Funding the Fine Arts:
An International Political Economic Assessment
Harry Hillman Chartrand ©
Nordic Theatre Studies,Vol. 14, 2002, Association of Nordic Theatre Scholars
* Due to delays in publication the title has been changed from:
National Superstructures for Publicly Funding the Fine Arts.
Additional editing and some updating has also been conducted.
In 1986, while serving as Research Director for the Canada Council for the Arts, I prepared, together with my Research Officer Ms. Claire McCaughey, a research monograph entitled: The Arm's Length Principle & The Arts: An International Perspective - Past, Present & Future. (1) In 1989, the American Council for the Arts published the monograph in a widely read compendium entitled: Who's to Pay? for the Arts: The International Search for Models of Support edited by M.C. Cummings Jr. & J. Mark Davidson Schuster. (2)
In the monograph I identified alternative modes of public support of the fine arts in North American and Europe – both western and eastern Europe. I also identified trends current at that time that seemed, at least to me, to point to the future of public support. In this article I first set forth public funding of the fine arts within the broader context of government fiscal policy. I then consider the objectives of public support and summarize the four basic roles government may play. Finally, I sum up trends identified in 1989 and then present a new set of trends for 2001.
Public funding is a political decision. The overall strategy of a government involves reification (making concrete that which is abstract) of the ‘platform’ of the governing political party or coalition subject to political ‘exigencies’. In tactical terms, government confronts a constituency (geographic or non-geographic) that exercises sufficient political power to elicit an increase, decrease or constant payment of public monies, year over year, collected from a targeted set of, and/or, all taxpayers. In logistical terms, the government chooses which institutional mechanism - ministry, agency, foundation or nonprofit/nonpolitical institution – should distribute public funds. The annual budgetary cycle by which government sets its goals and decides:
(a) who or what will be taxed (and by how much); and,
(b) who or what will benefit (and by how much) from public revenues;
constitutes what in macroeconomics is called ‘fiscal policy’.
One exigency that influences fiscal policy is the economic size and importance of a given industrial sector. If large amounts of national income and/or a large number of jobs are involved there is, all things being equal, a greater likelihood that government will choose to support that sector. In both respects, the fine arts are tiny. Not many jobs, relatively speaking, are involved and little national income.
From a business economics perspective, the fine arts are one of the last sectors in which a government would want to ‘invest’ public money. Confirmed in studies conducted around the world, the fine arts (both live and recorded) suffer an inherent cost disease. In the live arts it takes the same time to rehearse and perform a Mozart concerto today as in his own time. In other industries, new technology can substitute, complement or motivate workers increasing the productivity of labor and allowing wages (per worker) to rise without increasing the price of a good or service. (3) In the live arts, substituting technology for artistic labor is usually not possible and usually not desirable.
In effect, the live arts are a 'non-productive' industry in which an income gap opens up between what can be reasonably charged at the box office and the rising costs of production. (4) One factor filling this gap has been artistic labor that traditionally has worked for less than other professions with similar years of 'tertiary' education and training. Low wages have been offset, somewhat, by what economists call 'psychic income', i.e. love of the job.
Non-artistic personnel, however, including administrators, backstage artisans, office workers, technicians and other support personnel must be paid competitive wages. Eventually ticket prices increase unless the gap can otherwise be filled. In the past, princes, popes and prelates filled the gap, so-called 'patrons of the arts' who today have become government and the philanthropic sector.
Put in the darkest terms, to fiscal conservatives the fine arts are a ‘black hole’ into which public monies endlessly flow simply to stabilize an inherently unproductive industry – unproductive in terms of traditional economic growth and development. It needs to be pointed out, however, that public funding of research and development (R&D) in the science industries is accepted as an ‘investment’ by most governments even though there are no ‘empirical’ studies proving that publicly and privately funded R&D actually lead to economic growth.
There are, however, a number of indirect economic arguments justifying public funding of the fine arts. In essence, these deal with:
the contribution of the fine arts to other sectors of the arts industry, e.g., the amateur, applied, entertainment or heritage arts; and, in turn,
the contribution of Art, as an entire and distinct industrial sector of a knowledge-based economy, to the competitiveness of nations. (5)
The ‘political’ constituency for the fine arts consists of the audience for and producers of the fine arts. On the demand-side the audience tends, on average, to be ‘elite’ and ‘effeminate’, that is, it is highly educated, financially well off and slightly more female. On the supply-side, producers tend, on average, to be ‘elite’, highly educated, financially not well off and slightly more male.
On the demand-side, a financially affluent, numerically small and predominantly female audience presents political problems for publicly funding the fine arts. Is it welfare for the rich? Is it politically productive to subsidize upper-class women rather than working-class women, particularly in predominantly ‘jock’ or male sports-oriented cultures?
On the supply-side, the fact that fine arts are led by an ‘avant-garde’ that is ruthlessly critical of the ‘Powers-that-Be’ (6) also presents political problems. Since the middle of the 19th century and birth of the ‘arts-for-art’s sake’ movement, social criticism has been an established part of the creative arts community. (7) Such ‘opposition’, including ‘egalitarian realism’ in the visual arts, is not viewed kindly by the typical government of the day. (8) Why should government fund its critics?
In welfare economics, the economic sub-discipline concerned with the balance between equity and efficiency, fine art can be considered a ‘merit good’. A merit good is a good or service whose consumption or production is encouraged on the basis of non-market value judgments. It is the opposite of a demerit good or service, e.g. smoking or, at the extreme, criminal activity. As with ‘public goods’, of which merit goods are a subset, the private market cannot profitably provide the quantity or quality that a society considers adequate.
The definition of what constitutes a merit good, at any point in time, is dependent on social and historical circumstances and is often controversial. Today, for example, education is often described as a merit good because it not only improves an individual’s career prospects but also makes a person a better citizen.
To individual patrons and many within the corporate sector and government, the fine arts are considered a merit good. The merit audience is as old as the fine arts themselves. The aristocratic or ecclesiastic patron of past centuries funded the fine arts. Today, through grants and donations, public and private sector patrons support the fine arts to insure a larger supply is available and accessible to the general public than what the market is able to provide. This tradition of "multiple funding sources", i.e., box office revenue combined with public and private donations also serves as a guarantee of the independence of the fine arts.
For whatever reasons – merit or utilitarian – government in publicly funding the fine arts targets one or more of three objectives:
· to promote the process of creativity and/or excellence (as defined by the arts community itself);
· to foster production of works of a specific style, theme or purpose, e.g. socialist realism or ‘commercial’ success; or,
· to support specific producers, e.g., a budgetary ‘line item’ appropriation for ‘flagship’ arts institutions.
To achieve its objectives, government may erect one or more of four alternative national superstructures acting as:
· the Facilitator;
· the Patron;
· the Architect; and/or,
· the Engineer.
The Facilitator State funds the fine arts through ‘tax expenditures’, i.e. taxes foregone or forgiven. Government can choose not to tax certain types of income and/or expenditures made by citizens because related activities are considered merit goods. A charitable donation made by an individual or an organization is an expenditure example. In this case government mandates that a donation to a ‘recognized’ charity should, in whole or in part, be subtracted from income tax due to the government. The exemption from income taxation of copyright income by resident artists in the Republic of Ireland (Eire) is an income example relevant to the arts.
The Facilitator supports diversity rather than specific types or styles of art. Specific standards are not supported because the Facilitator relies on the preferences and tastes of corporate, foundation and individual donors. The policy dynamic of the Facilitator State is random in that public funding reflects the changing tastes of private donors. In the Facilitator State the economic status of the artist and fine arts enterprise depends on a combination of box office appeal and the changing tastes and financial health of private patrons.
The strength of the Facilitator lies in the diversity of funding sources. Individuals, corporations and foundations choose which art, artists and arts organizations to support. The Facilitator also has weaknesses. First, standards of excellence are not supported, and the State has no ability to target activities of national importance. Second, the valuation of private donations in kind, for example, a painting donated to a museum or art gallery, can be problematic. Third, the Facilitator cannot necessarily restrict benefits to the domestic arts community, e.g. reconstruction of the Versailles palace was funded in large part through tax-exempt contributions made by American taxpayers to the Versailles Foundation in New York City. (9) Fourth, it is very difficult to calculate the cost of tax credits and expenditures to government. (10)
In the United States, government plays the role of Facilitator, promoting the fine arts through tax expenditures channeled by donors. The Facilitator role has its origins in three American traditions: the separation of church and state, the competitive market economy, and private philanthropy, which before and after imposition of income tax has represented the single most important source of support for the fine arts.
The Patron State funds the fine arts through arm's length arts councils. The government determines how much total support to provide, but not which organizations or artists should receive that support. A council is usually composed of a board of trustees appointed by the government. Having been appointed, however, trustees fulfill their grant-giving duties independent of the day-to-day interests of the party in power, much like the trustee of a blind trust. Granting decisions are generally made on the advice of professional artists working through a system of peer evaluation.
The arts council supports creativity with the objective of promoting standards of professional artistic excellence. The policy dynamic of the Patron State is evolutionary, responding to changing forms and styles of art as expressed by the artistic community. The economic status of the artist and the artistic enterprise depends on a combination of box office appeal, the taste and preferences of private donors, and grants received from arm's length arts councils.
The very strength of the arm's length arts council is often perceived, however, as its principal weakness. Fostering artistic excellence is often seen as promoting elitism, with respect to both type of artwork produced and audience served. Support of artistic excellence may result in art that is not accessible to, or appreciated by, the general public, or by its democratically elected representatives. In most Patron States there are recurring controversies in which politicians, reflecting popular opinion, express anger and outrage at support for activities that are, for example, perceived as politically unacceptable, pornographic or appealing only to a wealthy minority.
With an arm's length council, however, politicians can claim neither credit for artistic success nor responsibility for failure. Great Britain is the prime example of the Patron State. Government adopted the role of Patron during World War II by creating the Committee for Education, Music and Art for raising morale during the Blitz. (11) After the war it created the Arts Council of Great Britain and its sister agencies in Scotland, Wales and Northern Ireland. The role of Patron evolved out of traditional arts patronage by the English aristocracy. The government continues the Patron role, even though various task forces and committees of Parliament have recommended incentives to enhance charitable giving. (12)
The Architect State funds the fine arts through a Ministry or Department of Culture. Bureaucrats, in effect, make grants. The Architect tends to support the fine arts as part of its general social welfare objectives based on an historic tradition in western European culture since the fall of Rome – practised first by the Church in praise of God then in praise of the Monarch and/or Aristocracy and, today, in praise of the citizen or the culture of the specific nation-state. Since the arrival of ‘democratic’ government, the Architect role has evolved from ministries of church affairs and culture to ministries of education and culture to a separate and distinct ministry of culture.
The Architect tends to support art that meets ‘established’ rather than ‘professional’ standards of artistic excellence. The policy dynamic of the Architect is revolutionary. Inertia can result in the entrenchment of established standards developed at a particular point in time leading to stagnation of contemporary creativity, as has been observed with respect to France. (13)
The economic status of artists in the Architect State is determined by membership in official artists' unions. Once an artist gains membership in such a union, he or she becomes, in effect, a civil servant and enjoys some form of income security. The economic status of artistic enterprise is determined almost exclusively by direct government funding. The box office and private donations play a small role in determining their financial status.
The strength of the Architect role is the fact that artists and arts organizations are relieved from depending on popular success at the box office, resulting in what has been called an "affluence gap". (14) Moreover the status of the artist is explicitly recognized in social assistance policies. The weakness of the Architect is that long-term, guaranteed direct funding can result in creative stagnation.
For example, since before World War II the government of the Netherlands has played the role of Architect. The government funded numerous literary, media, performing and visual arts institutions as regular budget items. Furthermore, the government provided a guaranteed annual income to visual artists. (15) Effectively, the government set minimum salary and working conditions. The "Tomato Revolution" of the 1970s, in which the audience protested the content of Dutch theater, demonstrates the revolutionary policy dynamic that can result from the Architect role.
[D]issatisfaction expressed in poor attendance, position papers, meetings and ultimately tomatoes, smoke bombs and invectives, gave government a clear indication that there was a serious gulf between the public's perception of need and what tax money was purchasing . . . . Now in a revival of one of the world's fundamental rites, the death/ castration of the parent cleared the way for the child's assumption of power and prestige. Mythic relationships prevail even in government support system! (16)
The Engineer State owns all means of artistic production. The Engineer officially supports only art meeting political standards of excellence. Funding decisions are made by political commissars intent on furthering political education or re-education, not artistic excellence. The policy dynamic of the Engineer State is revisionary with funding decisions constantly revised to reflect an ever-changing party line.
The economic status of the artist is determined by membership in official Party-approved artists' unions. Anyone who does not belong to such a union is, by definition, not an artist. All artistic enterprises are state-owned and operated; that is, all artistic means of production belong to the State.
The Engineer role is attractive to a "totalist" regime because it focuses the creative energies of artists toward attainment of official political goals. There are several weaknesses associated with the Engineer role. First, Art is subservient to political objectives. Second, the creative energy of artists cannot be completely channeled. Repressed artistic ambition results in an "underground" subversive of either party aesthetics or capitalist values, i.e. a "counterculture". (17) Third, counter-intuitive results can occur. For example in the old Soviet Union, it was works of the Czarist period that received critical acclaim in the West, not the works of socialist realism.
The exemplar of the Engineer role was the old Soviet Union. Between the Communist Revolution in 1918 and 1932 the Soviet government played the role of Architect. The "People's Commissar of Enlightenment" viewed Art as an integral part of human development. While the workers were considered owners of the "artistic means of production" they were not considered ready to operate them. First they needed to be educated through access to the capitalist art of the past after which true proletarian art would emerge. Censorship and control over content were relatively rare. (18)
In 1932, with the second Five Year Plan implemented by Joseph Stalin, the costs of industrialization and the need to develop a new socialist society combined to change the role of the State from Architect to Engineer:
This second page in socialist cultural policy saw the rise of the doctrine known as Socialist Realism . . . . [that] downplays the notion that the "means of production" in the arts belongs to the masses, substituting the idea that it is the final product, the artwork itself, that is the property of the proletariat. Under this scheme, the social responsibility of the artist lies in "satisfying" the "owners," that is producing works that can be immediately accepted by the masses. (19)
Henceforth all art produced in the Soviet Union had to be socialist realist, that is, realist in form and socialist in content. Artistic activity was organized into "creative unions" to monitor new works and ensure conformity with the aesthetic principles of the Communist Party. Artists who produced work that did not conform were expelled and no longer recognized as artists. A form of author’s rights derived from the Civil Code tradition was operative but granted only a one-time payment to a creator who did, however, retain ongoing moral rights. There were no subsequent royalty payments because the work belonged to the people, i.e. it entered the public domain.
In summary and expressed as ‘pure types’, Western Europe, the British Commonwealth, the United States and the former Soviet Union and its satellites evolved very different superstructures for publicly funding the fine arts in the post-World War II period. In the United States, the tradition of separation of church and state, free market competition and private philanthropy led the USA to adopt the role of Facilitator. In Britain and Commonwealth countries, government distanced the arts from the State, preferring to apply the arm's length principle through autonomous arts councils acting as the Patron. The European tradition is Architect reflecting the role played by absolute monarchs and the medieval Church. An exception to the Architect role in Western Europe was the former West Germany where the constitution forbade federal involvement in cultural affairs due to the Nazi experience. After unification, however, a national Ministry of Culture was created, allbeit with less power and influence than in other western European countries such as France. A tradition of Czarist "autocracy" together with Communist ideology led the Soviet Union to adopt the role of Engineer – owner of all artistic means of production.
In 1989, I identified three trends in publicly funding the fine arts:
· lotteries; and,
· commercial realism.
In summary, the Facilitator USA appended a Patron-style structure, the National Endowment for the Arts in 1965 and flowing directly from creation of the NEA, a nationwide system of State Arts Councils soon arose. This system of ‘public’ arts councils eventually spawned a parallel set of nonprofit Arts Alliances in each state dedicated to ‘lobbying’ government on behave of the fine arts because the arts councils themselves are legally restricted from lobbying government.
Since the early 1980’s and the Reagan Administration, the NEA has lived under continuing and constant threat that Congress will cut off its funding. Religious, right and conservative forces view the NEA as a center of ‘liberalism’ and, in effect, call for the separation of Art and the State.
Patron states of the British Commonwealth promoted more Facilitator-like tax policies and adopted an increasingly Architect-style as in:
· Australia where the Sydney Opera received a budgetary line item separate from the Australia Council;
· Britain where the Thatcher regime was in the process of ‘regionalizing’ the Arts Council of Great Britain in response to the perceived opposition of the fine arts community to the Conservative agenda; and,
· Canada where the federal government pressured (unsuccessfully) the Canada Council to refuse grants to artists who supported Quebec separatism and where a lottery agreement with the Canadian provinces provided public monies allowing the federal government to make direct grants to the fine arts community independent of the Canada Council.
Architect states were adopting Facilitator-style tax policies to encourage private donations and, in some cases, constructing Patron-style structures to provide grants at arm’s length from the government. In Engineer states behind the ‘Iron Curtain’ and, to a lesser extent, the ‘Bamboo Curtain’, it was Western popular cultural products - Hollywood movies and rock music - not the works of socialist realism that were demanded by the masses. When a Communist Party finally accepted that it could not stop the flow of ‘decadent Western art’ it would introduce a so-called ‘garbage tax’ levied on attendees of ‘pop’ events, the proceeds of which were targeted to publicly fund the ‘high’ arts including socialist realism and classical pre-revolutionary fine arts in an effort to bring culture to the proletariat.
Public funding of the fine arts was inhibited by, what later in the 1990s became known as the ‘deficit and debt’ dilemma of governments around the world. At the same time in Canada and the USA (later in the UK) a new source of public revenue was emerging - legalized gambling especially ticket lotteries. In effect, these new funds were used to finance an Architect role for government.
In Canada, lottery funds permitted the Government of Canada to initiate an ongoing program of operating and project grants in support of the fine arts. Funding was funneled through a department of government, not the arm’s length Canada Council. At the provincial level, lottery funds were used to create new granting councils but ones focused on ‘community arts’.
In the USA, it was at the State level that the impact of lottery revenues had an effect on the fine arts. The State of Massachusetts is a case in point. At first a state lottery was created and dedicated to fund the ‘arts’. However, the monies were used to create a new grant-giving arts council operating independently of the existing State Arts Council created after the establishment of the federal NEA. Funding from the new council went to support community-based amateur (or semi-professional) arts activities. Revenues from the ‘arts lottery’ were so large that eventually funds were ‘capped’ and the excess diverted to support other activities far removed from Art – roads, sewers, et al. Eventually the two councils were merged and mandated to support both professional and geographic community-based amateur arts activities.
The Engineer State of the old Second World owned all means of artistic production and consciously constructed the fine arts industry according to its vision. Each nation state, however, irrespective of ideology, owns and regulates (subject to international treaty) the electromagnetic spectrum and related media of communications including broadcast licensing within its borders. Each consciously plans and decides how this resource will be allocated to further the national purpose. Second, prior to creation of the World Trade Organization in 1994, the General Agreement on Tariffs and Trade (GATT) and various other treaties and covenants, e.g. on pornography, recognized that a country could control the flow of cultural materials in and out of its borders.
In Islamic countries, the GATT ‘morals clause’ was used to stop the flow of much Western media with its alien portrayal of women. In France and most of Western Europe, ‘cultural filtering’ took the form of quotas on movie screens before the Second World War and television after the war to assure ‘national content’ was available to citizens. Put another way, filtering was intended to control the flood of American cultural content that was, and is, successful at the box office and on radio and television in all countries.
The success of American product reflects two facts. First, the American domestic market is large enough to usually recoup the cost of high production standards associated with Hollywood film, American TV programs and recorded music. Second, the product is then sold in foreign markets, in effect, at a fee per viewer rather than the actual production cost of the work itself, e.g. a Hollywood film. This pricing mechanism makes it difficult for local producers to compete. Other than the United States, only one other country regularly recovers production costs in its domestic market - India. Producers in smaller countries cannot regularly recover high production costs for media art entertainment programming.
Concern about ‘foreign’, that is American content, was not just cultural. The second largest net export of the United States, after defense products, is reportedly media arts programming – film, radio, sound recordings and television programming. Some countries were, by 1989, beginning to believe that a commercially viable media arts entertainment industry was required for financial as well as cultural reasons.
As in the case of copyright and intellectual property in general, through legislation and regulation the State can create a marketplace and associated profit-making opportunities. The emergence of ‘commercial realism’ has significant implications for publicly funding the fine arts. As a political constituency the media entertainment industry is much better organized and funded than the fine arts. It also tends to be less controversial because ‘national’ rather than ‘local’ standards apply to exhibition or performance. It also promises to deliver profits and jobs. The result: public funding increasingly was increasingly being made in 1989 to support ‘commercial realism’ rather than the ‘high culture’ values embodied in the fine arts.
In 2001, I identify four new trends in direct public funding of the fine arts:
· Cultural Sovereignty & Supra-National Cultural Affairs
· Equifinality, Egalitarianism & Re-Definition
· Market Realism, WIPO, WTO & WWW
· Subsidiarity, The Second Wave & The Little Sisters
With the fall of the Berlin Wall and the end of the Soviet Union, a new post-modern era began. Almost immediately, the search started for the pattern of this new, unexpected era. One strand in the emerging fabric is globalization of the economy. This is evidenced by international trade statistics. It is also demonstrated by the impending entry of the People’s Republic of China into the World Trade Organization, the embodiment of the triumph of markets over Marx.
On the other hand, some argue that global conflict based on ideology has been replaced by the clash of cultures. (20) It will be where the "tectonic plates" of different cultures meet that conflicts will erupt. The recent tragedy in the Balkans between Catholic Croats, Orthodox Serbs and Moslem Bosnians who share a common language (Serbo-Croatian) and a common ethnic background (Southern Slavs) demonstrates that it takes only one significant cultural difference (in this case, religion) to lead to genocide, ethnic cleansing and cultural vandalism.
Yet more subtle and simmering differences and disputes, long suppressed by allies and adversaries in a coordinated bi-polar global struggle are re-surfacing after a fifty-year quiescence and will continue to do so with increasing frequency. Such differences can be summed up as the effort to establish, maintain and/or enhance ‘cultural sovereignty’. By 1989 the term was current in Canada having been introduced into the public policy vocabulary during the 1970s at the height of the ongoing struggle for Quebec independence. Since that time, and with the collapse of the ‘Communist threat’, it has reached the global diplomatic stage.
In summary, cultural sovereignty involves the struggle to be heard at home and abroad above the booming voice of the American entertainment industry that has succeeded in penetrating the cultural marketplace of every nation on earth. The one remaining superpower is thus also a global cultural colossus spanning East, West, North and South. Fuelled in part by the peculiar pricing methods used in the entertainment arts, i.e. a rate per viewer rather than the production cost of the work itself, the high production standards embodied in American entertainment arts programming have set the standards demanded by audiences around the world. As audience dollars flow to ‘American’ programs they flow out of the country leaving the local arts industry poorer – financially and culturally in that local production is not encouraged.
The battle for cultural sovereignty is being fought on two fronts. The first is the economic front where Canada, France and Sweden, among others, are pressing for the World Trade Organization to exempt ‘cultural goods and services’ from free trade restrictions. These countries have created a web of international film and television co-production agreements intended to generate the high production standards demanded by audiences at home, abroad and especially in the American marketplace itself. At home, these countries, together with the European Union, are actively engaged in manipulation of the regulatory environment to ‘engineer’ a financially viable entertainment arts industry through control of the electromagnetic spectrum and other communications media. The announcement (December 19, 2000) by the European Investment Bank that it would make $445 million US available to help European media companies compete against Hollywood and Silicon Valley is an example. In these efforts, the Canadian experience has served to lead the way.
The second front of the cultural sovereignty campaign is international institution building as part of the emerging field of what I call ‘supra-national cultural policy’. Three strands are currently visible.
First, flowing out of initiatives of UNESCO, of which the United States is not a member, the Government of Canada hosted an International Meeting on Cultural Policy, June 29-30, 1998 in Ottawa. Twenty countries participated The United States, however, was restricted to sending an observer because the meeting involved national ministers of culture. The United States has no such minister. The meeting resulted in the formation of a new international institution: the International Alliance of Culture Ministers (IACM).
Second, at the time of the initial meeting of ministers of culture (June 1998) a parallel non-governmental meeting of cultural representatives from 30 countries was hosted by the Canadian Conference of the Arts in Ottawa: At Home in the World: An International Forum on Culture and Cooperation. The conference concluded that each nation must have the ability, unfettered by international trade agreements, to take measures and adopt policies that maintain and enhance its culture. The conference resulted in the formation of the World Coalition for Cultural Diversity that in November of 1999 was renamed the International Network for Cultural Diversity (INCD). As of today more than 160 organizations from almost 30 countries on every continent have signed the declaration of principles of the Network recognizing the need to promote cultural diversity and maintain the ability of sovereign nations to support their cultures in the face of globalization.
On March 8 2002, INCD released its first draft of a Convention on Cultural Diversity to its members in 52 countries. Prepared by Canadian trade lawyer Steven Shrybman, the Convention translates the principles and concepts endorsed at meetings held in Santorini, Greece in 2000 and Lucerne, Switzerland in 2001 into the terms of a binding international treaty on cultural diversity. In addition to a preamble, it sets out 20 substantive provisions dealing with the key elements of such a treaty, including rules concerning trade in cultural goods, and investment in providing cultural services. The Convention stresses the rights and responsibilities of governments to implement measures designed to foster diversity and creativity while securing the rights of all creators and citizens to freedom of expression and access to the full range of cultural activities.
Third, the Canada Council for the Arts in Ottawa hosted the World Summit on the Arts and Culture in December 2000. Some 300 delegates representing arts and culture funding organizations from 60 countries, which included the US National Endowment for the Arts, agreed to form an international federation to advance art and artists around the globe. In addition to the creation of a new network, major subjects discussed at the conference included:
· the growth and diversification of the arts council model and the means of strengthening arts councils as stable, effective democratic agencies for support of the arts;
· cultural diversity as a core value in modern societies, and the means of supporting and fostering indigenous cultures and cultural diversity;
· making connections between the arts and new audiences, especially young people;
· the role of the artist and support for creativity in today's societies;
· the challenges to copyright from new technological developments; and
· encouragement of private sector support for the arts.
The nonprofit organization is open to agencies that support the development of arts and culture, either through funding or advocacy.
Taken together developments on the global economic and diplomatic fronts have placed Art near center stage of international affairs. To the degree that even the United States is involved at the arts council and nonprofit level one can say that a global coalition for the fine arts now exists. How effective this coalition will be in furthering the domestic position of the fine arts in individual countries remains problematic.
While cultural sovereignty and development of foreign cultural affairs has raised the profile of Art and Culture on the international stage other forces have altered the relationship of the fine arts and government.
There is a trend in public funding of the fine arts towards equifinality that can be defined either as:
· a condition in which different initial conditions lead to similar effects, or,
· a behavior that is oriented towards reaching certain final conditions or states regardless of from where it started.
Since the end of World War II the global community has been struggling with the lessons of total war fought by the Nazi regime. In Nazi Germany, all modern means of artistic expression – from dance, music, theatre and painting to radio and television to motion pictures - were harnessed in the service of a cause so evil that color film of the Nuremberg Rallies has never been released to the public by the American Government, which holds negatives and positives in protective custody. What in scratchy black and white is ancient history is, to the modern eye, a symbol of the power of Art to serve evil in living color. Art is not summum bonum, any more than physics.
Even governments in the English-speaking world that had, since Cromwell and the Puritans in the 17th century, adopted a strict hands-off Facilitator role, began to publicly fund the fine arts through arm’s length arts councils – the UK 1946, Canada 1957, New Zealand 1964, the USA 1965 and Australia 1975. In all cases the arm’s length arts council quickly became the focus of the fine arts constituency of each country.
Meanwhile governments of Western Europe (and their former colonial possessions) continued to play the role of Architect extending a tradition of direct State support initiated by the absolute monarchs of the 18th century Enlightenment. Behind the Iron and Bamboo Curtains the State played the Engineer role through ownership of all means of artistic production in the name of the proletarian masses.
The end of the Cold War and the fall of Communism, together with the trend towards a convergence of roles, have led towards equifinality in most countries. Most Patron states have created de facto ministries of culture, e.g. Heritage Canada. Most have adjusted their tax systems to encourage corporate and private giving to charitable causes including the fine arts, and thereby adopted the Facilitator role. Most Architect states have similarly adjusted their tax systems to play a Facilitator role and many have created actual or de facto arm’s length arts councils to serve as the focus for the fine arts constituency and thereby have adopted the Patron role. And with respect to the media entertainment arts, Facilitator, Patron and Architect states have increasingly adopted the Engineer role striving to create a financially viable industry often in collaboration with foreign allies.
There is an inherent tension, particularly in the West, between what can be called elite and egalitarian values (21). Art, specifically fine art, is consonant with Carl Jung’s observation: Nature is aristocratic and esoteric. Society, however, is increasingly egalitarian. This is true not only in social and economic terms but also in ‘political correctness’ and the ‘dumbing down’ of cultural life in many Western nation states. Furthermore there is a general trend in government away from the traditional politics of elite accommodation towards the politics of polls. (22) In the process the ‘elite’ and ‘contrarian’ nature of the fine arts constituency has led to a decline in its political power and financial resources. The decline is evident across the English-speaking world. In 1990, Margaret Thatcher ‘regionalized’ the Arts Council of Great Britain thereby taming a center of opposition to her policies.
In 1992, during the presidential primary campaign in New Hampshire, American President Bush fired the chair of the National Endowment for the Arts, John Fromeyer. Congress has progressively earmarked more and more of the NEA’s appropriation to State Arts Councils thereby limiting the freedom of the Endowment to act as a national arts council. Furthermore, in response to Congressional pressure over Maplethorpe’s homoerotic photographs and Serrano’s ‘Piss Christ’, the National Endowment also introduced a ‘morals clause’ for all grants to artists and arts organizations.
In 1994, the Canada Council came within one vote in the Senate of Canada of being merged with the Social Sciences & Humanities Research Council and the International Cultural Relations Bureau of the Department of External Affairs & International Trade Canada. The Canada Council has also capitulated, despite vigorous opposition in the 1970s and ‘80s, and adopted the federal government’s ‘word mark’ (a red maple leaf with the phrase ‘Government of Canada’ written below and attached to all official Council documents).
With respect to arm’s length arts councils, the key political question was raised during an independent Congressional review of the National Endowment for the Arts in 1990 (23): Is it the National Endowment for the ‘Arts’ (as in a political constituency) or ‘Americans’ (as in for all citizens)?
Without a clear definition of the arts industry, we are left with an amorphous, ill-defined sector of society struggling for self-identity and credibility. This leaves the arts unable to effectively compete in the court of public opinion with clearly defined economic 'sectors' such as business, education, health, science and technology. Elsewhere I have defined the nonprofit ‘arts-for-art’s-sake’ or fine arts within a wider concept of such an ‘Arts Industry’ made up of the amateur, applied, entertainment, fine and heritage arts. (24) There I proposed that the arts industry includes all profit, nonprofit and public enterprise and institutions including incorporated and unincorporated enterprise as well as self-employed artists that:
(a) use one or more of the arts as a primary factor of production, e.g. advertising, fashion, industrial and product design;
(b) use one or more of the arts as a tied-good in consumption, e.g. home entertainment hardware, magazines and newspapers; and/or,
(c) produce one or more of the arts as their final output, i.e. create, produce, distribute and/or conserve goods and services in the literary, media, performing, visual and/or heritage arts.
The term 'tied-good' requires further explanation. An example is the old 'punch card' computer. The computer could not operate without such cards, which, technically, were an output of the pulp, paper and publishing industries, sequentially. Similarly, there can be no mass market for home entertainment hardware, e.g. TVs and VCRs, unless there is a market for audio-video software, and vice-versa. These are tied-goods in consumption; they are like hand and glove. One would not exclude from an examination of the automobile industry the tires on which automobiles depend. Why would one examine the arts without including the devices specifically designed to ‘media extend’ the arts? Furthermore, as noted at the beginning of this article under Fiscal Argument, one exigency that influences government willingness to support any industrial sector is the economic size and importance of that sector. Failing to include all parts of the arts industry reduces the political importance of the arts, and therefore the willingness of government to support key sub-sectors such as the fine arts.
Furthermore, it is likely that the home entertainment center is the third most expensive consumer durable purchased by the average citizen, after his or her house and car. Similarly, private collections of books, photographs, records, tapes and works in the visual arts (including black velveteen Elvis') are present in every home and represent an enormous repository of cultural and financial wealth.
Using this inclusive definition, I have estimated that the American arts industry accounts for at least 6% and at most 8.5% of the Gross National Product, i.e. all goods and services consumed in America but not necessarily produced there. It ranks at most 6th and at least 7th among the ten major sectors of the American economy recognized by the Department of Commerce including, in descending order by income size: manufacturing; services; finance; government; transportation and utilities; retail trade; wholesale trade; construction; agriculture, forestry and fishing; and, mining.
The arts industry also ranks at most 5th after medical, educational and service industries, and at least 10th after petroleum products among 77 private sector industries identified in the Input/Output Matrix for the American economy. By the same measuring rod, it also contributes at least 13% and at most 45% of the American trade deficit with the rest of the world. (25)
The triumph of the market over Marx is embodied in the World Trade Organization (WTO) created in 1994. For the first time in history the nations of the world have agreed upon the rules of international trade and have accepted the market as the appropriate mechanism. The treaty establishing the WTO is called, in diplomatic terms, a ‘single undertaking’, that is, it is a set of legal instruments constituting a single package permitting only a single signature without reservation. To join the WTO, a nation must accept all agreements in the package.
WTO continues – at present and with increasing criticism from the USA – GATT’s ‘traditional’ exemptions for cultural goods and services, e.g. the ‘morals clause’ and film and television in quotas. Thus GATT distinguishes commercial cultural goods and services from other goods and services. There are four provisions of the GATT permitting such a distinction.
First, quotas are protectionist measures, which run contrary to free circulation of goods as defined by Article XI of the 1947 GATT agreement. However, an exemption was granted with respect to cinema exhibition. Article III makes reference to the exemption, while Article IV is entirely devoted to special arrangements for fixing showing quotas in the film industry. This provision represented a compromise between the USA film industry and Europeans keen to maintain quotas established between 1919 and 1939. In 1947, to the USA, such quotas were the least harmful of possible restrictions.
Second, Article XII of GATT allows temporary restrictive measures to safeguard balance of payments. In the case of cultural goods and services, Canada and the EU are in a serious and persistent trade deficit with the United States in entertainment programming. Restrictions must, however, be preceded by advance warning to other GATT partners. A decision to invoke this exemption would necessarily be a political decision.
Third, Article XX sub (a) and (f) similarly allow for certain exceptions. In the case of sub (a), restrictions are permitted to protect public morals. To the degree that public morals form a distinct part of national culture, then to that degree foreign cultural goods threatening public morals can be restricted. The most obvious example is Islamic societies that hold fundamentally different values from the West concerning portrayal of the relationship between men and women. But continuing controversy in many Western states concerning sex and violence in books, film, video and TV programming has traditionally been used to justify restrictions on cultural goods imported from more ‘liberal’ countries.
In the case of sub (f), exceptions to trade liberalization are allowed for the protection of artistic, historic and archaeological treasures. In principle, this provision could be extended to the cultural industries to provide protection of cultural identity. Similarly, Article 36 of the Treaty of Rome, which created the European Union, exempts cultural treasurers from the general prohibition on quantitative restrictions on trade. This exemption is, however, the subject of ongoing controversy as the ‘Single Market’ matures.
Fourth, Article XXI of GATT provides specific exceptions when ‘national security’ is involved. While formally limited to atomic materials, arms trade and emergency actions, the concept of ‘national security’ is explicitly used by the USA to restrict foreign ownership of broadcasting. A former Prime Minister of Canada also publicly equated ‘cultural sovereignty’ with national security. In this regard, under the Canada/USA and the North American Free Trade Agreements, public subsidies and other support to the cultural industries existing at the time of signing, are exempt from the general principle of freer trade.
Unlike its predecessor, however, the WTO has the power through formal ‘dispute settlement mechanisms’ to enforce its rules and findings of unfair trade practices. This means that interpretation of treaty provisions is now subject to adjudication and revision unless the WTO chooses to explicitly exempt traditional ‘cultural’ protections. The WTO also, for the first time, regulates international trade in intellectual property or ‘IP’ (Trade Aspects of Intellectual Property – TRIPS) unlike the original GATT. Previously IP was subject to separate non-trade-related international IP conventions such as the 1886 Berne Copyright Convention administered by the World Intellectual Property Organization (WIPO) created out of UNESCO in 1965. WIPO recently established dispute settlement mechanisms concerning ‘domain names’ and ‘cyber squatting’ on the Internet or World-Wide Web (WWW).
At the same time that the Government of Canada has been beating the drum of cultural sovereignty it has engaged in fostering development of ‘Hollywood North’, i.e. Canada. A number of forces are at play: the low Canadian dollar; employment tax benefits; and, investment through special ‘film and television production funds’ bankrolled out of cable, satellite and specialty television and radio channel licensing fees levied by the Government of Canada. The ‘market reality’ is that the United States is a near monopsonist in consumption of commercial cultural products. Except for India, the U.S. is the only economy large enough to break-even in its domestic market selling products incorporating world-class production values, e.g. the evolving special effects embodied in The Star Wars Trilogies. Other countries simply must sell in the U.S. market to break-even on comparable products. The result is production of what are called ‘American cultural clones’, not indigenous art and culture. The U.S. objects to ‘subsidization’ of cultural products targeted at the American market and argues that WTO cultural exemptions should be set aside.
Subsidies to the commercial culture will continually be threatened by the USA. However, under GATT countervailing measures are possible only if there is proof of injury to USA producers. In this regard in 2000, the Hollywood film industry lobbied Washington about Hollywood North and the resulting job losses in California.
On the surface these developments do not seem favorable to the domestic nonprofit fine arts of any WTO member country. At bottom, however, there are some silver linings. American scrutiny of commercial subsidies should lead other WTO member states, in their pursuit of cultural sovereignty, away from support to the commercial sector and towards the nonprofit arts. As the root from which the arts industry in any country grows, the fine arts can serve to nurture financially valuable cultural properties like Abba, Armani, the Beatles, Agatha Christie and Star Wars. The fine arts provide the standards of excellence and the talent pool to increase or decrease the odds of national success.
Second, behind the scenes (the etymological meaning of the English word ‘obscene’) lurks a new nervous system encircling the planet Earth – the World Wide Web, the WWW or ‘the Web’, for short. In less than a decade, the Web has affected economics, education, entertainment, health care, information, news and the nature of work. In the current decade, almost every mechanical and electronic device will be ‘plugged’ into the Web. From automobiles, ships, trucks and trains to home air conditioning, computer, heating, lighting and security systems to microwave ovens, refrigerators, toasters, toilets and TV sets: all and many more on the drawing board will be attached to the emerging global nervous system called the Web.
Distribution costs using the WWW are virtually zero. The ability of national cultures to get their artistic products to their own and foreign citizens should be greatly enhanced as the web matures. The implications of the WWW for the fine arts cannot be fully explored in this article. The words of noted copyright lawyer, David Nimmers, hint, however, at its potential:
New forms of interactive authorship.
Getting even further "out there," the question arises whether the Internet will facilitate new forms of authorship that were not hitherto possible For instance, a recent SIGGRAPH conference in L.A. was described to me as follows: Each member in the audience was given a wand, while supersensitive electronic equipment was calibrated to the totality of those wands. When the thousand members in the audience waved and manipulated their wands, the result was the creation of images of colors and movement on a gigantic, full-wall electronic screen.
From a copyright standpoint, what resulted? Was it graphical? Was it fixed? Was it a work of authorship? Whose?
Was it even "art"?
These questions simply adumbrate in miniature the completely unanticipated vistas that a world of interactive authorship might show us. Most, if not all, doctrines of copyright law are destined to become inapplicable, anachronistic, or at least severely distended, in such a brave new world. For the High Priesthood of copyright to even contemplate such potentialities might require the utmost in retooling. Not surprisingly, contemplation of developments such as these was not much in evidence in Geneva. (26)
Derived from a papal encyclical, the term the subsidiarity principle has been adopted by the European Union to mean at one and the same time:
· "if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effect of the proposed action, be better achieved by the Community’, and,
· "decisions are taken as closely as possible to the citizen",
In effect, it means that the ‘Union’ targets policies and programs at the regional or sub-national level, e.g. Sicily and Calabria, not at the national level, Italy. (27) This has been the case with regional cultures, languages and the arts that are being fostered in a way the traditional nation states and their search for ‘national unity’, never did. This has favored the fine arts in that it has encouraged expression at the regional level; it has not favored the fine arts in that the bulk of funding goes to ‘folk’ art rather than ‘high’ art.
In the English-speaking world a similar phenomenon is the ‘Second Wave’ of arts councils created in the 1980s. Funded by lottery monies a new set of ‘arm’s length’ arts councils appear in the 1980s at the provincial and state level in Canada and the USA and at the national level in the UK during the 1990s. Funded by monies either rejected by fine arts councils, e.g. Canada (28) or never offered (UK), this Second Wave tends to support amateur, community, folk or ‘grass roots’ art activities. In the English-speaking world this has, as in Europe, favored the fine arts in that it has encouraged expression at the regional level and not favored them in that the bulk of funding tends to go to ‘folk’ or ‘community’ rather than ‘high’ art.
By ‘folk’ arts I mean post-modern, multicultural urban folk art that sometimes rises to a ‘fine art’. A case in point is that the Canada Council for the Arts now recognizes ‘Classical Indian Dance’ as a distinct fine arts discipline like ballet. The fine arts in a global economy includes more than traditional Western European fine arts. The impact of Japanese prints in the late 19th and early 20th centuries on painting in Europe is an early example of the ‘cross pollination’ that can be expected in future.
Related to growing support to ‘provincial’, ‘regional’ or ‘state’ cultures is the concept of ‘The Little Sisters”. (29) A fundamental characteristic of cultural goods and services is that they are carriers of 'values' rather than utilitarian function like a coffee pot, automobile or bank account. The importance of 'values' is apparent in the ongoing debate about 'cultural sovereignty'. One side argues that national and regional identity is based upon a distinct set of values embodied in cultural goods and services. Even in the United States, some are now raising this argument as foreign interests increasingly acquire American cultural enterprise. Some point to the rising tide of regionalism within formerly unified states such as the Soviet Union and Canada as evidence of the importance of cultural sovereignty. These regional cultures, or ‘little sisters', contend with the homogenizing and standardizing influence of a global 'Big Brother' culture that today is essentially American. Protection of diversity of regional and indigenous cultures is likely to become as important in the 21st century as the environmental or ‘Green’ movement of the 20th. If it is important to maintain the rain forest for purposes of biodiversity, is it not equally important to preserve the indigenous cultures that live within them?
As the 21st century opens, the fine arts find themselves between a rock and a hard place with respect to public funding. On the one hand, market realism and the search for cultural sovereignty is fuelling the attempt by governments around the world to develop a financially viable entertainment arts industry to compete with the American super-culture. This leaves the fine arts competing for government funding with a much better organized and politically acceptable sector of the arts industry.
On the other hand, new public monies flowing from lotteries in the English-speaking world and through application of subsidiarity in the European Union are flowing to the amateur or community-based arts. This yet again leaves the fine arts competing for public funding with a more politically acceptable sector of the arts industry.
In both cases the shift from the politics of elite accommodation to the politics of polls has isolated the ‘elite’ fine arts from an increasingly egalitarian political process. What are the fine arts to do? In my opinion they must first ‘position’ themselves within a more broadly defined arts industry made up of the amateur, applied, entertainment, fine and heritage arts. To do so the fine arts must articulate their contribution to the more politically acceptable, economically important and less controversial sectors of the industry, e.g. serving as the research and development sector. In turn, the fine arts must help articulate why the arts industry as a whole is increasingly important to the economic and political competitiveness of nations.
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(2) Cummings, M.C., Schuster, J.M.D. (eds), Who's to Pay? for the Arts: The International Search for Models of Support, American Council for the Arts, NYC, 1989.
(3) Baumol, W., W. Bowen, The Performing Arts: The Economic Dilemma, Twentieth Century Fund, New York City, 1966.
(4) Baumol, W., H. Baumol, "The Mass Media and the Cost Disease", in The Economics of Cultural Industries, W. Hendon, N. Grant, D. Shaw (eds), Association for Cultural Economics, University of Akron, 1984.
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"Arts Education and the Bottom Line in a Post-Modern Economy: Two Variations on a Theme" in Living Traditions in Art: First International Symposium, B. White, L.M. Hart (eds.), Department of Education, McGill University, 1990.
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(12) Education, Science and Arts Committee, Public and Private Funding of the Arts,
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(26) Nimmers, D., “Time and Space”, IDEA: The Journal of Law and Technology, 1998.
(27) Chartrand, H.H., “Canada and the European Community: Cultural Policy Commonalities & Convergence”, Arts Bulletin, Vol. 15, No. 2, Canadian Conference of the Arts, Spring 1991a. http://www.culturaleconomics.atfreeweb.com/converge.htm
(28) Chartrand, H.H. & J. Ruston, Lotteries & the Arts: The Canadian Experience 1970 to 1980, Research & Evaluation, Canada Council, Ottawa, August 1981.
(29) Vettraino-Soulard, M-C., "Media in the World of 1984", in Understanding 1984, Canadian Commission for Unesco, December 1983.