as a “forgetfulness of recognition” (1967). As Honneth explains, “reification is the process by which during our knowledge of other people and the knowledge of ourselves we lose awareness of how one and the other are in debt to a previous disposition at an involved participation and a recognition” (2007, 75).

The absolutism of the market and the capitalist model, considered as an impregnable configuration of reality, lead us to pursue the objectives they set, and we forget the fact that these objectives grew out of a pre-existing social praxis and our role in it. For this reason, “the reification in the sense of ‘forgetfulness of recognition’, means, therefore, that in the conduct development of the process of knowledge, we lose the focus on the fact that this knowledge is due to a previous act of recognition” (Honneth 2007, 58).

Unable to take the historicity of their actions, subjects remain trapped in the objectives set by the economic system and begin to perceive themselves and their abilities as useful tools for the fulfilment of pre-established objectives. Capital, through abstract work, attaches “second nature” to the person, building up tools for capital use and consumption “As problematic is the motivation of this process of generalization, at the end, with its help, Lukacs arrives at the central thesis of his study, according to which the reification in capitalism has become a ‘second nature’ of man: all those subjects that are involved in the capitalist way of life, inevitably will acquire the habit of considering themselves and the world around them as mere things, as mere objects” (Honneth, 2007: 19).

Work in the post-Fordist era

The above-mentioned way of organizing work, going back to the Fordist model, presumes that the work of each person should be determined by an employment contract and that the work is necessarily defined as predetermined tasks agreed upon. The result is a simplification of tasks whose materiality is determined by the employer. The working action is reduced to its phenomenal and material aspects and robbed of its planning character; it is flattened out in the present, in the mere repetitive and mechanic execution. The aim of the worker is not the finished product but his/her survival, and this demonstrates the separation of the two planes that divide human needs from those alien ones that culminate in alienated work. Therefore, as Marx wrote, “the more the work is divided into several subspecies, the more the amount of materials that can be put in place by the same number of people increases; while the function of each worker is gradually reduced to a gradually more elementary simplicity, they invent a lot of new machines to facilitate and shorten these functions” (Marx, 2004, 44).

The strength of this working model in shaping the most intimate spheres of existence is referred to as the contractual theory of justice, which was developed by natural law theorists in the 17th and 18th centuries. Its principal forerunner was Hugo Grotius. Theorists of modern natural law may differ widely and include such representatives as Grotius, Locke, Pufendorf, Milton, Cumberland, Thomasius, Barbeyrac, Wolff, Vattel, and Burlamaqui as well as, to some extent, Rousseau, Kant, and the elder Fichte. According to modern natural law theory, the state is based on the social contract through which individuals leave the “state of nature”, characterized by war and permanent instability. According to Kant, to escape internal and external conflicts, individuals must establish a society formed through a civil constitution based on the principles of freedom, equality, and dependency. This society corresponds to a rational order in which humans are driven by nature itself to the extent that “the greatest problem for the human race, to the solution of which nature compels it, is the achievement of a civil society which upholds universally the law” (Kant, 2011, 34).

To these theoretical assumptions refers the Rawls’s conception of society as an equitable system of social cooperation. According to this concept, everyone must do his or her part in the social organism according to the skills and opportunities available. Society as a stable cooperation presupposes a contractual foundation based on a theory of distributive justice. The ownership of rights is subject to the contribution enshrined in the social contract and on work legally recognized. Now, the reductionism of this model of justice is obvious; it bases the person’s rights not on social practice but on the ideal contract, hence the need to do one’s duty. We will not dwell on the implications of this theory, which also deserve attention. Instead, we will shift our point of view from the abstract formal rights to the social practice in which rights are rooted.

According to an opinion in vogue in contemporary sociological and philosophical debate, work has changed radically. In Negri’s vision: “The starting point of this upheaval is in the conflictual dynamics through which the mass-worker has deconstructed the fundamentals of the rationalist management model in favor of the welfare model, well beyond the capability of Fordism. This has resulted in an easing of monetary constraint referring to the wage relation and a powerful process of collective re-appropriation of the intellectual powers of production” (Negri 2012, 89).

Today, production is not only attached to the task determined by the employment contract, but it is linked to the worker’s existence in general, his/her interpersonal skills and cognitive competences, which are part of the social texture, and develop in an autopoietic way, favour the appropriation of the “intellectual powers of production” by the shackles of capital. General social knowledge is subtracted from the objective trend of development of fixed capital and becomes an immediate productive force. This, then, may be, on one hand, viewedas a possibility of social conflict against the capitalist and, on the other, as a possibility of self-empowerment with the appropriation of living labour.

We can’t go into detail regarding the processes that, according to Negri’s analysis, led to this change in the economy. Suffice it to say that today the result is that productivity is removed from the calculation of capital and has an autopoietic character, immanent to life itself. We might add that the general intellect goes far beyond the cognitive abilities of the individual and has a structure that is eminently social and historical and shaped by culture and shared knowledge.

The distinction between work time and life time is no longer as clear as in the Fordist model. Life itself produces value and is functional in the accumulation of cognitive capitalism. As Fumagalli writes, “After the crisis of the Fordist-Taylorist paradigm, the division between life and work time is not easily sustainable. The most exploited in the world of work are those whose lives are put fully to work. This is done primarily for work in the service sector and in lengthening of working hours, especially for the migrant workforce: most of the worked time in the tertiary market does not happen in the place of work” (Fumagalli 2011, 1).

In cognitive capitalism production is removed from the organization of capital and takes on a cooperative nature that is inherent in the discursive and relational dynamics generated in the immanence of social relations. Fumagalli continues:

This transformation has its main origin in the way in which the development of diffuse intellectuality and the cognitive dimension of the work has led, at the level of the factory as well as of the society, to the affirmation of a new primacy of living knowledge, this last being mobilized from work, if compared to the knowledge embedded in fixed capital and in the organization and management of enterprises. From this derives the crisis of the “temporal regime” that in the Fordist era clearly distinguished between the time of direct work, carried out during the official working hours, and regarded as the only productive time, and other social time dedicated at the reproduction of labour power seen as unproductive. (Fumagalli 2011, 1)

In the face of this self-organization of intellectual production, the role of capital is no longer a determining factor for the organization of life and work but assumes a parasitical function, aimed at absorbing the value derived from the common activity. It is through income that the product is expropriated from the common and incorporated into capital. As Negri writes,

The formation of an economy based onto the knowledge precedes and is in opposition, both from the logical point of view as the historical, to the genesis of cognitive capitalism. This one in fact is the result of a restructuring process through which the capital tries to absorb and subdue in a parasitical manner the collective conditions of production of knowledge, stifling the potential of emancipation registered in the society of General Intellect. With the concept of cognitive capitalism then we designate a system of accumulation in which the productive value of intellectual and immaterial work becomes dominant and the central axis of the valorization of capital leads directly “trough the income” at the expropriation of the common and at the transformation of knowledge into goods. (Negri 2012, 189–190)

The common is trapped inside a proprietary right of the Fordist matrix, which does not respond to the changed work organization. Indeed, such a reading hides an optimistic view of social processes occurring in the contemporary age, very much in line with a certain postmodern literature that played a central role in the international debate in recent decades. According to Vattimo (2011), the networking of local historical horizons by the media society has eroded the stable idea of reason typical of modernity. In the process, on the world stage many local historical horizons are voiced, encouraging the collapse of truth and the corresponding modulation of the real.

Now, the processes involving subjectivity in postmodernity seem anything but emancipatory. Instead of opening communication horizon of local historians, what happened was a neutralization of the differences and an integration of subjects into a neutral arena. Here, outside the ambit of a sense of community, subjects have been plunged into a deadlock of inactivity. On the one hand, individuals – especially in the younger generation – do not have access to the arrays of signification of modernity, in particular to work and therefore to the ability to lead a “normal” life. On the other hand, they are uprooted by the spirit of the community, placed in a dimension devoid of aesthetic and hermeneutic references, and are unable to define themselves in the long term project.

The only open possibilities are the public ones, consumption and entertainment, which in the moment allow individuals to avoid feeling the discomfort associated with lack of access to work. These possibilities, at the same time, allow people to be suspended, without any root in a life project that involves their identity, now lost in the advertising of mediocrity. Thus, in the workplace, the flexibility of work is far from being an emancipatory factor. The inability of workers to design their own long-term future has fuelled social discomfort and prevented a real incentive for creative and decision-making skills. The search for ways of self-expression and research, in fact, passes through the assumption of the historicity of own possibilities. The precarious aesthetic of postmodernity, on the contrary, abstracts individuals from the ambit of their historicity and absorbs them in a new absolute scheme of possibilities: that of mediocrity, that is to say of what is said and done by everyone. The uncertainty therefore turns the work into a factor of existential distress, to the extent that the work remains the postmodern paradigm of reference of the individual.

As Casiccia writes,

Although in the managerial rhetoric of the end of the century the flexible worker of post modernity seemed at least partially redeemed by succumbing to the submission of the modern factory, he was instead mostly deprived of separation between work and private life, and also devoid, in good measure, of protection or guarantees: thus now facing a new uncertainty. Instead of gaining control over his/her time, the flexible worker risked losing what was left and to see his/her condition paradoxically approaching (at least for this aspect) to slave condition: where were not measurements nor time restrictions. (Vattimo, de Palma, & Iannantuano 2012, 40)

What has happened is not, therefore, as Vattimo and Negri say, the liberation of subjects from the shackles of capital but a larger value of inertia and of people excluded from work, integrated and anesthetized in the dispersion and indifference, in order to facilitate neutralization of social conflict. Among other things, the same Vattimo, after a few years of the theory of “weak thought”, argued that the limitation of total demolition of the principle of reality consists in the presence of the market and the laws of economy. Likewise, in the opinion of Negri, rent intervenes at a later moment to subsume into the capital the value produced by free subjects.

But a vision of this kind would seem quite reductionist since it ignores the historical constitutive exposition of the subject. This last is not added a posteriori in the socioeconomic organism, above all because the market is not one possibility among others because survival has been left to its own logic. The subject is, therefore, the lattice of the real and of the life. Cognitive capitalism has simply failed to account for the value of life itself and has eliminated the margins of decision-making ability that would undermine the stability of the system. At the corporate level, the subject is disembodied and lacks identity and is therefore easily blackmailed into submitted to business logic, which insists on the empowerment of the worker in order to encourage his/her commitment and competitiveness. The subject is in fact harmless because he/she is fully absorbed by the new company and is prey to a deep discomfort linked to the precarious nature of his/her future.

As Casiccia writes poignantly:

Pervaded by a pseudo-Calvinist ideology, the new managerial rhetoric insists more and more on the operator recovered autonomy and responsibility. Every employee, it is argued, “must” feel free to act according to his/her own logic. Relying on own creativity he/she will create the conditions of his/her own success. The truth is quite different, because the standards to be achieved are fixed more strictly by direction; and the margins of self-determination available to the employee are increasingly narrowed. So that the internalization of the principle of self-responsibility can only create frustration and self blame up to induce true and real states of distress. That principle of autonomy imperatively prescribed shall impl...

Table of contents

• Cover
• Title
• Part I  Setting the Scene
• Part II  The Cornerstone of Human Capital
• Part III  Measuring Human Capital
• Part IV  Good Practices from Abroad
• Conclusion: (Why) People (Really) Come First
• References
• Index