mercoledì, novembre 27, 2013

High Culture: Enclaving Art out of the Commodity-State

Issued on October the 30th
Class of Cultural Economics: Theory - Final Essay 
Master in Cultural Economics and Entrepreneurship 2013-14
Erasmus University of Rotterdam

From the Rational Approach to the Value Based Approach.
Discourses about High Culture and Their Relevance to Economics
This paper claims that when people talk about high culture they reinforce a social practice aimed at enclaving art out of the commodity-state. The discourse practice about high culture affects the interaction between economics and the arts. Therefore, the distinction between high and low culture is still relevant in cultural economics.

In order to address the topic, the paper first recalls the shift between the rational approach and the value-based approach to cultural economics. The rational approach regards as irrelevant the distinction between high and low culture, preference formation being out of the scope of economics. Cultural economics, though, has gradually questioned the assumption of stable preference structure, along with the standard theory of value. A value-based approach has consequently entered cultural economics as an alternative.

In the value-based approach, people do not maximize their utility, but realize their values. Rather than invest economic capital to acquire commodities out of market exchanges, people employ their cultural capital to share artistic goods in their social networks with friends, colleagues and artists. These social networks and the relevant social practices can be captured applying the metaphor of the conversation.

Within the artistic conversation, people currently reinforce the distinction between high and low culture. The distinction has an economic impact: High culture has restricted access to the commodity state, while low culture is free to enter the market as standard goods. Economic decisions follow accordingly, such as public funds allocation. The distinction between high and low culture is therefore relevant in cultural economics.

Standard Economic Approach and Methodological Individualism
In standard economics, the market is a social system that matches sellers, who offer goods and services in return for a payment, and buyers, who want to purchase desired items by paying for them(1). Price mechanism informs the interaction, as a combination of quantity of goods provided by suppliers and the willingness to pay of customers. Market exchanges take place, since both suppliers and customers have their incentives. Suppliers want to maximize profits. Customers desire to get the highest utility depending on their income and taste.

Standard economics, to sum up, assumes tastes and preferences as given inputs and theory does not deal with taste and preference formation. Rushton states that the neoclassical rational approach to economics is based on methodological individualism:

“Both rights-based liberal theories of ethics and the economists’ welfare economics involve trying to construct ethical systems as something rational, here meaning not the opposite of irrational, but rather a system independent of the culture, traditions, and personalities of the individuals who would live in such a world” (Rushton, 1999, p. 139-140).

Supply, demand, price mechanism, constraints, incentives, and markets are recurring topics in cultural economics: 

“What all economists do agree on is that cultural goods and services are economic goods. (…) These considerations alone make the case for an economic analysis of the production and consumption of cultural products and naturally lead to questions about what determines supply, demand and prices; in other words, we need to understand how market forces operate in the cultural sector” (Towse, 2010, p. 52).

The standard economic approach was in use when cultural economics was established as a discipline in 1966. At the time Baumol and Bowen (Baumol & Bowen, 1966) described the cost disease of the performing arts, showing that artistic labor benefited less than non-artistic labor of technological gain.

The standard economic approach, furthermore, is still commonly used by contemporary scholars. Frey, for example, supports the model as a powerful tool to capture the demand and the supply of the arts (Frey, 2003). Frey just transcends orthodoxy to include institutional constraints and psychological aspects. Institutional constraints arise in the interaction between different artistic organizations or between artistic organizations and public institutions allocating subsidies. Consumers' anomalies come with the so called “endowment effect”, ie for example when the owner of a painting is so tied up with the piece of art that she/he is not willing to sell it anymore. Producers' anomalies come when artists are willing to create even when little or no economic return is expected.

Though Frey admits that institutional and psychological inputs inform the cultural market, his analysis sticks to standard terms. For example, he considers an artist relevant for cultural economics as long as he gains from the arts a high share of his income. Economic capital and market interactions turn out to be the relevant issues. Frey concludes his personal view on the economic approach to culture as follows:

“It has been argued that the economics of the art would profit from going beyond the well-trodden paths, and integrating knowledge from the other social sciences, in particular psychology. This gives us the opportunity of understanding even better how human beings behave with respect to the arts. The economics of art has dealt with a large number of different issues and subjects. (…) But one of the most important aspects has been the relationship between culture and the market”.

The market, though, does not seem to be the social system where the core of cultural value is traded. Scholars have thus criticized the rational approach and fostered new approaches to cultural economics.

Cultural Economics and Critics of Methodological Individualism
Cultural economics has increasingly questioned methodological individualism and the standard economic theory of value. Scholars have proposed an interdisciplinary approach to account for specific feature of cultural goods, such as taste formation and non-economic values.

Blaugh, in his review of cultural economics research, points out the original pattern of taste formation. Blaugh reminds us that artistic goods are “experience goods”. Taste has to be acquired by repeated experiences of consumption and, as a consequence, “stable and identical tastes are an implausible assumption”, and “it is doubtful whether we can actually identify demand for art separately from the supply of the arts and vice versa”. (Blaugh, 2001, p. 125 & 127).

Taste formation is a topic in Hutter's research about the impact of cultural economics to economic theory:

“The standard assumption of stable preference structure is particularly inadequate in the cultural sector. Tastes are obviously socially shaped. Terms like 'acquired taste' demonstrate that this fact is well known” (Hutter, 1996, p. 265).

Hutter, however, brings our attention to other peculiarities of cultural economics. First, he questions the assumption about the stability of demand:

“Another standard assumption is stability of the demand that leads to a specific price paid and volume sold. However, in the 'thin' market for art objects, that assumption does not hold – demand at a particular auction is highly unpredictable” (ibidem, 1996, p. 265).

Finally, Hutter invites us to reflect on the theory of value:

“In the process of making and appreciating art, there is a form of valuation at work that is distinct from valuation in terms of monetary exchange value. Apparently, artistic quality cannot be broken down into more elementary characteristics. Despite occasional anecdotes of the contrary, there is fairly high consensus among participants in the various genres about which pieces have quality and which do not. This kind of valuation is different from traditional individual use valuation. It is a social kind of valuation, just like exchange valuation, yet it operates differently. I have already mentioned that artistic valuation involves a complicated scheme of certification and reputation building” (ibidem, 1996, p. 267).

In order to account for the social dimension of valuation, cultural economics has overcome the traditional notion of economic capital to include cultural capital. Throsby has theorized about cultural capital.

A New Theory of Cultural Value
Throsby extends the social dimension of cultural value (Throsby, 2001). He accounts for the ideas that permeate the economic domain – price, utility, individual preference -, but also claims that cultural goods embed cultural values – spiritual, social, historical, symbolic, authenticity values – that cannot be captured by the willingness to pay of individuals, because cultural experiences arise when people become members of a group; “People form judgments about cultural value not just by introspection but by a process of exchange with others”. (Throsby, 2001, p. 33)

Throsby names the discussed set of values that people share in their social interactions. Throsby names these values cultural capital. When cultural capital is involved, traditional assumptions of price formation are not met. On the demand side, tastes are time dependent. They increase with time and every act of consumption seems to affect future consumption. On the supply side, creators do not behave as profit maximizers. Creators, quite to the contrary, allocate relevant labor capital even when price predicts little or no return in economic capital. Therefore, Throsby concludes:

“If we are serious about striving for theoretical completeness, and eventually for operational validity in decision-making, it is essential that cultural value be admitted alongside economic value in the consideration of the overall value of cultural goods and services” (Throsby, 2001, p. 41).

The value-based approach is the approach to cultural economics which tries to account for the social construction of artistic value. Arjo Klamer has developed this approach.

The Value-Based Approach to Economics
Cultural values pose a main question to cultural economic theory, “How do social interactions generate, shape, and trade cultural capitals?”. This question is the starting point of Klamer's value-based approach to economics. “Researchers may ask themselves how values come about, in which ways they are realized, affirmed, evaluated and valorized” (Klamer, 2011, p. 465).

Klamer provides a new approach to economics which takes into account cultural capital and preference formation. Abandoning the rational focus on the market system, Klamer suggests taking the standpoint of the people involved in the process of social construction of value. Therefore, the name “value-based approach”.

According to Klamer, cultural goods are discursive constructions. Cultural goods may be exchanged in the market, as standard economic goods, and thus get a price, yet, most of the time, people deal with the cultural capital of economic goods to realize personal, social, societal, and transcendental values in their social interactions and social communities.

Klamer talks about “conversation” to light up how these interactions and communities work:

“Conversation defines all the exchanges, the chatter, the publications, the literature, the conferences, the meetings that constitute these communities, and participation in the conversations establishes who is counted as a member of these communities” (Klamer, 2009, p. 250).

Within a conversation what matters is not the intrinsic value of the object, but the shared meaning about the object that is socially defined: “Goods become cultural when people treat them as such: in the way they talk about them and in the process of valuation, evaluation and valorization”. (Klamer, 2013, ch. 12). Conversations, therefore, define who and what belong to the artistic conversation. Let's briefly discuss both points.

When someone wants to establish himself as an artist, he must enter the artistic conversation. The process implies a high opportunity cost: he must invest a great amount of time, labor and social networking. Economic profit is seldom gained. However, sharing the artistic conversation appears as a value itself. A value that interacts with other conversations, generating an ongoing flow of cultural capital. The artistic conversation may convey high status and positively affects conversations with friends. The artistic conversation, though, may be demanding and reduce our investment and success in the family conversation.

The artistic conversation defines, as well, what pieces of art are cultural goods. The artistic conversation rules stocks and flows of cultural capitals related to the relevant cultural goods. Artists and public co-create the value of cultural goods. They together define what cultural goods are good for, and what cultural goods are allowed to do.

Several cultural goods, for example, are not allowed to enter the market. They are named “high culture” and they have restricted access to the commodity state. Arjun Appaduraj has introduced the notion of commodity and discussed the restrictions to the commodity state. His insights may eventually help us to tease out the social process that goes on in the cultural conversation when people talk about high culture and restrict its access to the market.

The Social Life of Things: Goods vs Commodities
Appaduraj brings in the distinction between goods and commodities to explore the social life of things, and light up the political construction of value that we have so far discussed with the conversational metaphor. Appaduraj introduces his aim as follows:

“Focusing on the things that are exchanged, rather than simply on the forms and functions of exchange, makes it possible to argue that what creates the link between exchange and value is politics, construed broadly” (Appaduraj, 1988, p.3).

In order to follow the political construction of value, Appaduraj introduces the distinction between goods and commodities. Appaduraj defines commodities as goods meant for exchange. What he wants to show us is that there are goods that are not meant for exchange. Though the standard economic approach focuses only on commodities, Appauraj tells us that the commodity state, the moment of exchange either in the market or in a barter, is just a phase in the social life of goods. Goods can enter or exit the commodity state, following pathways of “enclaving” and “diversion”:

“Whereas enclaving seeks to protect certain things from commoditization, diversion frequently is aimed at drawing protected things into the zone of commoditization” (ibidem, p. 26).

Appaduraj points out two features of the political debate around commoditization that are relevant for our discussion about high culture. First, Appaduraj reveals that artistic production has always had restricted access to the commodity phase:

“The more complex case concerns entire zones of activity and production that are devoted to producing objects of value that cannot be commoditized by anybody. The zone of art and ritual in small-scale societies is one such enclaved zone, where the spirit of commodity enters only under condition of massive cultural change. (…) It is typical that objects which represent aesthetic elaboration and objects that serve as sacra are, in many societies, not permitted to occupy the commodity state (either temporally, socially, or definitionally) for very long” (ibidem, p. 22-23).

Then, Appaduraj adds that contemporary societies distinguish themselves from traditional ones because more and more goods are allowed to enter the commodity phase:

“In modern capitalist societies, it can safely be said that more things are likely to experience a commodity phase in their own careers, more contexts to become legitimate commodity contexts, and the standards of commodity candidacy to embrace a large part of the world of things than in non capitalist societies” (ibidem, p. 15).

To sum up, art in modern societies is at the crossroad of divergent pathways. There is a long term trend enclaving art out of the commodity state; and there is a shorter term trend diverting art into the commodity state. When people in the artistic conversation talk about high culture, they seem to resume the old trend and enclave a few high culturally valued objects out of the commodity-state.

High Culture: Enclaving Art out of the Commodity State
The capitalist pathway of diversion has extensively driven art into the commoditization sphere. Pop culture – music, paintings, books, plays, live performances in general – are often specifically conceived for the market. Cultural economics has indeed coined the term “cultural industries” to include all the industries engaged in the creation, reproduction, and distribution of cultural goods. The bulk of standard economic studies deals with cultural industries.

However, established pieces of art or new pieces of pop art, thought to be of high value, tend to become exceptions to the commoditization trend. People in the artistic conversation label these particular old and new pieces of art “high culture”. When “high culture” discourse starts, a pathway of enclaving comes in and the commodity phase is restricted. High culture goods tend to acquire the features of shared goods, as Klamer defines them (Klamer, 2013, p. 4): (1) at least two people must share the ownership to make them real; (2) the ownership is not legal, but social or moral; (3) neither market transaction nor governmental action can alter the ownership; (4) price is unstated, yet values of goods are clear to the users; (5) experiencing the goods implies a social contribution; (6) acts of consumption increase the overall value of the goods.

Moreover, when high culture is at stake, public intervention comes in to solve market failure or to favor low income audience: subsidies or donations may cover the high fixed costs of a classic orchestra performance or allow a reduction in the entry ticket for students. Finally, incentives, such as cultural prizes, may intervene to stimulate high culture productions, whereas cultural industries, such as publishing or music industries, would focus on profit maximization.

More examples could be included. This essay, however, is not meant to provide empirical analysis of the different means to restrict art commoditization, nor is meant to evaluate their economic efficiency. The given examples are useful only to prove that the social activity around high culture effects economic behavior of consumers, donors, and administrators. As a result, high culture, meant as a social practice to enclave a few pieces of art out of the commodity-state, is relevant for cultural economics.

The rational approach to economics takes as irrelevant the distinction between high and low culture. Frey points out that “there is no such thing as good or bad art” (Frey, 2003, p.26). Art, according to Frey, is indeed what individual actors purchase on the market. However, Throsby shows that, along with economic capital, cultural goods embed cultural capitals, and Klamer reveals that cultural goods help people to realize their values far beyond the market. People talk about cultural goods in the artistic conversation, and, there, they define what art is and how they behave in respect to art. In the artistic conversation, the distinction between “high” and “low” culture is still an ongoing discourse practice and shapes the way society deals with the art. While low culture is free to enter the commodity state, high culture has restricted access to the commodity sphere. Going back to Appaduray, high culture represents, for modern societies, what sacred art used to represent in traditional societies. 

(1) For an overview of the concepts of market, supply, and demand in classical economics see for example Towse, 2010, part I – ch. 3, 4, 5.

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