For decades, critics of orthodox Human Capital Theory (HCT) have pointed out that reducing education to an individual rate-of-return investment ignores human dignity and social reality. Yet moving past the neoclassical consensus has produced two distinct, highly influential alternatives in contemporary educational theory: Amartya Sen and Martha Nussbaum’s Capabilities Approach, and the “New Human Capital” (NHC) framework formulated by sociologists Phillip Brown, Hugh Lauder, and Sin Yi Cheung.

Both frameworks reject the reduction of human beings to economic production units. However, their diagnoses, analytical tools, and envisioned social outcomes diverge in revealing ways.

Sen’s Capabilities Approach: Substantive Freedom and Human Flourishing

Pioneered by Nobel laureate Amartya Sen and expanded by philosopher Martha Nussbaum, the Capabilities Approach argues that development must be evaluated not by gross domestic product or personal income, but by what people are actually able to do and to be (their “capabilities” and realized “functionings”).

In education, Sen’s framework establishes learning as a foundational freedom. Education is intrinsically valuable because it expands a person’s capability set—enabling ethical reasoning, political participation, bodily health, and cultural engagement.

The primary metric of success is substantive choice: does education empower an individual to pursue a life they have genuine reason to value? The outcome is fundamentally ethical, developmental, and individual-centered, prioritizing personal agency and the removal of “unfreedoms” such as poverty, discrimination, and illiteracy.

Lauder and Brown’s “New Human Capital”: Political Economy and Collective Capability

Where Sen’s approach originates in development economics and moral philosophy, Lauder, Brown, and Cheung’s The Death of Human Capital? (2020) approaches the crisis through the sociology of labor markets and political economy.

NHC directly targets the breakdown of the post-war meritocratic bargain. As credential inflation, artificial intelligence, and corporate restructuring decouple university degrees from secure, well-paid employment, orthodox HCT traps graduates in a zero-sum positional arms race.

Rather than abandoning the concept of human capital entirely, Lauder and his co-authors attempt to salvage and reconstitute it. They argue for a collective capability model.

Under NHC, education must not simply equip individuals to compete in an unjust market; public policy and economic planning must actively generate socially useful, democratic, and rewarding work. The target outcome is structural and macroeconomic, demanding a new social compact between the state, employers, and the education system.

The Theoretical Critiques of Both Models

Neither model has escaped critical scrutiny from other educational sociologists and political philosophers.

Marxist and critical political economists (such as Samuel Bowles, Herbert Gintis, and contemporary labor process theorists) argue that Lauder’s NHC remains trapped in the very vocabulary of the market. By retaining the word “capital,” critics argue NHC risks rehabilitating a concept that is inherently tied to exploitation, underestimating capital’s structural imperative to cheapen labor regardless of educational reform.

Conversely, Sen’s Capabilities Approach has faced critique from institutional sociologists and philosophers like Thomas Pogge and Charles Gore. They contend that Sen’s model is overly individualistic and methodologically difficult to translate into concrete curriculum design or national policy. Without a robust theory of labor markets and institutional power, expanding individual “capabilities” risks generating educated citizens who possess rich interior lives and civic desire, but remain economically disempowered in an unforgiving capitalist system.

On the Same Team, Targeting Different Horizons

Despite their differing vocabularies and points of origin, Sen’s Capabilities Approach and Lauder’s New Human Capital are playing for the same intellectual team. Both are committed to dismantling the narrow economism that has dominated global educational policy since the 1980s. Both insist that human development must take priority over corporate convenience.

Their ultimate endpoints, however, serve complementary halves of the human condition:

• Sen’s framework provides the moral and existential compass: It clarifies what education must achieve for the individual person—expanding autonomy, dignity, and the freedom to lead a meaningful life.
• Lauder’s NHC provides the institutional and economic strategy: It clarifies what education requires from the social structure—demanding that governments actively restructure the labor market so those realized capabilities can find purposeful, non-exploitative expression in the real world.

Together, they remind us that liberating education requires both the cultivation of human capability within the classroom and the democratic transformation of the economy outside of it.