A German population statistician as a forerunner of the concept of "human capital”.  Ernst Engel (1821-1896) and his influence on Rudolf Goldscheid’s concept of “economy of human beings” and the "organic capital"

Gudrun Exner, University of Vienna

To us the modern social state is something quite natural and also some kinds of economic thinking have became part of every-day-knowledge, like regarding men as “human capital”. But history shows us that the mental fundaments of these modern developments had to be laboriously worked out. Two of these concepts shall be presented here. 1) In 1883, the German statistician Ernst Engel (1821-1896) put up the quite uncommon hypothesis in his article “The Value of Man” that man has a “cost value” which can be calculated exactly. This material value is caused by the costs for the rearing and the education of children. 2) Goldscheid took up this thought and tried to develop out of it a contra-argument against capitalist exploitation at the time. High birth rates made labour force cheaply available, but people were badly treated which caused an enormous premature loss of working power. It was among others the demographic development which caused a change of attitude. In 1902 the birth rates began to decline continuously in Austria. This led Goldscheid to develop his concept of “Economy of Human Beings” in two books in 1908/1911: Low birth rates are no threat for national security and economic wealth if the now less quantitative “organic capital” is made better use of by a more qualified education, a public health care system and public insurance services. The concept of the „Economy of Human Beings” leads to mental foundations of the modern Austrian social state. As Goldscheid was active in many social reform associations, he had many opportunities to make his concept known to responsible politicians. Up to now at least an influence on the social democrat municipal counsilor Julius Tandler (1869-1936) and the welfare system of “Red Vienna” has been proved by research literature.