In so far as it was a singular event, the launching of Sputnik, which contextualized much of the debate over the place of education in society in the late 1950s, it was the gradual emergence of a newfound market ideology for education which underlied much of the debate over the economics of education in the 1960s and beyond.
Early formulations of human capital theory (Denison, 1963; Becker, 1964) extended the economic value traditionally ascribed to the material world to the labor force. Increases in productivity and personal income were equated with knowledge and skill investments in people. It was no longer sufficient to cite land, labor, and material capital as the sole harbingers of economic success. Rather, investments in human capital, in training and education, provided their own high rates of return, not only for those workers who were the direct recipients of training, but also for the wider economy more generally.
Far from playing a defensive role (as it did during the Sputnik era) education and training were now optimistically heralded as key to the labor force's social and economic development. New federal and state initiatives [in the United States], including educational loans, anti-poverty programs, and public relations campaigns, promoted the place of education in improving the lives of both the privileged and disadvantaged. Educational researchers and economists produced studies which demonstrated clear linkages between educational investment and economic success. Human capital theory successfully married economics and education in a way that established a new empirical and quantitative justification for the place of education in supporting the market economy. Monies paid out to schools were no longer to be labeled as consumptive expenditures. Instead they were to be seen as educational investments in the future.
The rise of human capital theory had clear benefits for schools. It produced an outpouring of monetary investment in education and, just as importantly, gave public schools a privileged role to play in forging future economic and social progress. Yet, at the end of the day, this newfound economic view of schools was beholden to the principles of market ideology. In the view of democratic proponents, the purpose of education was myopically limited to fulfilling the needs of the market economy as measured exclusively through quantitative data which rationalized educational investments solely in terms of economic outcomes (Engel, 2000). If the economic rationale of monetary investments in education were ever to be questioned, public schools might well lose much of the public’s esteem. Indeed, educators might even be put into the defensive position of having to justify monetary investments in public education solely on the basis of economic rates of return and using quantitative data alone (Chamberlain, 1971).