ABSTRACT
This chapter explores what human capital theory is, as well as tracing its origins. It outlines some of the arguments that suggest it has passed its use-by date, and documents some of the circumstances where large numbers of young people continue to experience this cruel optimism. Apart from the rhetorical skills of neoclassical economists an explanation for the success of human capital theory is that it was an idea with strong elective affinities to its historical and social context. Human capital theory would be retained but in a radically different political and policy setting, one shaped by the neoliberal political project. While Britain and Australia historically had extensive systems of technical schools, they had greatly diminished by the advent of neoliberalism. In Europe, however, human capital theory was used to justify maintaining high levels of public investment in higher education. In Europe, human capital theory has proved increasingly influential in shaping vocational education.
