Cultures and Globalization

The Cultural Economy

Helmut K Anheier, Yudhishthir Raj Isar, Helmut K Anheier, Yudhishthir Raj Isar, Author

• Publisher: SAGE Publications Ltd
• Year: 2008
• Print ISBN: 9781412934749, 9781412934732
• eBook ISBN: 9781473903579
• Edition: 1
• Topic: Social Sciences
• Subtopic: Cultural & Social Anthropology
• Index: Social Sciences

The world?s cultures and their forms of creation, presentation and preservation are deeply affected by globalization in ways that are inadequately documented and understood. The Cultures and Globalization series is designed to fill this void in our knowledge. In this series, leading experts and emerging scholars track cultural trends connected to globalization throughout the world, resulting in a powerful analytic tool-kit that encompasses the transnational flows and scapes of contemporary cultures. Each volume presents data on cultural phenomena through colourful, innovative information graphics to give a quantitative portrait of the cultural dimensions and contours of globalization.

This second volume The Cultural Economy analyses the dynamic relationship in which culture is part of the process of economic change that in turn changes the conditions of culture. It brings together perspectives from different disciplines to examine such critical issues as:

• the production of cultural goods and services and the patterns of economic globalization

• the relationship between the commodification of the cultural economy and the aesthetic realm

• current and emerging organizational forms for the investment, production, distribution and consumption of cultural goods and services

• the complex relations between creators, producers, distributors and consumers of culture

• the policy implications of a globalizing cultural economy

By demonstrating empirically how the cultural industries interact with globalization, this volume will provide students of contemporary culture with a unique, indispensable reference tool.

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CULTURAL ECONOMY: THE SHAPE OF THE FIELD

Stuart Cunningham, John Banks and Jason Potts

Introduction

Raymond Williams (1976) famously remarked that culture was one of the most complex words in the English language. While not an economist, nor especially interested in the question of the relation between culture and economy that preoccupies us in this volume, Williams made a powerful contribution to its understanding by offering a basic typology of culture – in his foundational text Culture (1981: 204) – as residual, dominant or emergent. This is simple but powerful, and emphasizes the dynamic, overlapping and contesting nature of culture and its role in economies globally. The value of Williams’ typology is that it embeds the insight that culture is always in process, always propagating (meanings, experiences, identities) rather than only preserving that which is gone, it is becoming rather than begotten, and that it is important to understand its place in relation to the forces that are shaping it and that it is shaping.

We propose to adapt Williams in order to lay out a hopefully useful heuristic by which to introduce the diverse range of approaches to the relation between culture and economy presented in this volume. We start from (but will not stay only with) the position of what does economics make of culture? To address this deceptively simple question adequately, as John Holden points out, we would need to traverse macroand microeconomics, labour economics, international economics, law (IP, moral rights, freedom of expression, contract theory), spatial economics, and the services innovation literature, to name an indicative few (2007: 4–5). And this is only to name approaches from the standpoint of economics.

When attempting to survey a field as vast as cultural economy, we suggest that it is useful to decompose it into broader sets of relations, and that a natural basis for this is the dynamic relation between the cultural economy and the rest of the economy, i.e. how a change in one affects the other. We can hypothesize four models of this relation, which are the four possible answers to this question, namely: (1) negatively, (2) competitively, (3) positively or (4) in an emergent manner. We call these, respectively, the welfare model, the competitive model, the growth model and the innovation model. These map onto Williams’ residual = (1), dominant = (2) and emergent crossing over (3) and (4). But it is not a simplistic linear set of relations: there are trends and potentials that see model 1 and model 4 recursively turning toward each other. Each of these four hypotheses suggest different possible economic policy responses: in the first case a welfare subsidy is required; in the second, standard industry policy; in the third, investment and growth policy; and in the fourth, innovation policy is best.

Our reason for emphasizing these different dynamical relations is that the study of the cultural economy has been dominated by models 1 and 2: either the ‘negative’ model in which the cultural economy produces cultural value but this is rarely economically viable in the market, and thus requires public transfer for support; or the ‘competitive’ model in which large, industrial-scale and often multinational businesses parlay culture as a commodity and behave just like the rest of the market-capitalist economy.

The first feature we note, in introducing the chapters in Part 1 of this volume, is a decreasing weight of attention to the fields of culture and creativity most readily associated with each successive model. This is consistent with Williams and reflects the fact that most supportive attention has been placed on the ‘residual’ (those most vulnerable, and often most valued, parts of the cultural continuum, arts, crafts and heritage), and most critical attention placed on the ‘dominant’ (those large, consolidated industrial-scale fields such as film, music and broadcasting). For this reason, we shall spend some time ‘filling the gap’, as it were, with exposition of emergent fields of culture and creativity.

Naturally, there are issues we will touch on which complicate the picture this heuristic paints. But the value of a relatively simple model like this is that it allows some measure of organization of the global range and perspective that this volume’s contributors bring to bear, if only so that it provides a target for debate and criticism! Are culture and economy in a state of permanent tension, embodying irreconcilably and constitutively different notions of value? Does culture, at this level of organization, obey the iron laws of capitalist industry, especially through the economically contentious optic of labour theories of value? Do the geospatial configurations of cultural industry organization under conditions of globalization betray increasing degrees of structural asymmetry, inequity and exploitation? Does the creative industries’ discourse represent a neo-liberal take-over of the cultural debate, or does it offer a pathway to the future shape of cultural activity and markets? Issues such as these seem to us to capture some of the vigour of the debates, evidence and approaches that make the cultural economy so vibrant a topic of attention today.

Four models of culture and the economy

A detailed description of the four models of the dynamic relation between the cultural economy and the rest of the economy can be found in Potts and Cunningham (2007). While the rest of the economy is normally taken to mean the national economy, these models extend to consideration of a global economy in which cultural goods and services are traded globally and in which the new technologies and business models developed within the cultural economy can be adopted and used in a global economic context. These four models can be summarized as follows.

Model 1 (the welfare model) is the argument that the arts, broadly considered, are economically successful to the extent that they can extract rents from the rest of the economy. (This may also be called the ‘subsidy model’, but we prefer the term welfare in the standard, politically neutral, sense that it is used in microeconomic theory.) This is typical of what are called ‘public’ or ‘merit’ goods, with the economic justification for resource transfers resting on a market failure argument. Policy is then calibrated to estimates of their non-market value. In model 1, cultural activities have a net negative impact on the economy, such that they consume more resources than they produce. To the extent that they exist, their value must lie fundamentally beyond market value. This model fits most accurately the (subsidized) arts end of the cultural spectrum, and the sub-discipline of cultural economics has largely been developed to address issues arising from these assumptions.

Model 2 (the competitive model) differs from model 1 in presuming that the cultural industries are not economic laggards, nor providers of special goods of higher significance, but are effectively ‘just another industry’. The term cultural industries has historically been used for this part of the cultural spectrum. This model might be seen to fit best the established media industry sectors that are mature, experiencing static growth or are in relative decline, and which are being impacted by emergent distribution/aggregation models as, for example, in some parts of publishing and print, broadcasting and mainstream music copyright firms, and perhaps the commercial end of film.

The distinctive features of this large-scale sector – extreme levels of demand uncertainty, power-law revenue models, tendencies toward monopoly, complex labour markets and property rights, endemic hold-up problems, information asymmetries, highly strategic factor markets, and so on (e.g. Caves, 2000; De Vany, 2004) – are held to be addressable under competitive conditions. This is where the neo-Marxist critique concentrates its energies, analysing how large, powerful, industrial-scale and often multinational businesses parlay culture as commodity and behave just like the rest of the market-capitalist economy. Policy responses under model 2 are not about targeted resource re-allocation, but rather about consistent industrial treatment, or, as in the case of multinational and oligopolistic business, for regulation and control of excess market power.

Model 3 (the growth model) explicitly proposes a positive economic relation between growth in the creative industries and growth in the aggregate economy. It is for this model we deliberatively use the term ‘creative industries’. This is not because cultural forms, such as the established arts and media, cannot be regarded as part of the creative industries – they can and are – but because the term creative industries is more an idea or proposition than a neutral descriptor of an industry sector. The creative industries are a dynamic force and not just another static sector.

The creative industries, in this view, are a growth driver by their new creation of value, which is consistent with the rise of a global market economy. In this model, culture becomes increasingly important because as economies evolve, a larger fraction of income and attention is devoted to it. In model 3, policy should properly treat the creative industries as a ‘special sector’. This is not only because it is economically significant in itself, but because it influences the growth of other sectors. This may plausibly lead to intervention, but unlike model 1, the purpose is to invest in economic growth and the development of capacity to meet growth in demand. This model thus accommodates design as an input factor into the economy, industrial digital content and applications like games, and also mobile and Internet media. These exemplify input impact, such as games providing models for next generation education and learning paradigms, or for simulation and virtual reality training in aerospace. It is evidenced by the positive correlation between design intensity in firms and their stock market performance (Design Taskforce, 2003; Design Council, 2004). It also is suggested by the growing proportion of creative occupations ‘embedded’ in the broader economy. But it is perhaps best exemplified by the huge growth of mobile and Internet media use and content creation and the unexpected (on the supply side) uses to which such activity and inventiveness has been put. The creative industries seem to be a driver of economic growth.

Yet rather than thinking of the creative industries as an economic subset ‘driving’ growth in the economy, as in model 3, the creative industries may not be well characterized as a sector per se, but rather as an element of the innovation system of the economy. This is model 4 (the innovation model or creative economy model). The economic value of the creative industries, in this view, does not stem from their relative contribution to economic value (as in models 1–3), but from their contribution to the coordination of new ideas or technologies and thus to the process of economic and cultural change. In this view, the creative industries are mistakenly classified as an industry in the first place; they would be better modelled as a complex system that derives its ‘economic value’ from the facilitation of economic evolution – a system that manufactures attention, complexity, identity and adaptation though the primary resource of creativity.

If model 4 is true, this renders innovation policy a superior instrument to competition or industry policy. This justifies an ‘elitist’ aspect to creative industries policy in the same way that traditional versions of cultural policy justified the development of culture as a public good. But unlike a heritage approach to cultural value, creative industries value lies in the development and adoption of new knowledge, and so is focused on experimentation and difference, rather than conservation and equality. Evidence for model 4 would accrue from the emergence of new industries in consequence of creative industries activity as a facilitator of ongoing structural change and adaptation.

Plainly, these four models have, at different times and places, been more or less appropriate. An abstract model, such as the four possible dynamic relations between the cultural economy and the rest of the economy, helps us to see more clearly the nature of our economic characterizations of the cultural economy, and to point toward appropriate policy frameworks. We have elected here to introduce the works in this volume within this framework because it serves to highlight the difference between dominant Keynesian and neo-Marxist analysis, which are based in a static view of the economy that tend to presume no positive connection between the cultural economy and the process of economic growth and development, and emergent Schumpeterian conceptions of the cultural economy, which do recognize such a dynamic (evolutionary) connection.¹ The fact is that much can be elucidated by these dominant neo-Marxian and Keynesian approaches, but little of the emergent dimensions of cultural economy – which are beginning to impact on all sectors of the cultural economy – are captured in these approaches. This is recognized by many contributors to this volume.

Cultural economy in four models

Approaches to model 1 are well represented in this volume. Friel and Santagata (Chapter 24) argue that cultural economics has neglected material cultural heritage as being of too marginal and hyper-local significance. This field of cultural activity is changing through global niche market development and the application of quality control standards based on ‘soft industrial design’. Dhamija’s contribution (Chapter 9) reinforces this point, showing the strength of crafts in India as an employer (36 million in the cottage industries sector) and exporter (one of the largest exporters of goods after agricultural produce). It attracts no state subsidies – unlike heavy industry – and forms a crucial link between the massive informal economy and the formal, export-oriented sector.

Similarly, Aageson’s chapter on cultural entrepreneurship (Chapter 6) reminds us that, particularly in low income countries, publicly provided infrastructure for culture is often too tenuous to suggest that it readily fits the model of the subsidized arts. This is the space where the cultural entrepreneur operates as a core intermediary. This take on the agency-structure dyad is a necessary balance to emphases on institutional, political-economic and similar large-scale perspectives. However, it also begs the question of a broader vision of the cultural entrepreneur which allows for collective action (cf. Leadbeater and Oakley, 2001) and leaves unaddressed the ways in which cultural entrepreneurship operates in complex advanced economies relatively well-provisioned with state-supported infrastructure. The state in this situation runs the risk of ‘crowding out’ the entrepreneur.

The arts festival would seem prototypical of model 1 as a time-and-s...

Table of contents

• Cover Page
• Title Page
• Copyright
• Contents
• Foreword, by Gilberto Gil
• Acknowledgements
• Contributors
• List of boxes, figures, photos/illustrations and tables
• Introducing the Cultures and Globalization Series and the Cultural Economy, Helmut K. Anheier and Yudhishthir R. Isar
• PART I: THE CULTURAL ECONOMY TODAY
• PART II: INDICATOR SUITES