Table of Contents

Intangible Capital

Intangible Capital

Its Contribution to Economic Growth, Well-being and Rationality

John F. Tomer

Despite increasing research efforts, there is still much confusion regarding the nature and contribution of the most intangible forms of capital. This book develops a comprehensive and unifying conception of intangible capital in order to understand its role with respect to economic growth, well-being, and rationality. As the book illustrates, utilizing the intangible capital concept enables many new and important economic insights. Intangible capital is defined to include standard human capital, noncognitive human capital (including personal capital), social capital, and other intangible manifestations of human capacity. Understanding intangible capital is a key to realizing the full human potential of our economic systems.

Chapter 12: Government Policy and Intangible Capital

John F. Tomer

Subjects: economics and finance, behavioural and experimental economics


It is widely acknowledged that governments should play an important role in fostering investment in standard human capital through the provision of education and training. Should governments play a similar role with respect to the more intangible forms of human capital? What about noncognitive human capital? Different forms of personal capital? Social capital? First, it is doubtful that there is much of a need for a standard government regulating role utilizing laws and regulations that correct for the problematic incentives associated with positive or negative externalities. Rather than the government as regulator, what may be needed more is the government as coach in which the government role is the same as or quite similar to the government role in certain kinds of industrial policy (see Tomer, 1993: 216–20). Let’s start by considering industrial policy efforts to foster organizational change in firms. Charles Hampden-Turner (1988: 44) has asked: ‘Is it possible . . . for capitalist free enterprise to be “coached” to greater humanity and success?’ His answer (and my answer as well) is a resounding yes! Firms’ socio-economic performance can be raised through appropriate coaching. Coaching makes sense when we conceive of firms as organisms that learn, organisms that not only compete but cooperate, and organisms that are involved in complex social networks. Further, the coaching approach follows when we conceive of firms as fully human, socioeconomic entities whose learning (and cooperation) can be nurtured, facilitated, prodded, and otherwise encouraged. It is through such means that the human firm’s...

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