Historically, economists have treated art as ‘exceptional’ in the sense that its producers and consumers do not correspond to the rational activity of ‘utility maximization’. Artists are not subject to market forces to the degree that other producers are. Mainstream economists regard artists as economically irrational or explain their apparent irrationality as in fact a longer-term strategy for greater financial rewards (although these are acknowledged as high-risk economic decisions). When economists fail to completely re-describe artistic decision in terms of economic rationality they argue that artists are motivated by non-pecuniary rewards (which replicates the economic model of incentives even for those who are not motivated by money at all). This idea is well-established in the canon of economic thinking, but it is flawed.
Cultural Economics focuses its analysis on five key areas: (1) markets for artworks (including questions of taste and consumer demand, as well as the operations of galleries and auction houses), (2) arts policy (including governments subsidies, tax breaks and copyright law), (3) labour markets for artists (including employers’ demand for labour, the ‘oversupply’ of labour, productivity and training), (4) the relationship between art and high finance (including art banking and art as an investment), and (5) the microeconomics of art’s institutions (including the funding and incomes of museums, theatres and the ballet, and the demand for them).
Consumption is overplayed by Cultural Economics (examining incentives, disincentives, outcomes, choices, prices, the allocation of resources, copyright, and so on) with scant attention to questions of production (as well as circulation, economic structures and so forth). This is key to the limits of Cultural Economics in general, and it is one of the reasons for the flaws in the conception of ‘non-pecuniary rewards’. Instead of studying production, economics studies markets. High on the bill of Cultural Economics is the study of the auction houses, the funding and financial policies of art museums (public subsidy, corporate sponsorship, selling off museum collections, entry fees, marketing and so on), the scrutiny of the performance of art as an investment, the relationship between art and banking, the education of and market demand for artistic labour, the growth of corporate arts sponsorship and corporate art collecting, and the microeconomics of the contemporary art market.
The overplaying of consumption leads directly to one of the most conspicuous limits of Cultural Economics. Instead of explaining the conditions of artistic production, it addresses artistic production in terms of labour markets for artistic labour. This is why mainstream economists are puzzled by the behaviour of artists who do not behave like rational producers (profit maximizers) or rational consumers of education and training (utility maximizers). Cultural economists have struggled to explain why artists place more value in informed judgements about their work rather than the sales. Economists simply reconfigure this value is a ‘non-pecuniary reward’, in other words, it functions just like a financial rewards, and is thus subject to the calculation of costs and benefits. ‘Artists have rejected market sales in pursuit of the nonpecuniary benefits of high satisfaction art’, Tyler Cowen and Alexander Tabarrok say. While these writers, typical of mainstream economists, observe a glitch in the economic behaviour of artists, they proceed by implying a trade-off that can be calculated just like profits and losses. This is because economists have a methodological assumption about individuals making economic decisions rationally, and without this trade-off artists would not behave rationally. Hence, the redescription of activities that contradict economic logic as having a ‘non-pecuniary reward’ is a staple of Cultural Economics, but it is a shoddy piece of thinking.
The notion of ‘non-pecuniary rewards’ is, from a Marxist point of view, a schoolboy error. It confuses the properties of exchange-value with the qualities of use-value (the latter does not imply that artworks are useful in the ordinary sense). Exchange-values are quantitative, while use-values are qualitative. The former are abstract, the latter concrete. Use-values are diverse and unique, while exchange-values are identical, equivalent and, as the term suggests, exchangeable. ‘Non-pecuniary rewards’ are nonsense, then. But the notion is also a complete failure to understand what is at stake when artist sacrifice financial gain for values internal to their practice. It is false to account for economically irrational behaviour in the artworld in terms of ‘non-pecuniary rewards’. And it is worse to assume that artists calculate trade-offs between pecuniary and non-pecuniary rewards. This is how capitalists make decisions about their firms, but it is not how artists, critics and curators engage with art.
It is this sort of muddled thinking that prevents Cultural Economists from understanding what artists do. Why do so many artists continue to produce works when there is no market for their products? This is not economically rational behaviour. Its value lies outside the calculation of economic cost and benefits. If artists measured what they do strictly on business terms, then most of them would quit. But they don’t judge the activity of making, exhibiting and looking at art exclusively in economic terms. Making art is strenuous and pleasurable, intense and testing, intellectual and sensuous, wild and disciplined, exciting and routine, and many more things besides. Also, the strenuous pleasure of looking at art is enhanced by making art, and vice versa. It is important to see this uneconomic activity as central to artistic practice, not as compensation for economic failure.
Here’s some news for any economists reading this blog. Artists take notice of what is said about their work because other artists, curators, art historians and critics say interesting things about them. Artists put more value on the opinion of informed spectators rather than the art market because art is a dialogical practice in which artists learn off each other, as well as feed off the work of curators, critics, philosophers, historians, musicians, film-makers, scientists, the media, and a thousand others. These are not experts in the economic sense (the critic is not a mediator between the work and the consumer); they are informed spectators who are members of a cultural community. Critics and other spectators engage with the works’ as artworks, not commodities. What matters in art is that artworks are above all regarded for their ‘use-value’ rather than ‘exchange-value’. In art, therefore, it is economic thinking that is irrational and perverse.