Reproduction of human capital as a polycyclic process

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The human capital reproduction is a complicated multidimensional process of the structural transformation and development of human capital under the influence of various factors. Complex theoretical research of the human capital reproduction requires application of different scientific approaches of economics and applied economic disciplines, sociology, psychology, management, law, etc., economic methods, methods of arts and social sciences. Nowadays, due to formation of the knowledge economy, the human capital reproduction theory assumes more scientific and applied importance. It should be noted that the main resource of the knowledge economy is human capital and its purpose is human development.

At the present time, a problem of determination of a human capital reproduction mechanism is controversial. The main theoretical approaches to solution of this problem are the wave and the cyclical approaches, which were methodologically developed in theories of N.D. Kondratieff, J. Schumpeter, M.I. Tuhan-Baranovskyi, S. Kuznets, modern neoclassical theories of economic cycles, and the institutional and evolutionary theory of economic changes and the life cycle. Human capital reproduction cycles are examined by O. Borodina (Borodina O., 2003), N. Koroliova, T. Lekh (Lekh T.A., 2012), V. Maksymovych (Maksymovych V.I., 2011), L. Revutska (Koroleva N.N., Revutska L.E., 2013), L. Simkina (Smkma L.H., 2000), etc.

The human capital reproduction is a social and economic process of human capital intrinsic inheritance and transformation over time, which combines several processes. The first process is reproduction of essential characteristics of a human capital reserve providing the inheritance of its development. The second process is formation and accumulation of new (in quantitative, qualitative, and value terms) components of its reserve as an indicator of the intrinsic transformation of human capital under the affect of various factors. These factors comprise internal ones related to its structural and functional evolution and external ones related to historical changes of conditions for creation, accumulation, and application of human capital (economic, social, technical and technological, etc.). The third process is value reproduction of human capital as a process of formation, accumulation / loss, renovation and increase / decrease of the value of a reserve of human knowledge, skills, and abilities as a resource of social and economic development.

According to the time criterion, the human capital reproduction is the human capital life cycle. It encompasses phases of origination (formation, creation) -- development -- maturity -- decay. The human capital life cycle consists of formation of new cycle frameworks (that is to say, the human capital reproduction in compliance with new conditions) as well as its historical termination and vanishing. At the same time, it is possible to bring into effect several cycles of the intrinsic inheritance and transformation of human capital and its value reproduction during a human life cycle.

In the narrow sense, the individual human capital reproduction as its reproductive (investment) cycle encompasses a certain period of the human life. During this period, investing and the combination of the intrinsic inheritance and transformation lead to formation (renovation), development (accumulation), application and renovation at a new level in compliance with new social requirements (or aging and vanishing) of knowledge, skills, abilities in quantitative, qualitative, and value terms. These knowledge are the basis of the productive activity in different areas and obtaining the investment payback.

In the wide sense, the human capital reproduction is polycyclic. Firstly, the polycyclicity is stipulated by the sense and structure of human capital. The following properties are inherent to human capital: a) human capital is a reserve of knowledge, skills, and abilities of a human as the basis of its productive activity in all areas of the social life; therefore, the human capital reproduction is characterized by life cycles of elements of this reserve in quantitative, qualitative, and value terms; b) the human capital structure consists of its basic and complex forms (capitals of health, education, family teaching, mobility, access to information, motivation, etc.; intellectual, labor, organizational and entrepreneurial, social capitals); consequently, life cycles are peculiar to the human capital reproduction; c) the human capital value can change. Although human capital significantly differs from the physical one, from the standpoint of value the human capital flow is a process of the change of functional forms of its value.

Secondly, the human capital reproduction depends on cycles of components of an external environment, where it forms, accumulates, and is applied. At the macro level, these cycles include scientific, scientific and technical, technological, educational, innovative, economic and other cycles of national economy development. At the micro level, these cycles include life cycles of firms, organizations, which apply human capital. At the individual level, these cycles include life cycles of a human. Thirdly, the human capital reproduction is a process, which is managed by the very bearer (self-regulation of the human capital flow) and carried out under the affect of social regulators (market, corporative, governmental, public, and international ones). Consequently, the human capital reproduction also encompasses managerial cycles related to orientation of formation, accumulation, and application of human capital towards achievement of goals of regulators. Fourthly, the human capital reproduction is multi-level. The author considers the human capital reproduction levels to be considered according to its subjects (an individual, a firm, a branch, a region, a state, over national and international levels), i.e. individual (nanolevel), corporate, regional, branch, national, transnational, and international (global) levels. At a certain level, the human capital reproduction, on the one hand, is an autonomous process, which indicates the specificity of aims, tasks, functions, and resources of its particular participators. On the other hand, it depends on the human capital reproduction at the other levels. The individual human capital reproduction is the basis of all the other levels, which, in turn, determines its conditions, types, and mechanisms.

The reproductive (investment) cycle of the individual human capital encompasses forms of its flow as an economic good such as production, distribution, exchange, and consumption. The human capital production is carried out in phases of its formation, accumulation, and development. The individual human capital distribution among human capital potential consumers (lessees) is based on a market mechanism, primarily, a labor market, and is carried out under the influence of regulators such as a state, a corporation, a civil society, and international norms. The human capital exchange consists in conversation of human capital into incomes of its owner. In this context, it is worth mentioning the point of view of a famous French sociologist P. Bourdieu concerning cultural capital, which, under certain conditions, converts into the economic one. The economic capital, in turn, directly converts into money (Bourdieu P., 2009). Similarly, the human capital exchange is a mechanism of transformation of human capital into economic capital as a factor of earning income (convertation into money). Characterizing the human capital exchange, scientists frequently apply a concept «commercialization». Form the author's standpoint, a reserve of knowledge and abilities of a human to efficiently work should assume a commodity form and gain properties of a commodity as an object of market demand and supply, i.e. be commercialized before a phase of the human capital exchange. Otherwisely, not only is the conversation of human capital into incomes impossible, but also the market distribution of human capital and, as a result, its consumption (application).

Considering the reproductive (investment) cycle of the individual human capital, it is expedient to emphasize the general reproductive (investment) cycle, which encompasses all the human lifetime, and phased reproductive (investment) cycles, which are carried out in a phase of the human productive activity and represent the flow of additional investments in a human. The necessity of these investments is stipulated by improvements of production processes, new requirements to human capital quality (owing to the scientific and technological progress) that lead to a need of additional expenses for education, staff training, training for a new profession, etc.

The general reproductive (investment) cycle of the individual human capital consists of the following phases: a) a phase of accumulation of the individual human capital based on primary and additional investments; during the general reproductive (investment) cycle, the human capital value increases and the investment in the capital pays out and provides earning more and more income, i.e. the human capital multiplies and grows quantitatively, qualitatively, and in value; b) a phase of quantitatively, qualitatively, and value degradation of a reserve of knowledge, skills, and abilities of a human. When the productive activity phase is accomplished, incomes of the capital bearer decrease or, at all, terminate because of insufficient implementation, aging, decomercialization, and decapitalization of the accumulated knowledge. However, a new phase reproductive (investment) cycle is possible if in the aging phase a human spends money and time for gaining new knowledge, skills, and abilities, which provide adherence of human's individual capital to new social requirements and human capital application. When a life cycle of an individual comes to the end, individual's human capital vanishes for good and all because of its inseparability from the individual.

Since investments in a human as well as development of the latter depend on numerous internal (internal cyclical) and external factors, which can stipulate changes of the human capital flow, bifurcation positions can emerge during the general reproductive (investment) cycle of the individual human capital. In a case of discreteness of investing in a human, there is the possibility of assumption of the following positions in the process of further reproduction at bifurcation points of the general reproductive (investment) cycle of human capital: accumulation (qualitative and quantitative) based on a new investment; gradual degradation in a case of absence of investments (time lags of investing in a human) and natural and moral depreciation. Suspension of human capital development is an isolated example. It can occur if, in a case of absence of investments, human capital neither assumes, nor loses its qualities as a factor of the productive activity and it is applied to the same extent of intensity.

The phased general reproductive (investment) cycles of the individual human capital occur within the general reproductive cycle. The general reproductive cycle also influence the phased cycles. The phased cycles are possible not only in a productive activity phase, but also in other phases of human lifetime. Quantity of additional investments in human development (consequently, the phased cycles), their amount, and durability of periods between their occurrences are determined by numerous factors. The most important factors are a rate and periodicity of technical, technological and innovational changes. Training for a new profession and training of an employee at a new workplace stipulated by technical and technological changes will require additional investments, which result in new phased reproductive (investment) cycles of the individual human capital. At the same time, bifurcational positions of the individual human capital are possible in all the phases of the general as well as the phased reproductive (investment) cycles.

Reproduction of complex forms of human capital (intellectual, labor, organizational and entrepreneurial, social capital of a human) is also polycyclical.

Intellectual capital as a complex form of the individual human capital is capitalized knowledge of a human, which were formed and accumulated due to investments. Application of intellectual capital provides the increase of the value and earning income. The following properties are inherent to the intellectual capital reproduction: firstly, it encompasses phases of creation, formation, accumulation, and application of the intellectual reproduction and combines the human life time and investment cycles to form intellectual skills and human knowledge; secondly, it depends on life cycles of knowledge and information; thirdly, it is directly related to processes of socialization, commercialization, and capitalization of knowledge and is affected by social and economic organizing knowledge; fourthly, it is one of the most important terms of the effective innovative activity and it is interrelated to the cycle of innovations.

According to a definition of T. Lekh, labor capital of a human is related to qualification, training at production, embodied in labor of qualificated workers, and directly depends on applied technology (Lekh T., 2012). V. Kryvoshei emphasizes that labor capital is a specific type of human capital, which functions in a certain industry, earns profit for its owner, forms only at the micro level, and embodies an accumulated reserve of specific knowledge, skills, abilities, health, and organizational opportunities, which enhance the labor productivity and encourage the growth of production amounts (Kryvoshei V.V., 2011). The labor capital reproduction is affected by a professional cycle of a human, life cycles of a firm as an employer and its products, which determine a level and the structure of its demand for certain labor services as well as opportunities of accumulation of employee labor capital due to improvement of qualification, training, career advancement, productive application of professional skills, a productive cycle, and a technical and technological (innovative) cycle of production.

Ye. Samorodova and O. Maslova suggest that organizational and entrepreneurial capital of a human is capital of the innovative and creative activity of an enough large number of people (Samorodova Ye.M., Maslova O.L., 2008). Its reproduction depends on a life cycle of a business, a firm, and an innovative cycle. human capital investment

The direct relation to a process of human socialization and cycles of confidence are inherent to the reproduction of human social capital as a capital of cooperation of humans in different areas of the social life. Firstly, human social development as the basis of formation and accumulation of its social capital is a term of the reproduction of individual human capital and its most important component. Secondly, the human social capital reproduction is based on investment in human social development, human adaptation, individualization, and integration. Consequently, the human social capital reproduction is affected by cycles of investment in human social development (social investments). Thirdly, the reproductive cycles of social capital are closely interrelated to cycles of interpersonal and institutional confidence (Artomova T.I., 2010). Proving the direct influence of a confidence level on economic development, G. Akerlof and R. Shiller has proposed a concept of «the confidence multiplier»: «.. .We can also think of the confidence multiplier, like the consumption multiplier, as resulting from different rounds of expenditure. ... Changes in confidence will result in changes in income and confidence in the next round, and each of these changes will in turn affect income and confidence in yet further rounds» (Akerlof Dzh., Shyller R., 2011).

Therefore, taking into account the cyclical and wave approaches, it is worth mentioning that the human individual capital reproduction is a polycyclical process, which are characterized by the unity of its general reproductive cycle encompassing all the human life time, phased reproductive cycles occurring within time limits of the human productive activity, and cycles of intellectual, labor, organizational and entrepreneurial, social capitals of a human interrelated to cycles of investments, innovations, knowledge, professions, a business, a firm, human social development, social innovations, and confidence.

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