Here is my Art Monthly article on the austerity cuts to the arts written in 2012.

‘In the period since 1945 there have been two major political acts of public policy in cutting public expenditure, in 1979-80 when Margaret Thatcher’s Government took office and in 2010-11 when the Coalition took power.’ In 1981 the universities received a 15% cut over four years, in line with all Government spending. In 2010-11, however, while the average cut proposed in the Spending Review was 25% over four years, higher education suffered a cut of 40%. Mrs Thatcher made savage cuts in higher education funding but in 1984, Thatcher’s education minister, Sir Keith Joseph, despite arguing that ‘[t]oo many within higher education believe that their case for extra resources is self-evident. That is not so: there are many competing demands for the limited expenditures for which tax and ratepayers can reasonably be asked to provide’, was forced to abandon plans to introduce tuition fees. Blair’s government introduced fees, but it was not until Cameron and Clegg’s coalition government that the fees would reach the full average cost of their education. In the meantime, student grants were replaced by loans. We we warned.

The Comprehensive Spending Review slashed the higher education budget from £7.1bn to £4.2bn, a saving to be implemented in full by 2014. What is noteworthy about this second neoliberal attack on the public funding of education is that this time the attack is asymmetrical. Funding for arts and humanities is affected a great deal more than science, technology, engineering and maths degrees. The arts and humanities have been identified by the UK government as the lowest economic form of higher education (awarded 0% teaching subsidy following the Browne report). ‘By implication’, Polly Toynbee says, ‘arts are a pastime for idle moments, whose unproductive students take useless degrees.’

The hike in tuition fees for students in Higher Education to cover the cost of their education in full is not just a prudent act by a government trying to reduce the national debt. The public face of the right wing policy is the transformation of students into paying customers with effective consumer ‘demands’. If you believe in market forces or even acknowledge that Conservative politicians do, then this is a reasonable measure. But, the neoliberal campaign goes further than this: it is a deliberate measure for converting tax revenue (it is the government that stumps up the cash for student loans) into profits for the private sector, primarily the banks.

Cuts to the arts, humanities and education represent key principles and long-term plans for Conservatives in general and neoliberals in particular. However, while these cuts are the latest example of the neoliberal backlash against the welfare state that began in the 1970s to privatise profits, and socialise risks, the general principkes of neoliberalism only provide an indistinct background to the specific attack on the arts and humanities. The systematic attack on the public subsidy of art, the humanities and education has been meticulously planned in every detail over the preceding forty years by neoliberal economists. It must be stressed, however, that these plans were not produced merely by applying the general theory of neoliberalism to the field of art. The case for subjecting culture to market forces had to be constructed by neoclassical economists. This was achieved through the new discipline of Cultural Economics.

In 1994 David Throsby, one of the leading practitioners and organizers of cultural economics as a field, wrote, ‘it is only relatively recently that serious work has begun to be undertaken in the area that has come to be known as “cultural economics”, or more particularly the economics of the arts’. Throsby says, ‘if contemporary cultural economics has a point of origin, it would lie in the pages of a book by William J. Baumol and William Bowen’. Baumol and Bowen’s book, ‘Performing Arts: The Economic Dilemma’, was the first book-length economic study of art. More importantly, though, this study was part of the campaign for the setting up of the American version if the Arts Council, the National Endowment for the Arts. Cultural Economics is not brought into the world by the perceptive work of a handful of individual economists breaking new ground in the mid-60s. It is not merely a coincidence that 1966 is the year that the NEA was established. In fact, the political forces that pushed through the formation of the NEA were also behind Baumol and Bowen’s book. Baumol, who taught both economics and sculpture at Princeton, was approached by the Twentieth Century Fund, led by August Hecksher and John D. Rockefeller III. Baumol and Bowen’s study of the ‘cost disease’ of the performing arts provided precisely the kind of argument that Rockefeller’s campaign for public funding for the arts needed.

Economists took a much stronger interest in art and culture after the introduction of state subsidies to the arts had spread to the USA in 1966. Cultural economics was born as a result of the trauma of public funding for the arts. By the end of the 1970s a fully fledged field of cultural economics had its own annual international conference, its own journal, an Association and a separate classification in the bibliography of the Journal of Economic Literature. Within a decade the agenda of the new field had turned 180 degrees. One of the earliest respondents to Baumol and Bowen’s book was Alan Peacock. He was, like all the other economists who pioneered the economic analysis of art, personally involved in the arts. He was the conductor of the LSE Orchestra, a composer, musician and Chairman of the Scottish Arts Council between 1986 and 1992. Ruth Towse, the chief chronicler of cultural economics and a disciple of Peacock, says what separated Peacock from the two Williams, ‘was essentially the willingness to accept a role for government in the arts: Baumol, tending more to views somewhat left of centre, was more ready to embrace state involvement than Peacock, the classical liberal’. Peacock had a neoliberal aversion to state subsidy.

Despite his avowed opposition to public funding for the arts, Peacock was hired by the Arts Council of Great Britain in the early 1980s to write a report. It was clear that the commission ‘sought and expected detailed confirmation’ of the cost disease, but Peacock disappointed them. His report at the time was too neoliberal for a pre-Thatcherite arts body. Peacock did not disprove the thesis or show it to be false, but he concluded that the ‘cost disease’ was not pronounced, and that there were demand-side measures that could alleviate it, thus, he argued that public subsidy was not supported by it. He described his own report as ‘a landmark in the discussions of public policy towards music’ (Peacock, 1993, p. 71) and it paved the way for the Thatcherite and Coalition decimation of public funding for the arts.

George Stigler and Gary Becker in their famous essay, ‘De Gustibus Non Est Disputandum’ and Becker’s theory of ‘human capital’ more generally, changed the agenda for the public subsidy of the arts. Economists, policy makers and politicians of all stripes became convinced that the enjoyment of art was an activity that individuals engaged in as an investment in their own capacity as employees. Subsidising artists, art venues, museums and so on, therefore appear for the first time as an interference in the labour market. If art’s public benefits from the experience of art and can command higher wages because of their cultivation and sophistication, then, the argument goes, they should pay for this. William Grampp, in ‘Pricing the Priceless’, took an uncompromisingly pro-market position, suggesting that museums need to charge visitors prices that can be supported by the market to meet their costs, lamenting that museums fail to capitalise on the growing value of their collections and ought to sell works to help fund themselves. Grampp contends that there is no economic rationale behind arts subsidies in any form and calls for their full and total abolition. Clare MacAndrew says, ‘the reality is that art is produced, bought, and sold by individuals and institutions working within an economic framework inescapable from material and market constraints’. Tyler Cowen stands on the summit of this neoliberal assault on the dominance of welfare economics in the special case of art, arguing in his book ‘In Praise of Commercial Culture’ that the market is the best possible system for the production of great art.

Recent campaigns against the cuts and concomitant changes in the economics of art’s public sector appear, unfortunately, to have failed to recognise the fact that the agenda has changed. ‘Save the Arts’, which campaigned in the run up to the cuts made the issue visible but was based, ultimately, on an explicit commitment to the value of art and an implicit assumption that public funding for the arts is self-evident to anyone who values art. Bob and Roberta Smith’s letter to Michael Gove, and his subsequent campaign for the public funding of art, is a very worthwhile and important issue, but it is bound to appear naive to neoliberal economists and th policy makers that they advise. Everything is made, the letter says, and creativity is rebellion. Art should be at the centre of the national curriculum, says the artist, not dropped from it. Michael Rosen’s open letter to Gove is based on the same contrast between economics and humanist values, protesting against the corruption of secondary education by the interests of business, industry and finance. State education ought to be about knowledge, self-improvement, critical thinking and the needs of the fully rounded individual, he argues, whereas the Coalition government is steering a course by which pupils will learn only what employers require of them. In Ireland the National Campaign for the Arts is based on the argument that the arts are vital and vibrant.

The National Society in Art and Design Education believes progress will be made by voters requesting ministers to set up an All-Party Parliamentary Group for Art, Craft and Design Education. The Precarious Workers Brigade remind arts workers of their rights in confronting bosses and campaign for equal pay, free education, democratic institutions and shared ownership of space, ideas, and resources. Their practical assistance incorporates advice for interns and a resource pack for educators who want to resist the tendency for education to become mere ‘training for exploitation’. The PWB does not argue for state subsidy as a solution to increasing threats to art’s survival, but it persistently draws on the legal protections afforded by the state for art workers as economic agents. The state, therefore, is presented as some sort of solution to the confrontation between employees and employers. Since the rights to which they refer have been won by generations of campaigning workers and their representatives, these are valid tactics. In fact, in terms of grassroots politics, this is heroic and inventive work. Nevertheless, for a campaign based on the contemporary relationship between art, education and the economy, it appears not to address the issues that are central to the current consensus in cultural economics and cultural policy.

In the era of welfare economics, when Richard Musgrave developed the idea of ‘merit goods’, it was possible to argue that art, health and education ought to be funded by the public purse because access to them ought to be free to all. Many of the people who care about education, culture and the NHS would subscribe to something like this view, myself included, but a new argument must be made for it or else the case will appear to be nothing but an outdated and economically illiterate romanticism. Simply re-asserting the case for Keynesian state subsidies will get nowhere against a new consensus that became dominant by discrediting welfare economics. Keynesianism is not the cure for capitalism but under current conditions it is not even a viable alternative version of capitalism. Spouting Keynesian rhetoric in an era in which neoliberalism is dominant is Quixotic. Neoliberalism is not merely a powerful ideology, it holds hegemony over the science of economics and therefore has the ear of policy makers and politicians. It appears to speak the truth. Heterodox economists like Joseph Stiglitz may prove that mainstream economics does not all speak in one voice, but these rare individuals are not simply restating old comfortable economic platitudes. We need to take on neoliberalism’s assumptions, doctrines and principles.

Neoliberalism has an overwhelming desire to cut public funding for art, education, health and unemployment benefits, among other things, not just because it is philistine, elitist, uncaring and spiteful, but because it believes that free markets allocate resources more effectively than state monopolies, that the consumer ought to be sovereign not the political leader or bureaucrat, and that market forces are more democratic than political democracy. Mainstream economists distinguish the soverereign consumer not from other ordinary political individuals, sovereign citizens, but from political figures such as leaders, rulers, tyrants and officials. So, instead of pitching the sovereign consumer against its political equivalent, the sovereign citizen, 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 to market forces in arriving at collective decisions. This ought to be the basis of a critique of the neoliberal dismissal of public subsidy to art, education, health and so on. 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. We need to state the case for democracy over economics.

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