Note on Consumer Sovereignty

Consumer sovereignty, at best, is the sovereignty of wealth. Only disposable income counts. However, since firms are purchasers of raw materials, property and labour in most markets, then consumer sovereignty is often the sovereignty of capitalists in the moment of productive consumption. Even in markets for consumer goods and leisure, corporations are prominent and powerful consumers insofar as they purchase advertising (on TV, in magazines, online, at sports events and so on) as well as through sponsorship. If we regard corporate advertisers and sponsors as the consumers of a football match, then consumer sovereignty begins to appear as nothing other than the sovereignty of capital.

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Van Abbemuseum Talk for Giant Step 4

Public Museum, Public Funding, Public Sphere

Introduction: market, state, public

Neoclassical economics and liberal politics share the goal of converting individual preferences into social aggregates. The first is called demand; the second, democratic will or mandate. An aggregate of consumers does not belong to a public but a market. An aggregate of voters is an electorate that belongs to a state. Neither, therefore, produce a public. A public is a social formation constructed by discursive interaction. Consumers have cash, voters have votes, but members of a public have opinions, make judgements and hold values that they express through discursive interactions (not only through publishing well constructed arguments but also through applause, heckling, chanting and booing).

Public art institutions require not only a collection of consumers and voters but also a public. Public galleries and museums have relations with consumers and voters (the first buys tickets, books, food, and so on, while the latter ultimately authorise public subsidies), but art institutions neither operate according to consumer sovereignty (ie satisfying demand by exhibiting works that match consumer tastes), nor democratic principles (in which the wishes of the majority are granted). Questions of quality in art are not sacrificed for consumers and voters by the procedures embodied in art’s public institutions, although it must be admitted that the market and the state exert considerable pressure on them nonetheless. This means that the art museum is not primarily determined by markets or the state, but by art’s public.

Three leading communitarian moral philosophers show up what is lacking in thinking about the politics of communicative action in relation to market forces and state power.

Iris Marion Young has examined ‘ways that individuals can think about their responsibilities in relation to global social structures’, including political and economic structures. Young speaks of ‘political responsibility’, extending Hannah Arendt’s use of that term, in relation to the economic phenomenon of ‘sweatshops’, for instance, especially in cases where third world states are too inept or corrupt to impose the correct regulations on factory owners. This version of political responsibility has been effective, she explains, with examples of organised consumer boycotts, especially through large institutional customers such as Universities. Here, I would say, Young fashions a conception of the production of ethical or political value that is in practical harmony with the capitalist system it confronts since it achieves its ends through market mechanisms.

Nancy Fraser responds to what she calls ‘marketization’, with ‘an egalitarian politics of redistribution and an emancipatory politics of recognition’. Separating economic questions of distribution and redistribution from political and ethical questions of recognition and cultural identity does not tackle the hegemony of economics over the reduced forces of discursively produced values. And the dominance of economic forces is shored up even further by Fraser’s insistence that Habermas’ distinction between the ‘system’ and ‘lifeworld’ is not a ‘substantive institutional distinction’ (that is, markets and state apparatuses on one side and the institutions of the public sphere on the other), but an ‘analytical distinction of perspectives’. Calhoun is right to point out that ‘money and power are non-discursive modes of coordination’, but the issue, for me, is not how to think of discursive coordination formally but how these different modes of coordination intersect in real situations.

Michael Sandel approaches the question of ‘commodification, commercialization and privatization’ in ethical terms. Is it wrong for students to tip their tutors? Is it wrong to ask someone to sell their kidney, their sperm, their baby, their vote, the window space of their book shop – or, we might add, the exhibition space of their gallery? Sandel is interested in ‘the moral limits of markets’. He has two objections to market forces: coercion and corruption. The first ‘points to the injustice that can arise when people buy and sell things under conditions of severe inequality’ and relates to the moral idea of consent, while the second ‘points to the degrading effect of market valuation and exchange on certain goods and practices’ and relates to the moral importance of the good at stake. I do not want to restrict the tensions between economics, politics and publics to special cases of coercion and corruption. I want to examine the confrontation between the public of the museum and both the market and the state.

Neither neoclassical economics nor liberal political theory conceive the aggregate of individuals as forming a public. In fact, both turn to anonymous mechanisms as replacements for discursive exchange, making discursive exchange redundant. One form of aggregation cannot be converted into another without loss, misrepresentation and tension. Hence, economists complain that liberal democracy imposes the decision of the majority onto those who voted for an unsuccessful candidate, while pointing out that every single dollar is spent according to the preferences of the consumer. Political theorists complain that market demand neglects the interests and preferences of those without cash and, effectively, gives multiple dollar-votes to the wealthy in social decisions governed by markets.

The difference between art’s public and these two social aggregates is expressed with some tension in concepts such as elitism, minority culture as well as the idea of art’s unpopularity, its alleged illegitimate use of taxpayers’ money and similar complaints. This is an uncomfortable starting point. Public institutions face certain practical difficulties that arise from organising themselves around publics instead of markets and oolitical constituencies. Insofar as the market and the state dominate social decision making, the public, which is not reducible to the aggregates of consumers and voters, finds itself either outside of the processes by which resources are allocated or must address the market and the state in the terms of the incentives and interests of those aggregates.

Public Subsidy: Economics

The public art institution is one of the key sites that brings together the public with the market and state into a tense confrontation. What makes a public art institution public is not that it receives state funding. On the contrary, when an institution is awarded state subsidy this is a recognition of its service to the public.

Politically, the public sector is a portfolio of institutions, services and infrastructure that have been designated as in the public interest and, typically, therefore in receipt of state funding or subsidy. Economically, welfare economics has devised various rationales for public funding, including a battery of special concepts such as ‘public goods’, ‘social goods’ and ‘merit goods’. These economic concepts are expressions of the conflict between the political and economic as contradictory modes of power, with their distinctive mechanisms of decision-making and class dynamic. Between the 1940s and the 1970s these economic concepts aided politicians in implementing and extending the welfare state, but since the 1970s these concepts have been retooled as weapons against the state’s interference in the self-correcting free market.

Nowadays the range of arguments and circumstances that once demanded the differential concepts of ‘public goods’, ‘social goods’ and ‘merit goods’, has been reduced to a rather puny and technical definition of ‘public goods’. Public goods, according to economic doctrine, are non-excludable and non-rival in consumption. Non-excludability means it is impossible, improbable or impractical to prevent others from having access to a good (for example, the provision of clean air cannot be withheld from those who do not pay their taxes, and the same is true for flood control, clean streets, the judiciary and the armed forces). Non-rivalry means that the good can be enjoyed without reducing its capacity to be enjoyed by others (for example, looking at an artwork, swimming in the sea, reading an ebook).

Since there is no way for the market to ensure that those who pay for flood-control, the fire service and the military are protected while those who refuse to pay or can’t pay will not be protected, then ‘social wants of this kind’, Richard Musgrave argued in the 1940s, ‘cannot be satisfied through the mechanism of the market’. Ruth Towse says these features of non-rivalry and non-excludability ‘make it unlikely that private for-profit firms will produce public goods’ 27-8 Economically, therefore, public provision takes over, in principle, where the market fails to provide goods that are socially valued but incapable of producing profit. However, economists since the 1970s, especially neoliberals, have whittled away at the list of genuine public goods, and complain that many alleged public goods can be provided by the market at a profit and therefore their public subsidy cannot be justified.

The case for public subsidy, which began with welfare economics making the case that certain goods ought to be available to all without direct cost, has been reduced to a technical question of market failure. The methodological distinction between positive and normative economics is added to this, makes welfare economics appear to fall short of the requirements of economic science.
Alan Peacock, who pioneered the neoliberal approach to art, began his career in the economics of art within welfare economics and argued for state intervention in the arts, heritage and broadcasting with reference to market failure in relation to the unexpressed demands of future generations, as well as the non-economic goods of ‘national cultural standards’ and ‘social cohesion’. Peacock was among the first economists to take an increasingly heightened and increasingly negative view of the public subsidy of the arts. The problem, he said, is that some appointed authority decides on our behalf what we want or, worse still, what we ought to want.
Anyone who believes in the efficacy of market mechanism to allocate resources according to the subjective preferences of consumers looks upon state subsidy as an interference.

‘Some properties of the arts and culture are true public goods in the economic sense, such as shared history, cultural history and language’, Ruth Towse concedes, before reigning welfare economics in, saying, ‘but far and away the majority of goods and services in the cultural sector are not public goods; they are rival (the more for you, the less for me) and access to them can be limited to those who have paid an entry charge or subscription (they are excludable).’ The argument that certain goods such as art ought to be free to all is replaced with the argument that whichever cultural goods can be feasibly allocated according to market mechanisms ought to be subjected to market disciplines. She provides the standard rationale for such thinking as follows: ‘Of course, a cultural organisation can choose to let some people in for free, say children, or to give their product away (such as a ‘free’ newspaper). Even if ‘free’ goods and services are supplied by a public organisation, though, they are nevertheless ‘private’ goods in the economic sense unless they have the specific combination of non-rivalry and non-excludability, and it is important to distinguish publicly supplied goods from public goods.’
Mainstream economists today approach the question of public subsidy in two ways. The first is to establish the economic concept of a public good, and the second is to exaaamine the behaviour of public policy makers in terms of the incentives, satisfactions and preferences of consumers in the marketplace, which is called public choice theory. Public choice theory collapses the problem of the conversion of subjective preferences into a social aggregate by asserting that political representatives are led by their own self-interests rather than the communities they formally represent.

‘Public choice theory analyses the incentives to politicians and bureaucrats to behave in certain ways. It explains why public employees act in their own interests rather than those of the public they are supposed to be serving. The public ownership and control of cultural provision, the granting of public subsidies and regulatory controls all enable politicians and bureaucrats to exercise their power and influence. This can explain some otherwise seemingly anomalous behaviour: for example, public museums all over Europe close on Mondays to suit the needs of the employees rather than those of visitors.’

Public Subsidy: Politics
Public subsidy is at once an economic and a political choice.

The public funding for the arts that Keynes pioneered combines the late-eighteenth insistence on artistic independence and individuality with a revival of the concept of art’s public and a new role for the state within a novel economics of patronage. Historically, the Arts Council model develops as much out of the Humanist tradition of patronage as it does the earlier practice of religious patronage, but it also depends upon the transformation of artistic production that took place through the replacement of patronage with dealers mediating between artists and collectors. The art market is a prerequisite for its apparent opposite, the public funding of art. But the public funding of art is not merely a bastardized form of market relation. It is based, equally, on the conception of the bourgeois public sphere.

At the end of the 1950s, the welfare economist Richard Musgrave argued that the main allocative objective of the public finance is to provide resources to the satisfaction of ‘public wants’, ‘social wants’ and ‘merit wants’. The difference between these three wants is due to the manner in which they are justified. Merit wants are items that benefit from public subsidy without necessarily conforming to the two traditional ways of justifying public expenditure but are funded nonetheless for normative reasons. The first objective in Musgrave’s list is ‘to provide for the satisfaction of public wants free of direct charge’.

Musgrave specifically argued that merit goods were those goods which people should be able to consume not only regardless of the ability to pay but also regardless of whether they actually regard it as beneficial, appealing, etc. So, in the case of merit goods, interference with market mechanisms is based on values attributed to a good independent of subjective judgements of utility by consumers at large. In other words, it is the precondition of the concept of merit goods that they do not conform to the standard pattern of neoclassical supply and demand.
If a good has so much merit that we believe everyone ought to be able to consume it regardless of ability to pay (and, moreover, regardless of the choice to consume it), then, it will, as a result, be exempted from the economics of supply and demand. For this reason, the economists West and McKee, who subscribe to the doctrine that markets are the most effective mechanism for allocating resources, suggest that the public supply of merit goods ought to be temporary measures only. They illustrate their point with the public funding of education. If, they argue, those who are uneducated are less likely to demand education in the open market, then supplying education services to them will raise their education and, presumably, show them the value of education, leading to an increase in demand for education. And they regard the fact that universal free and compulsory education still exists as proof that the merit want arguments and the policies they have fostered have failed.

To make this assessment they first have to convert a hypothesis into a condition. Some merit goods, we might speculate, can be supplied by the market once the state’s provision of them as merit goods has created the demand for them. However, it is a political choice, not an economic principle, that determines whether to guarantee education for all or to subject education to market forces, in which ability to pay and willingness to pay are determining forces, giving advantage to the wealthy. Even in Higher Education, which has no claim to be universal, it is a political choice to have candidates preselected by their ability to pay rather than their ability to excel. The point of recognizing and funding merit goods is to ensure that every member of society has access to those benefits that society chooses politically to be universally valuable and should not be restricted to those who can afford them.

The controversy over merit goods is tied up with its flouting of consumer sovereignty. Merit goods, which are publicly funded to ensure universal, equal and free consumption, contradict consumer sovereignty. The suspension of consumer sovereignty that the concept of merit goods requires strongly indicates that another (non-economic) form of sovereignty takes precedence. In his discussion of social wants, Musgrave asks a searching question. ‘Since the market mechanism fails to reveal consumer preferences in social wants, it may be asked what mechanism there is’. (p,10) The answer, as he puts it, is voting. Voting reveals preferences that markets cannot. Consumer sovereignty has no part to play in allocation of merit goods because the decision to produce them for universal consumption is taken by democratic representatives. There is no economic rationale for the funding of merit goods; the case for public funding derives from norms at large in society, or perhaps that part of society that has effective sway over policy makers. In fact, ‘merit goods’ might be best understood as a concept that approaches economics from the perspective of political priorities. Economics has no methods to predict such priorities and market mechanisms are incapable of allocating them in the desired magnitudes (ie universally and equally).

Merit wants can be supplied by the market and consumed in the standard way, but there is a case for arguing that everyone ought to enjoy the good equally nonetheless. Merit goods are not supplied by the state in response to market failure, but in response to political problems arising from market success.

Public Sphere: Publics Beyond Market and State

The question of public subsidy is not an economic question at all, but a political one. For mainstream economists, this opens up a Pandora’s Box of state interference in free markets, the crowding out of capital investment and the flouting of consumer sovereignty. Public subsidy is a political choice outside the remit of professional economists, but economists are opposed to public subsidies on principle and are regarded as experts by national budget holders.
Habermas, however, would look at this as Hobson’s choice. If public subsidy is either economic OR political, then it has been colonised by ‘the system’ and has not been brought within the auspices of ‘the lifeworld’. In other words, the collective decisions have been handed over to the steering media of anonymous market mechanisms or the bureaucratic machinations of power by professional politicians.

Neoliberalism has an overwhelming desire to cut public funding for art, education, health and unemployment benefits not just because economists are philistine, elitist, uncaring and spiteful (some of them, it turns out, are not), but because neoliberal doctrine insists that free markets allocate resources more effectively than state monopolies and that market forces are more democratic than political democracy. We need to state the case for democracy over economics.
Central to neoliberal dogma is the doctrine of consumer sovereignty. This needs to become one of the battlefields of a new case against the neoliberal assault on art, the humanuties and education. Art’s institutions, I want to suggest, would be well advised today to develop a discourse in their favour based precisely on the superiority of processes of public formation rather than the assumption of the sovereignty of the consumer.
Mainstream economists distinguish the soverereign consumer not from other ordinary political individuals, namely ‘sovereign citizens’, but from political figures such as leaders, rulers, tyrants and officials. So, instead of pitching the sovereign consumer against its political equivalent, mainstream economists imagine ‘a clash between the economic power of consumers and the coercive power of the state’. This asymmetry makes it a lot easier for economists to make the standard case for consumer sovereignty as ruling out political ‘interference’.
Joseph Persky is quite wrong when he says ‘consumer sovereignty is attractive because under its impartiality, producers are more easily resigned to their roles as servants of society’: producers do not serve society through consumer sovereignty; they serve capital. Consumers are consumers only insofar as they own, spend and represent money which will realise the value of invested capital through sales. Consumer sovereignty is an expression of the dominance of capital over the production and allocation of social use-values. What about citizen sovereignty, or other forms of severeignty not expressed through money? Mainstream economists believe markets to be superior. They are fond of the analogy, first formulated by Ludwig von Mises, one of the most fanatical pro-marketeers in history, that every dollar spent by consumers on the free market is like a vote cast in favour of a certain commodity.
Murray Rothbard later argued that Mises’ comparison of the market to the democratic process was unfair on the free market. In democracy, the majority decision is binding on all (the candidate who receives 51% of the votes will govern 100% of the people), hence, the free market is more democratic than democracy because every dollar counts. That the wealthy get more dollar-votes than the poor shows that democracy is, in principle, superior in at least one respect to market forces in arriving at collective decisions: voting is more equitable than market forces. But the full political critique of market forces as a method for arriving at collective decisions should not be limited to the case for democratic voting. All those situations in which discussions are held to arrive at an agreed action – from a family deciding which movie to watch, to a dispute over the teaching of evolution in faith schools – would not be improved if they were governed by market forces. Markets allow those with disposable income to express their preferences, but discussion allows us to reflect on our preferences and change them in the light of arguments made against them or for alternatives. Voting is required only if discussions fail to produce a consensus.
It is a weakness of mainstream economics that it underestimates the merits of democratic and discursive processes for arriving at collective decisions. Neoliberal policies are therefore vulnerable, in principle, to the argument that they universalise the sovereignty of the consumer and thereby eradicate the sovereignty of the citizen or the participant in public opinion formation. This includes powerful interests such as politicians, journalists and activists of all kinds. The future of art’s public institutions is dependent on a critique of the doctrine of consumer sovereignty and a defence of the sovereignty of both the political choice to fund it and the self-determination of art’s publics.
There are other significant weaknesses to the neoliberal argument, which privileges the market over all other methods of mediating between individuals and the social whole, that can be exploited by the advocates of art and its institutions. One of the most important of these is the question of quality. Treating art and the humanities as consumer goods that can be bought means neglecting the dimension of quality in which we speak of the experience of them being earned, benefitting from prolonged study, being augmented by close attention and rewarding effort. Consumers can buy artworks or a library full of books, but the quality of the experience is not guaranteed by the purchase. Economics has a poor track record in discussing quality and so it should be a conspicuous element of the critique of the neoliberal attack on art and the humanities.
Consumer sovereignty, insofar as the consumer is assumed, as a matter of principle, to be the best judge of commodities available in the marketplace, is a doctrine that is indifferent to questions of quality. Economists are aware of this problem and have attempted to dispel the irritating presence of issues of quality – of a type of value that cannot readily be reduced to economic value or measured by the price of an article – by claiming either, directly, that quality is nothing but a question of taste and therefore preference, or, indirectly, that consumers can have access to knowledge of quality and therefore the market can reflect such judgements.
You can find out what experts and other consumers know about the quality of a particular car or hotel and adjust your purchases accordingly. But art and education are unusual in this respect. Quality in art is only recognised, understood and experienced through time and effort put into it. Asking what Hank and Ingrid want is a rhetorical device for making us indifferent to quality and critical self-teansformation. The ‘consumer’ of philosophy, too, cannot make judgements of the quality of arguments prior to purchase based on the recommendations of others. Courses designed according to student preferences or employer demand are, like consumer sovereignty generally, indifferent to quality. The alleged consumers of education (potential students or potential employees of graduates) are in no position to judge the quality of knowledge or pedagogy on offer, since students lack knowledge of the subject which they are being asked to judge, and employers have interests external to the subjects which are being taught.
Quality, insofar as it is a matter of judgement, experience, opinion and taste, can be legislated (eg handed over to experts) or entrusted to market demand (ie as if the satisfaction of wants are the best way of expressing judgements of quality) or they can be subjected only to the rigours of dispute and debate within publics formed through discursive exchange. By and large these three modes of dealing with the question of quality co-exist uneasily and somewhat unhappily together in liberal democracies. Publics are often regarded as the worst of the three by virtue of being neither democratic nor bent to the sovereign consumer. Under these circumstances, simply advocating publics over market forces and political democracy is self-defeating.
What’s more, it is clear that the public sphere sits alongside liberal democracy and the self-regulated market as a distinctively bourgeois mode of sociality. The point is not to advocate one bourgeois social institution in opposition to the others but to show how the hegemony of economics, or the false dilemma of public subsidy as being either economic or political, is not even the full bourgeois picture.
Quality is central to a reconsideration of art’s public institutions but it can not be presupposed as our elitist and humanist predecossors had it. Art’s public cannot be seen as that minority which safeguards the quality of art through its superior judgement and taste. Art’s public must be seen as a social platform through which questions of taste – rather than market demand or popular will – can be realised.

Conclusion: Summary

Art’s public institutions are not public by virtue of their public subsidy. It is because art’s institutions address the public, rather than the market or the electorate, that they have any chance of being awarded public funds. Mainstream economists are typically dismissive of the argument for the public subsidy of the arts because they have come to believe that the only justification for public subsidy is market failure. If public subsidy is not primarily an economic question at all, but a political one, then art’s public institutions can be awarded state monies on account of their social merit. Rather than assuming the merit of art or the merit of its educated and tasteful publics, however, the basis for art’s public funding ought to be linked to art’s vigorous production and proliferation of publics. That is to say, instead of simply asserting that art is ‘high’ culture as the Keynesian pioneers of art’s public funding did, the case for the public subsidy of the art’s in the new century must be based on the understanding that questions of quality, which cannot be resolved in the marketplace or the ballot box, must be addressed through discursive interactions in the public sphere. This can only occur if art’s institutions are public institutions. The young Marx said the first condition of the freedom of the press is that it is not a business activity. Likewise, the first two conditions of the publicness of art’s public institutions is that they are subjected neither to consumer demand nor majority rule. The bourgeois public sphere is the only extant alternative, today, but we must not be limited by it.