Cultural Economist &

Compiler Press




In this section the following questions are examined:

  • What are the Arts?

  • What is the Arts Industry?


What are the Arts?

 If the Natural Sciences are made up of three elementary disciplines - biology, chemistry and physics - then the Arts are made up of four:  literary, media, performing and visual art.  Each uses a distinct medium of expression: the written word; the recorded sound and/or image; the live stage; and, the visual image.   Each operates in accordance with tenets and principles of distinct sub-disciplines and schools specific to a given culture.  Artistic disciplines tend to mingle and mix into interdisciplinary forms.   For example, motion pictures (media art) usually rely on a screenplay (literary art), acting and music (performing arts) and set design (visual art).

The Arts are unlike the Sciences in a number of important ways.  First, in the Natural & Engineering Sciences and the Social Sciences & Humanities research is centered in the university; in the Arts, research is not centered in the university.  Art R&D takes place primarily in the nonprofit ‘fine’ arts.  It is there that new talent and technique are developed, new scripts and scores created, new images and styles emerge.  Results of Arts R&D, like the results of pure scientific research, are sometimes adopted by for-profit enterprises.  Results can inspire society-wide changes in design, fashion and style, e.g. art nouveau and art deco in the early part of the 20th century.  The university also plays a smaller role in professional development.  There is, in fact, a well documented gap between graduation from university in the Arts and attainment of professional status.  Art is learned by doing; it is experiential.  Old craft methods, apprenticeship and master classes survived the Industrial Revolution and remain the most effective methods of professional training in the Arts.

Second, artistic knowledge is unlike scientific knowledge.  Scientific knowledge tends to depreciate through time, e.g. Greek deductive science was displaced by modern experimental science.  In Art, however, knowledge can appreciate through time.  King Tut, Shakespeare and Bach still speak, still sell.  In media art, Hollywood film libraries have become multi-million dollar assets.  Maintaining classical repertoire in the performing arts provides continuing inspiration to contemporary creators and establishes standards of excellence against which new work is judged.  This ‘religio’ or linking back is embodied in heritage art that conserves and preserves past and present creation for subsequent generations. 

The Arts pervade and permeate all aspects of human society.  Consider the human or ‘built’ environment. It is shaped and molded by architects, designers, preservationists and urban planners.  They are the visual ecologists of society.  If architects and designers are concerned about the present, preservationists are concerned about the past and planners are concerned about the future.  It is architects and designers who apply art to the skylines of our cities, the clothes we wear, the malls at which we shop, the picture on the cereal box in the morning, our homes and furnishings, the cars we drive, the places at which we work and the churches and temples in which we worship.  From Frank Lloyd Wright through the German Expressionists and the Bauhaus Movement to the International Style, architects and designers of the 20th century believed good design could change the world.  They wanted to contribute to the kosmos or the sense of the right ordering of the multiple parts of the world.

Engagement in any of the four primary artistic disciplines involves five distinct motivations.

i - Amateur Art

            Amateur art is motivated by self-actualization, self-education and self-realization including of one’s cultural heritage.  It is less concerned about pleasing an audience and more about developing self-expression and self-understanding.  Amateur art is practiced during and after primary, secondary and tertiary school.  It is in the amateur arts that talent is first disciplined in an artistic craft and an informed and appreciative audience is initially cultivated. 

            Amateur art is part of the public sector in the schools; part of the nonprofit sector in amateur or community institutions such as amateur theater and orchestras; and, part of the profit sector through private teachers and instructors. It provides four kinds of experiences:

  • arts education, i.e. education in how to create art;

  • education through art, i.e. art as a distinct way of understanding the world and of problem-solving;

  • education of citizen consumers with respect to recognizing quality in advertising - commercial and political - and industrial and product design; and,

  • therapy - physical and psychological.

ii - Applied & Decorative Art

            Applied and decorative art includes advertising, architecture and urban design, the crafts, jewelry and fashion as well as industrial, product and interior design.  To a degree, it involves the use of style for enjoyment and persuasion.  Production is motivated by the challenge of marrying aesthetic to utilitarian value.  At its best it contributes ‘elegance’ to the human environment defined as simple but effective, or ‘the best looking thing that works’.  From buildings to urban planning; from product design to effective advertising; from corporate ‘imaging’ to designer fashion: applied and decorative art has the most pervasive and significant economic impact of any segment of the arts industry accounting for 45% of the total American arts labor force

iii - Entertainment Art

            Entertainment art generates enjoyment, amusement and recreation.  In the entertainment arts, America currently leads the world.  Thus entertainment programming (film, recordings and TV) is reported to be the second largest net export of the United States after defense products

            Entertainment art is dominated by for-profit global media conglomerates with linked interests in television, film, music, video and print media.  The last ‘global’ survey of the entertainment industry, conducted in 1990 revealed that the five largest firms in the world had combined revenues of $45 billion in 1988 and accounted for 18% of a $250 billion world-wide entertainment.  Only one of the five, however, was American-owned: Time/Warner. 

iv - Fine Art

            Fine art is motivated by ‘art-for-art’s-sake’.  It is the primary research and development segment of the arts industry.  It generates ‘enlightenment’, i.e. it sheds light on the nature of the human condition – on the individual and society.

            It is primarily in the fine arts that new talent and technique are developed; new scripts and scores created; and, new images and styles set.  Results of fine art ‘R&D’, like the results of scientific research, are sometimes adopted by for-profit enterprises in and out of the arts industry.  And, as in pure science, fine art is not financially self-supporting.  It operates, primarily, in the nonprofit sector relying on public and private patronage.  As in the Natural Sciences, a thousand new plays (experiments) must be tried if one is to become a box office smash.  The right to fail is an essential artistic and scientific freedom - a freedom that requires patience and risk-taking on the part of patrons, investors and audiences.

v - Heritage Art

            Heritage art subsumes the amateur, applied and decorative, entertainment and fine arts as residuals of contemporary and past creation preserved for and/or by subsequent generations.  It feeds back on contemporary art setting standards and inspiring creators.  It generates ‘enrichment’ through the marriage of scarcity and aesthetic value including a sense of social cohesion and continuity.  Heritage art thus links us back to our past reminding us of who we are and from where and when we come.  It can also, however, impose the deadening hand of the past on contemporary creators who must compete not just with domestic and foreign peers, but also with works tried and tested through time. 

            Between 1969 and 1989, heritage art yielded the highest return of any financial investment opportunity (The Economist July 1, 1989).  Furthermore, theft of antiquities is the most lucrative international crime.  Ounce for ounce, an antiquity can be more valuable than drugs.  It can yield this higher return at lower risk of being caught and  less jail time if  convicted.


1.2 What is the Arts Industry?

The arts industry, or more properly, ‘the arts sector’, includes all profit, nonprofit and public enterprises including incorporated and unincorporated businesses that, and self-employed individuals who:

  •  use one or more of the arts including the heritage, literary, media, performing or visual arts - live or recorded - as a primary factor of production, e.g. in advertising, fashion, industrial & product design as well as Internet, magazine and newspaper publishing;

  • rely on one or more of the arts as a ’tied-good’ in consumption, e.g. home entertainment hardware and software; or,

  • produce one or more of the arts as their final output, i.e. they create, produce, distribute and/or conserve artistic goods and services.

Using this definition, the Arts Industry can be seen as the center of a circle of circles made up of the so-called ’cultural industries’ or the widely defined arts & cultural industry (2.1 Widely Defined Arts & Cultural Industries).   The economic term ’tied-good’ perhaps requires 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.  The computer and cards were tied-goods in production of computational results.  Similarly, there can only be a market for audio-visual software, e.g. records and tapes if there is a market for home entertainment hardware, e.g. cameras, record players, TV sets, etc.  They are tied-goods in consumption - fitting hand in glove.  In this regard, the home entertainment center (HEC) is the third most expensive consumer durable purchased by the average consumer after house and car.  Similarly, private collections of audio-visual software including phonographs, photographs and videotapes constitute an enormous stock of contemporary cultural wealth.

In a chapter entitled “Towards an American Arts Industry” in The Public Life of the Arts in America, M. Wyszomirski and Joni Cherbo (eds), Rutgers University Press, 2000 (pending) I summarize twenty-five years of cultural economic research conducted by myself and other researchers.  To do so, I mapped findings into a mainstream economic framework - the Industrial Organization Model or ‘IO’. 

            IO was the brain-child of the late Joe Bain.  His seminal work - Industrial Organization - was published in 1959.  Using IO, Bain began what has become an ongoing process within the economics profession of linking macroeconomics (the study of the economy as a whole) to microeconomics (consumer, producer and market theory) to better understand the way the ’real’ world works. 

The IO schema (see: 2.2 Industrial Organization of the Arts Industry) consists of four parts.  First, basic conditions face an industry on the supply- (production) and demand-side (consumption) of the economic equation.  Second, an industry has a structure or organizational character.  Third, enterprise in any industry tend to follow typical patterns of conduct or behavior in adapting and adjusting to a specific but ever changing and evolving marketplace.  Fourth, an industry achieves varying levels of performance with respect to contemporary socio-economic-political goals.  As is evident from 2.2 much additional research will be required to complete the description and analysis of the industrial organization of the arts industry.