Introduction

Human capital is widely seen by economists as a key determinant of growth and productivity performance (Lucas, 1988; Romer, 1990). And yet surprisingly little is known about the quantitative dimensions of human capital accumulation before very recent times, beyond years of formal schooling, an indicator which suggests only minor differences between the major industrialized countries (Maddison, 1987, table A12). In this paper we present data on key aspects of human capital accumulation in the manufacturing sectors of Britain, Germany and the USA, and relate them to comparative productivity performance. We find that developments in human capital accumulation in the major industrialized countries can only be understood in relation to overall production strategies.

We emphasize competition between technological systems geared to mass production and craft/flexible production, with very different human capital requirements. We see the evolution of a mass production system in the USA in the early twentieth century, building on the American system of manufactures from the nineteenth century (Hounshell, 1984). In mass production, special-purpose machinery and resources were substituted for skilled shopfloor labour to produce standardized products. This involved heavy investment in fixed capital and the managerial aspects of human capital, but on the shopfloor involved the use of relatively unskilled labour. Over time, the investment in human capital above shopfloor level was strengthened by heavy investment in research and development. Furthermore, American R&D evolved in a ‘missionoriented’ direction, concentrating on the emergence phase of new technologies (Ergas, 1987).