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The tension between economy and creativity: how the arts are valuable

Why do people think that the arts are ‘just a hobby’ and not a full-time job? Why are artistic people being told to find another job during the pandemic? The tension between the economy and art is a long-time discussion. I was taught about it in my very first class at the university. And it would continue till the very last class. And now, today, the tension is once again seen with the cultural field closed.

I’m usually not really outspoken about politics, but I feel that – on this point – that there is some knowledge missing. I’m not trying to change your mind, just to give you a new look on the discussion by giving you a bit of information. We’re going to look at artistic values, economic values and where the friction is caused. But I want to continue and not only look at the differences. This article also wants to see where they connect. And I’ll be honest: I’m a bit biased and pro-arts, but you would probably already have guessed that from this website…

Economic vs. Artistic values

In this part, I want to explain what economic and artistic value contains and then look at the differences between them both. Let’s open up the underlying layer that is causing the tension.

You probably already have some idea what each value encloses. And if you want a quick answer, I can sum it up very shortly: the tension is caused by the different outcomes of both economic and artistic values. In general, economic value focuses on money or the financial aspect of the market, cultural value is about symbolism, aesthetic and artistic significance. Seems easy, right? But if we delve a bit deeper, we will find it’s not as straightforward.

Economic values

Let’s start with the economic values. If you’re a businessman or woman, you will know that economic value is often described as ‘the value that a person or company is willing to pay for a product or service’. So, essentially: what is the price of something? If you need a bottle of water, you pay 1 dollar. That 1 dollar is the economic value of that bottle of water.

This value that someone is willing to pay is subject to a few things. It depends on the competition of the industry, how easy you can find a substitute, how expensive the product is to create, but also how rare it is. Diamonds are expensive because there is only a limited supply. But you won’t pay a large sum for toilet paper, as there are twenty different brands selling toilet paper at your supermarket. Brands can’t make their toilet paper too expensive as you will turn to the cheaper options.

There is also another definition of economic value. In that case, you look at the economic effect it has for the country or an industry. Does it raise the GDP of the country? Does it create more job opportunities? Does it spur economic growth in a market, industry or country? You don’t look directly for money, but abstractly at aspects that help markets grow (and as an effect make money more valuable). If more people have a job than more people have money to spend, which means more products will be bought, a bigger circulation of money, etc.

So economic values either is directly related to capital or effects that have to do with monetization.

Artistic values

Then we have the artistic values. They are a lot more abstract than the economic value and need a bit more explanation. There are many theories about them, like from Bourdieu and Florida, but I won’t go too much into theory. I find it most important that you have a clear idea of these values.

According to research, there are multiple artistic values that someone can receive. Those values are divided between individual and societal values. I’ll explain both, starting with the individual values.

Watching art in a museum

When an individual comes in contact with an artwork or a creative process, there is an invisible communication between the recipient and the artwork. This can cause three different effects:

  1. You receive an intrinsic value. You gain something that only that artwork can give you, like a certain self-reflection triggered by the artwork.
  2. You receive an extrinsic value. This is something more general. It’s something that you can obtain from an artwork but has little to do with the artwork itself. An example is the value of ‘a nice day out’. You go to the theatre or museum for more than just seeing the artwork. You also meet up with your friend, you have a change of scene, etc.
  3. You receive a semi-intrinsic value. These are values that you get through the artwork but might also get from other things. Emotions are the best example here. A gloomy song may trigger sad feelings, but so can a sad story in a book.

You can experience all three of these values or just a selection when meeting one artwork. You will, however, always at least have one reaction to the artwork.

Moving on to the societal values, we can see a continuation of the individual values. More precisely: they are the effect of the individual values. When many individuals experience individual values, it has a collective effect on society.

Specific societal values are open-mindedness, more tolerance and better social cohesion. Artworks often challenge the individual and their mindsets. It broadens the individual’s perspective as they made people think about certain problems, borders and issues. When many individuals have this effect, you can imagine this will affect society: people are more open-minded and also more understanding of each other.

Artistic values: individual values and societal values
An overview of the artistic values and how they are connected

Often, there is a delay between the individual values and the societal effects. On the one hand, individual values do not immediately materialize when meeting the artwork. I’m sure that you probably have had times where you needed to mull over things before you came to an conclusion. And on the other hand, it also needs time to ‘collect’ enough individuals to have a societal effect. As there is a suspension, it is often difficult to trace the effects back to the first meeting with artworks.

So if we talk about artistic values, we can say that these values are mostly about behaviour, feelings and emotions. The effect is on society.

The difficulties between artistic values and economic value

Looking at these values, you probably already see where the hick-up is between the economy and the creative expression.

It’s difficult to pinpoint the economic value of a cultural product in money as artistic values have only social effects. From a purely economic perspective, you would have to look at the costs of making the artwork (think about salaries, paint, rent, etc.), look at the competition, how scarce it is and decide your price upon those factors.

The fact that you cannot easily put a price on an artwork makes it difficult for some people to see the value in an artwork. In a regular market, you pay for the production costs + some profit. In the cultural sector, you pay for the symbolism/expressionism of something, the artistic idea of the artist. Why did the banana with duct tape on the wall from Maurizio Cattelan sell for $120.000?

Maurizio Cattelan's Comedian - the tension between art and econony
Maurizio Cattelan’s Comedian
Credits: Rhona Wise/EPA

A few weeks ago, I’ve written an article about the cultural market and how it differs from regular markets. You can read it here. The conclusion is that competition is very difficult to measure, as each artwork is unique in some sense. Not to say that there’s no competition at all, but it’s different. Competition often arises from difficulties in time management. If you go to the cinema, you will have all these films competing for you to go see them and you only have time to see one.

Sometimes, the value of an artwork is easy. For example, when you buy a ticket for the theatre you know exactly what the value is: the ticket price. But what about paintings? A good example is a painting of Da Vinci, which was sold in 2005 for $10.000 but auctioned in 2017 for $450 million. Who can explain this large difference?

art Salvator Mundi by Leonardo Da Vinci, sold for 450 million dollar
Salvator Mundi by Leonardo Da Vinci, sold for 450 million dollar
Credits: Tolga Akmen-AFP-Getty

Apart from the fact of putting a specific price on an artwork, it can be difficult to see the economic values of economic growth in artworks. Looking at the artistic societal values, social cohesion does not directly help economic markets grow. The same goes with the intrinsic trigger you may get when you watch an artwork. Feeling emotions does not help job opportunities. And then we have the problem that effects cannot always be traced back to the art experiences that people have had. So how can you convince an economist that art is just as important?

This is what I meant in the beginning when I said that the outcomes of both values are very different. They focus on different points, society versus markets. This often causes a clash between artists and economist, as they each find other values more important.

Governments acknowledge the importance of arts for its societal effects (think about all the subsidies and stimulation of outdoor art in neighbourhoods). In the Netherlands, the value of arts is mostly measured by the effect it has on people. Non-profit art societies have to account how many people their performances or artworks have reached and what effect they want to cause in society.

But governments usually value the economy more. In the end, the capital is what that keeps the country driving forward. And so, in time of crisis, it’s the cultural sector that may hear to go do something ‘useful’.

But this is not the end! While these two sides seem miles apart, they are actually quite close in multiple aspects.

Are there hard facts about the arts in economic values?

Yes, there are. Actually, there are quite many. From audience numbers to revenues and the extent of the sector. I’ll just put down the most important ones here from the US and the UK, so you have an impression of the scale we’re talking about.

In the USA, arts and culture are responsible for 4.5% of the gross domestic product. That’s 877.8 billion dollars of economic activity (in 2017). It contributed more to the national economy than construction, transportation and warehousing, travel and tourism, mining and agriculture industries. Performing arts companies and independent artists, writers and entertainers added 52.2 billion to the economy in 2017. That’s quite a lot and the number keeps rising. Between 1998 and 2016, its contribution grew by 69,5%.

Passion led us here: many creatives or cultural employees are working in the sector because they love what they create.
Many creatives or cultural employees are working in the sector because they love what they create.

This contribution also means that there are many jobs in the sector. More than five million Americans work in the arts and culture-related industries. But Americans also like to participate in the cultural sector: 54% of the American adult population (133 million Americans) visited a cultural activity and about the same percentage created or performed art in some way.

The UK is a smaller country, but here we see the same trend as in the US. The entire cultural sector contributed £32.3 billion in 2018, about 1.7% of the UK GVA and has grown with 21,9% since 2010. It’s important to note here that this does not include the performing arts as the research counted them part of the creative industry. Also in jobs, the art industry does well in the UK. In 2018, about 363.700 jobs were available in the cultural sector.

So you can see that the arts do participate in the economy. Even more, it is claiming a bigger part of the economy of it as time goes on and the expectation is that the numbers will only continue to grow. I will explain later in this article why.

Economic value in the cultural field

The values I’ve mentioned so far are mostly based on academic theory. In reality, things are not as black and white as I’ve portrayed them. So let’s look at where they interact, starting with the cultural field.

The role of money in the cultural field

Money cannot be ignored in the cultural industry. In the end, organisations and artists have to earn enough to break even. Artists have to be paid for their work to make a living. New materials need to be bought for future projects. Rent has to be paid with money. So it’s not like artworks can just be given away for free. This also means that organisations and artists need to have some understanding of the economy, the market they work in and their value in it. (Although in my experience, most artists really hate the economic part and feel that the market limits their artistic possibilities.)

Even subsidized organisations and non-profit organisations will need to have revenue. In the Netherlands, the government demands that the organisations earn at least 25% of their total revenue. The other 75% may come from subsidies and grants. In the subsidized organisations, however, artistic quality is more important than profit.

As the same time, many profit-driven cultural organisations want to have the highest profit possible. They use artistic products as the means for earning a large revenue. Unlike non-profit organisations, their focus is on the money. Therefore, the artistic freedom of their product comes second. Most of the Hollywood studios are willing to give up some quality for a bigger revenue. That’s why we now see so many similar movies and sequels appearing as they have proven their worth in the market. But this is an entirely different discussion that I may address in another blog.

Poster of The Hobbit
The main reason that The Hobbit was adapted to screen was the popularity of Lord of the Rings and the creators saw this as a way to earn even more profit on something that has already proven to be a succesful formula.

But we can see the tension between artistic freedom and economy within commercial organisations. The drive of a commercial company to earn as much profit as possible and the drive of artists to reach the highest artistic value needs to be balanced. Artists often want a higher budget to create their products, the management wants to keep the costs as low as possible to make more profit. That’s the reason that producers exist in TV, film and musical theatre. They negotiate between the creativity of the artists and the wishes of the company owners for control in the production process.

If you want to read more about producers and how they came to be these negotiators, read this article.

Translating societal values into economic values

As it is quite obvious that the economy comes first in many countries, many organisations and especially academic researchers have made it as their goal to show how the artistic societal values have a (positive) effect on the economy. This eagerness to demonstrate these effects often comes from proving the need for government support for art projects. It’s a validation for why they should spend money on the arts.

The idea is that open-mindedness and social cohesion leads to a better society and thus stimulate the economy. When people feel safer in their environment and find it easy to connect with others, it will help organisations to build their business. They can easier connect with others in the industry and they have fewer thresholds to cross with their clients.

Also, artistic individual values cause improved economic value. When someone has had an intrinsic experience, their welfare increases. Happy employees are good for business. They may also receive more knowledge or broaden their judgments. More knowledge often means a better understanding of things, which leads to better choices in (among others) how to spend their money and job picking.

These so-called ‘external’ effects of the art are often not taken into account by the economist. The relations between these societal values and economic values are not very obvious and difficult to prove as well.

The economic aspect of the cultural field

This last one is an often-used argument in the cultural field: there is an economic outcome in every artistic event. The researches done for this argument are called impact studies: they evaluate the economic outcome of an artistic event, like someone going to a museum or a festival.

When I worked for a city marketing organisation, I was in charge of the researches done. And in all researches, it was very obvious that art was one of the main triggers to visit a place. Art attracts people. Tourists will come and visit museums or festivals and spend a lot of their money. Think about your holidays: have you ever gone somewhere because you wanted to visit a specific museum or festival? How much money did you spend, a few hundred?

Hundreds of tourists are wainting in line to make a picture of the Mona Lisa in the Louvre.
Hundreds of tourists are wainting in line to make a picture of the Mona Lisa in the Louvre.

Let me give you an example: The Louvre was the most visited museum in the world in 2019. It received 9,6 million visitors. Of those, only 25% of the visitors were French. This means that 7,2 million visitors came from abroad. Think about all the money they will have spend on their holiday there. According to the Louvre, most foreigners came from the U.S., China or the European Union. Especially visitors from the first two countries will not have come to Paris for just one day, meaning they will have spend a lot of money and added to the economy.

This is exactly how the cultural field validates their existence. Someone who visits their artwork will also need a hotel, a restaurant for something to eat and some kind of transportation. A lot of the tourists will also go shopping, stimulating the local businesses.

Besides tourists spending money in their shops and other facilities, also locals will profit from the art around. Because art facilitates jobs. A big event may need a crew of hundred, meaning that hundred new jobs are created. A regular theatre has about thirty employees, but some bigger ones may need a hundred. I used to work for Stage Entertainment, who has over 3000 employees worldwide. You can see how cultural organisations can stimulate jobs and be part of the economic market, although this has very little to do with the artwork itself.

Thus we can see that the cultural field cannot ignore economic values and even strives to validate their own value to that of the economy, often with underlying reasons.

However, we need one thing in mind. While these are all effects from artwork to the economy, the artist never strives for these effects when he or she makes the artwork. For the artist, the intrinsic value is almost always the most important. That it affects the society and the economy is just an extra plus.

Cultural values in the economic field

So let’s take a look the other way around: cultural values in the economic field. And then we something quite ironic. The economy has become more and more dependent on creative people.

In 2001, the term ‘creative economy’ was introduced and it is deemed to be the market of the 21st century. It means an economy where creativity is the driving force of economic growth: ideas are the base for the economy. This market is very broad: it goes from culture to media, architecture and fashion. So it contains the entertainment sector and the art industry, but it’s much more than that. Every advertisement you see, every website, every piece of clothing you have: it’s all made by creatives. And to think that you see on average between 6.000 and 10.000 advertisements a day.

Santa Clause as invented by Coca Cola in 1931
One brilliant advertisement by Coca Cola. They invented the Santa Clause as the grandfather type with a white beard and twinkling eyes as we know him today through their advertisement in 1931.

I’ll admit that the creative economy is a bit different from the cultural industry discussed before because this market is much broader and contains mostly commercial organisations. Their priority is often more on revenue than the intrinsic values in their products. They will be hired by an organisation who will command their wishes. There is less artistic freedom. Although, these creatives do want to be unique, impress their audience and move the client. Think about all those Christmas ads you see on the TV every year!

The idea of a creative economy is very dual because it is economic in the sense that it contributes to the economic development and wealth creation, but it needs creativity to develop its products. We even see it reflected in vacancies. Being smart is no longer enough to get the best job. Employers seek people with confidence, flexibility and various soft-skills. This often accounts for the creativity of a person. The World Economic Forum predicts that in 2022 ‘creativity, originality and initiative’ will be the number three in-demand skill.

So in the last decennium, companies have become to appreciate creativity more and more, although they see the cultural industry as something else that’s separate (especially the non-profit part). Before the pandemic, the creative industry was one of the fastest-growing sectors of the UK economy, 5 times as fast as the economy as a whole. Almost 1 in 8 UK businesses was a creative business and the sector contributed £111.7 billion gross value in 2018, which was more than the automotive, aerospace, life sciences and oil and gas industries combined!

It’s quite interesting to see how this will develop more. Especially now that robots and AI will be able to do the ‘logical’ things, creativity may be the one thing that will set humans apart from machines.

To wrap it up

So in the end, the tension between artistic freedom and the economy is due to the different outputs that the two have and the different goals of the creators/economists. Both have their own influence on individuals and society and while they merge on multiple occasions, their base is so different that it creates a strain.

The tension between artistic expression and economy will never completely ease. And that’s good, they keep each other on the toes and look for the right balance. Both effects are good for society and should continue to exists.

I’m most curious where we will go from here. The creative industry is becoming more important as we walk further into this century and that’s exactly where economy and creativity meet. They are profit-driven companies who have products of artistic value.

This article has become quite longer than I intended it to be, but I feel like it was necessary to give a good look at this discussion. Of course, there is much more that can be said, but I feel like I’ve just given a summary of my undergraduate study.

In one of my sources, I found a statement that I want to finish with. According to Oscar Wilde, people with an artistic mindset can see the value of everything and the price of nothing. People with an economic mindset are the other way around: they see the price of everything and the value of nothing.

Of course, this is very black and white. I don’t believe people are completely one side or the other, but I do like the quote. Who of these two do you want to be?

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