Towards Plan A: A new political economy for arts and culture

Through culture, we come to understand and articulate ourselves; the arts illuminate our inner lives, enrich our emotional world and teach us compassion. They engage us in a dialogue about values; they define our national identity and our concept of citizenship. They hand down the tradition, the ideas and the language that make us confident innovators.

Our arts sector is also a major contributor to social wellbeing – in its engagement with children and young people, with older people, and with the sick and the marginalised. We encourage the individuality of local communities and through our commitment to diversity we strive to bring out the positive, creative potential of the nation.

At present, you could liken our case to that of the Higgs boson, the elusive particle that gives others their mass. The arts are essential, but so embedded in our lives that their presence often goes unacknowledged.

Pinning this down requires specifics. It needs more measurement, more evaluation, and a new language of value to communicate across different sectors of influence. We need to be able to make this holistic case as clearly as others in the ‘third sector’ do.

As part of our renewed mission to ‘enrich society through ideas and action’, the RSA is aligning our activities under an emerging core belief in ‘the power to create’ – to liberate and support as many people as possible to act on their own initiative to establish better lives for themselves and a better world for others. To do this, we need to work towards a world where concentrated forms of power and the orthodoxies that stifle diversity and initiative are challenged by creative and collaborative individuals, institutions and communities.

As we find the world facing enormous economic, social, geo-political and environmental challenges, and a set of institutions and power relationships struggling to meet these challenges, now is the time for the arts to step up and step out, to contribute to the huge task of re-humanising society.

It has been instructive to bring the arts and cultural sector into more direct dialogue with partners (many fans and some sceptics) from outside the sector. It has been interesting watching the arts and cultural sector realise how it needs to change the case it makes. Instead of arts for arts sake or box ticking instrmentalism the emphasis has been on mainstreaming arts and culture into the broader national and local case for economic and social renewal – this is what the Arts Council means by a holistic approach.

NESTA’s ‘Seven Rules for Creative Clusters’:
1. Be pragmatic – ‘build on areas or niches of existing strength’
2. Be data-driven
3. Think systemically
4. And Listen – ‘detailed consultation with local businesses’
5. Raise visibility and strengthen networks
6. Invest in people as well as buildings
7. Leverage anchor institutions – ‘universities have a central role to play in creative cluster development’

The harsh reality is that the arts and cultural sector is being starved of analytical and evaluation support from its lead bodies and agencies.

But the cuts are hurting and with more in the pipeline we absolutely have to find new ways of generating revenue’ – would be the realistic view of many arts leaders. But what does this signify for sector ambition and sector advocacy? Amongst other things I think it means continuously renewing the relationship between art and commerce, rethinking the way in which we represent ourselves to policy-makers and politicians, and asking difficult questions about how we enhance British competitiveness in the global market for cultural goods and services.

... it is generally acknowledged that the wider commercial creative industries’ sectors, including the audio-visual industries, are cross-fertilised by the ‘core’ performing and visual arts in various ways, and that the vitality of the former is to a significant degree dependent on the continuous nourishment of the latter.

Leaving aside the arid but important topic of employment statistics, it is clear that the boundaries between ‘the arts’ and ‘the entertainment industries’ are both porous and of reducing significance. Although a lingering snobbery about the distinction between ‘high’ art and ‘low’ entertainment persists in a few quarters, such views are increasingly dated and contrarian, and at odds both with changes in the pattern of cultural consumption and of everyday creative practice.

Outside the DCMS, its client base and academia, the signature paradigm is habitually characterised as the begging bowl rather than the investment case – a caricature assiduously cultivated by much of the right-wing print media but one for which we perhaps bear some responsibility ourselves.

The Labour Party’s front bench team has avowedly banned the word ‘subsidy’: it talks now only about ‘investment’. The impulse here is admirable, but simply changing the words cannot disguise the fact that subsidy has often not been used as ‘investment’ in the strictest sense. Subsidy only qualifies as investment when it is deployed strategically as risk capital for the purpose of creating new work, developing talent, refurbishing or putting up new buildings, or bringing in new money.

In a cooler financial climate the role of the producer/entrepreneur will become even more pivotal than it always was. This applies equally in the subsidised and non-subsidised sectors. We shall need more ‘alchemists of the impossible’, to use Kate Tyndall’s phrase. They are the initiators of projects and ideas, the forgers of partnerships, the long-term collaborators who have, in Tyndall’s words, ‘the judgement, nerve and inner reserves to take considerable commercial, artistic and financial risks’ while matching the ‘courage, risk taking and vision of the artists with whom they work’.

Many performing arts only, TV only, music only and games only models are fast becoming commercially unviable in a multimedia universe: the future will belong to producers who, Robert Lepage-like, are able to develop creative formats which draw on all of these disciplines.

The crucial point is that in different ways the performing and visual arts are both intrinsically labour intensive. The so-called Baumol Effect applies: Shakespeare’s King Lear still has 18 characters in it just as it did when the First Folio was published in 1623, and it still takes four people to play a Beethoven string quartet. Many galleries and museums are also places of scholarship: new exhibitions demand the deployment of intensive research, curation, production and co-production skills. Pictures, sculptures and other artefacts have to be looked after. All of this severely undermines the potential for digital ‘disruption’ to cut costs in all ‘old’ cultural industry business models.

The recent appearance in cinema formats of blockbuster museum exhibitions like the British Museum’s Life and Death: Pompeii and Herculaneum, and the V&A’s David Bowie is happening now, is just one pointer to future directions.

Most chronically under-capitalised micro-businesses exist on a permanent treadmill of project funding. They finance their creative work off balance sheet, failing to hold on to much if any of their intellectual property (IP) because they are obliged to trade IP for cash in order to survive. IP is the key to sustainability in creative content businesses, as distinct from creative services businesses; without owning any IP it is usually impossible to grow. The result is that British creative businesses effectively gift profits to global media corporations based overseas, thus (among other things) failing to pass on to HMRC the fruits of the many commercial successes that flow from our creative talent and ideas. This is a clear manifestation of the consequences of paying inadequate attention to competitiveness issues.

In trying to develop an argument about the competitiveness of the UK creative economy I may already have lost some in the arts world who, finding such commercial talk distasteful and bruised by the cuts which have already come through, insist that the arts have nothing to prove, that culture budgets should in all circumstances be treated as sacrosanct and even, as a few readers of The Stage have occasionally suggested, that the considerable tax revenues generated by arts organisations should be hypothecated for their own exclusive use. ‘We are different, this is culture’ – is an argument that still resonates widely, but one which is philosophically and politically objectionable to anyone who believes that the arts are of society, and must reflect what happens in society, not be something apart from it.

In every political cycle, however tiresome it may be to those who have been round the course before, of whom there are many, especially in the universities, we have to reframe the arguments for public investment in the arts and wider creative economy because the political and economic context changes and public attitudes cannot be assumed to be a constant. Such arguments are always likely to draw in part on Enlightenment values about what it means to be human (the moral argument), arguments which of course have a particular resonance here at the RSA, and in part on an affirmation of the contribution the arts make to community well-being through their engagement with education, health, prisoner rehabilitation and other important programmes (the social argument). Some civic indication of the persuasiveness of these arguments may be provided by the ‘What Next?’ movement, started by David Lan and others at the Young Vic in London in 2012, as it evolves through direct popular engagement and develops a decentralised presence around the country before the next general election. However, the overarching case should also embrace, and be informed by, a better understanding of the role that the sector can play in a ‘rebalanced’ UK economy, stimulating tourism, attracting new investment and creating jobs (the economic argument). It is the logic of this third argument that calls for an industrial policy for the creative sector as a whole.

Investment is the key. In hard times it is foolish to imagine that any government will future-proof the arts sector or any other part of the domestic creative universe with public money: bigger cheques are unlikely to be written if we do not ourselves demonstrate greater unity and strategic vision.

That economic impact, set out in various publications demonstrating the economic impact of creative industries on the UK, was key to piquing the interest of economic development professionals always attuned to the latest sector ‘in vogue’. Estimates in 2007 suggested that with a productivity output comparable with the financial sector, the creative industries employed some 1.8 million and was growing at double the rate of the UK economy as a whole. Creative industries were widely understood to be the next big thing when it came to jobs generation and economic growth.

Austerity means, however, that the economic and instrumental arguments are more powerful political weapons for elected politicians than the intrinsic arguments.

But the shift towards an entirely instrumental approach to arts and culture investment is concerning. In the field of science, it is the projects that have not been directed towards specific products that have resulted in the greatest leaps forward (consider internet cryptography as a result of investigations into the Fibonacci sequence). Without continuing funding for the equivalent kind of arts and culture projects, we do not know what we might lose – intrinsically, social and economically. Too little is known about what happens over time, to people and places, when culture is allowed to wither.

At the same time, there is a growing interest in what the RSA has dubbed ‘the social productivity’ of public services. In essence, this productivity is the degree to which public services tap into people’s ability to meet their own needs, both individually and collectively – their activism, or civic engagement.80 Politically, it is influenced not just by the efficiencies of self-help, but also by an interest in wellbeing. Structurally, the re-shaping of public services provides opportunities to do things better, as councils like Lambeth start to mutualise, and the Social Value Act puts the Treasury’s valuation intentions into legislation.

Cultural interventions are particularly good at building capacity, capability and aspiration in individuals and communities. And the cultural sector has already proved an adept partner in new approaches, like Citizen Power in Peterborough. Many cultural organisations are now well versed in the language of civic engagement, creating services that go beyond personal learning or social need, to encourage activism, build resilience and helping communities to flourish.

So if our services are sound, it’s time to take stock of where we’ve reached in terms of understanding the value being created. There is no shortage of good practice and even spectacular outcomes in the arts, but these are rarely codified. There is little engagement with leading edge evaluation debate, and there is almost no formal connection with professional economists and public policy makers, from the Treasury to the London School of Economics, whose standards on measurement, causality and validity are both different and demanding. So while there is a growing perception that the arts are good at generating value in this new social sphere, how it is created, what precisely that value amounts to, and the effectiveness of cultural capital as an investment in our uncertain future are yet to be made clear.

Our starting point is that the cultural sector needs to agree a single framework within which to talk about value, while disentangling the social from the cultural in the process. So fundamental to our approach is that the cultural sector should present all its value including ‘intrinsic’ benefits and especially those in the social sphere. By assessing these side by side we can understand the importance of our cultural capital (sense of identity, empathy, ability to imagine different futures, for example) as well as our social capital (relationships, community resilience, health and wellbeing and so on). Until we do so we will fail to make the case for why a cultural project offers something in addition to say, a sports project which can do all of the latter too.

Why has progress been so slow given the decade long focus on ‘value’ and return on investment? Part of the problem is that we have had lots of discussions about measurement, but much less focus on value. When we do discuss value, we tend to focus either on intrinsic or on instrumental value, lacking an overarching framework where we could discuss each together. As a sector, we lack the language to air our internal differences. It is a challenge, consequently, for the sector to demonstrate our common cultural value to others.

To value culture, we need to quantify outcomes, and be aware that value is created and lost at all points in the story of change. We are all too aware that many resist valuation because the arts are ‘priceless’. Our view is that the arts are being valued, but by the few cultural leaders who hold the purse strings. Econometric or consultative approaches make valuation transparent and shared.

Now, in order be able to compare benefits to costs, CBA converts all welfare impacts – which could be financial ones (eg the costs of implementing the policy) or non-financial ones (eg an improvement in health or the environment) – on to the same metric: a monetary scale. We seek to estimate the monetary equivalent of the change in welfare and to do this market data and prices can be used. Or where outcomes are non-market ones like environmental quality, economists can ask respondents what they would be willing to pay in a hypothetical market, known as contingent valuation surveys (the Bolton Museum and British Library analyses Mandy mentions above are examples). Note that both market data and surveys like contingent valuation, rely on information about people’s preferences over different goods and outcomes. Hence they are termed preference valuation methods.

Monetization of outcomes and non-market goods should not be seen as some blunt ‘capitalist agenda’ that could devalue these things. It is simply a way of converting the welfare gains and losses on to the same metric so that they can be compared – indeed we could convert welfare changes in to jelly beans or Mars bars instead!