Human capital theory and the industry training strategy in New Zealand

This paper begins with the assertion that the regime of ‘perpetual training” (Deleuze 1992) will become the new regime and system which now motivates and integrates education and industry in the western world. This notion is located in the national industry training strategy for New Zealand. The first section serves to provide the policy context, focusing on public sector restructuring and the significance of the Employment Contracts Act (1991). The industry training strategy is outlined and described in some detail within the main body of the paper. This strategy is explained in terms of the underlying human capital theory, in particular, with reference to a recent OECD survey of New Zealand's economy and in terms of general workplace reform. The paper then addresses the problems inherent in human capital theory and the way it legitimizes present Government policy in education and training. Human capital theory is the most influential economic theory of education, setting the framework of government policies since the early 1960s. The paper isolates two basic assumptions on which neo‐classical, and therefore also human capital theory depends. These assumptions are cast in universal and ahistorical terms. The first is the idea that the economy is an analytically separate realm of society that can be understood in terms of its own internal dynamics. The second key foundation is the assumption that individuals act rationally to maximize utilities. The paper argues that individuals are capable of acting irrationally or in pursuit of goals other than the maximization of utility, and that the economy is influenced by politics and culture, but the strategy of excluding these deviations from the rationality principle is justified wrongly by the effort to identify the core dynamics of an economy. Some comment is given towards the end of the paper about recent experience in the UK of the conceptual and empirical problems of the type that the authors consider are in need of research within New Zealand.