Value Difference

Report
Cameron M. Weber
New School for Social Research
Dissertation Proposal Defense
for PhD in economics with minor in
historical studies
March 11, 2014
Thank you for serving on the committee !
Three Essays on the Political
Economy of Art
Outline of Presentation to Committee
1) Overview of three essays and how they hold
together as dissertation.
2) Specifics on each essay,
a) What is the original contribution to scholarship?
b) What is the methodological approach?
c) Preliminary findings
1939 World’s Fair, Queens NY
Three Essays on the Political Economy of Art
I.
The Value Difference in Art Economics
Art is seen by practitioners of cultural economics as having value beyond exchange and is therefore preanalytically different than other “economic goods”, counter to claim by Mark Blaug that cultural
economics does not have a paradigm.
II. The Role of Museums in Utility-Enhancing Consumption
Fine art as experience or novelty goods, relative to normal goods, contains risk in consumption although
can offer higher value in consumption. Museums can help create preferences for fine art at the margin
through educational programs, increasing lifetime utility (human flourishing).
III. The Political Economy of New Deal Art (1933-1943) as Seen Through
the Lens of State Theory
Art might be used as propaganda by a self-interested state seeking an increase in discretionary power.
Public art which creates preferences in citizens for more state intervention might be seen as “art statism”.
I. The Value Difference in Art Economics
Contributions:
Provides counter-claim to Mark Blaug (2001) that cultural economics
lacks a “single dominant paradigm”.
Methodology Approach:
Reviews canon in art economics and builds categories using Lakatos
Methodology of Scientific Research Programs (1978) to test counterclaim. The value difference “hard core” of the research program is
irrefutable due to the shared pre-analytic visions of cultural
economists.
I. The Value Difference in Art Economics
Literature review results in this classification
Research Program in Art Economics
Protective Belt
How do economics and culture
intersect?
Arguments for/against
government funding of arts
Supply side - economics of
creative process and property
rights
Demand side - preference and
price theory
Analysis of art markets and
institutions
Hard Core
There is a value
difference between
art and other
economic goods
I. The Value Difference in Art Economics
One example
Category: “How do economics and culture
intersect?”
Hutter in Klamer, ed., The Value of Culture
(1996). Art is “inexhaustible source event”
which provides the raw materials for the
economy’s “resource event”. The relationship
between art (culture) and the economy is
symbiotic. Human ingenuity is limitless, but
the creative depend on the economy for
support. Art and culture are a limitless source
of value (not scarcity or market exchange
value).
Exchange of Value Between Art and the Economy
Art
(Source Event)
Economy
(Resource Event)
Inexhaustible source of
scarce resources
Reservoir for support
(Constraint)
Adapted from
Hutter 1996
I. The Value Difference in Art Economics
Motivation:
The value difference in cultural economics is important because it
draws-upon and helps to clarify the role of art and culture in society,
value which makes-up and helps to explain our shared historical
cultural heritage.
Too as claimed the value difference helps to define “cultural
economics” as a body of knowledge, and as a research program with its
own unique characteristics.
II. The Role of Museums in Utility-Enhancing
Consumption
Contributions:
1. Creates model to illustrate risk hurdle of consuming the novel (the finer
things in life such as art which can lead to satisfaction) relative to
comfort goods (which can lead to dissatisfaction).
2. Creates measure (unique to literature) for economic performance of Notfor-Profit museums in the United States, which is prioritization of
educational programs to address risk hurdle for consumption of novel
goods.
3. Addresses tax benefits received by museums due to Not-for-Profit status
and compares to educational spending. This may be of interest to
cultural economists working with museums at a time of fiscal austerity
when tax-exemptions are being reconsidered by policy-makers
II. The Role of Museums in Utility-Enhancing
Consumption
Methodology Approach:
i. Theoretical discussion on consumption theory and role of experience
goods which can lead to increasing marginal utility (the more someone
“consumes” modern art, the more they come to appreciate it) relative to
consumption of normal goods.
ii. Literature review on the economics of museums and how practitioners
measure museum performance.
iii. Empirical research into Not-for-Profit museums in the United States
including measurements for 1) “top” museums and 2) for prioritization
of education, both also unique to literature.
II. The Role of Museums in Utility-Enhancing
Consumption
average taste
and
utility of consumption
role for preferenceformation through
education
experience goods
normal goods
0
time
II. The Role of Museums in Utility-Enhancing
Consumption
Museums are “multiple output firms” (Towse 2010) whose goals
“cannot be reduced to one function, it’s three basic functions are
research, preservation and communication” (Paulus 2003).
Grampp (1989) finds that museums goals are defined by mission
statement, board of directors, and “by political representatives if it is a
public institution”.
My work focuses on Not-for-Profit museums as am interested in the
market process, “Fashions and tastes change, unless a museum adapts
through time it is unlikely to maintain its visitor attractiveness”
(Johnson and Thomas 1978).
II. The Role of Museums in Utility-Enhancing
Consumption
“Top” art museums calculated from Art Newspaper ’s attendance
figures (2007) and Paulus (2003) “collectiveness index” concept of a
museum’s ability to attract foundation funding as disinterested relative
to paid attendance or memberships. (Foundation Center publishes
grants data).
So “Top” museums are those with largest attendance and/or largest
foundation grants in 2007.
II. The Role of Museums in Utility-Enhancing
Consumption
Not-for-Profit organizations are exempt from US income tax, which usually
results in exemption from state and local taxes.
Estimated real-estate taxes lost due to Not-for-Profit tax code is between $17
and $32 billion, or between 4% and 8% of real estate taxes in the USA
(Kenyon and Langley 2011).
Some of the best real estate in US cities is owned (tax-free) by universities,
religious orders and museums. (A walk around Central Park in NYC will verify
this.)
A review of the 501(c)3 tax code finds that the “educational” purpose for tax
exemption most highly correlates with museum’s “communication” purpose.
II. The Role of Museums in Utility-Enhancing
Consumption
It is not possible to calculate a return on assets for museums because
museums are not required to report the value of their collections, this
leads to “hoarding” of works. More than half of museum-owned art is
in storage (Gampp 1989, 1996).
I then determine that a measure to evaluate museum prioritization of
education could be percent of current revenues spent on educational
activities.
II. The Role of Museums in Utility-Enhancing
Consumption
Of the 27 top museums, only 17 self-report a separate line item in Financial Statements for
education activities.
In 2007 prior to the financial crisis these 17 museums received $1.3 billion in revenues and
spent $68 million on self-reported educational activities. This is an equity creation payout of
5.3%.
In 2010 revenues were down 15% yet educational equity creation was up to 5.8%.
Equity here being defined as a transfer of utility from those already educated in the arts (e.g.,
exhibition expenditures) to those not yet educated (e.g., education expenditures).
Note that equity transfer payout of around 6% is half-way between the low and high estimates,
4% and 8%, for real estate taxes foregone.
III. The Political Economy of New Deal Art (1933-1943)
as Seen Through the Lens of State Theory
Contributions:
Creates using fiscal sociology (Wagner 2007) a model describing
precognitive taste creation and socially-formed preferences.
Develops concept of “art statism” following Frankel (2006) “print
statism” and Cohen (1990) “worker statism”.
Discovers primary sources from archives showing negotiations between
Roosevelt administration and artists employed by the state.
III. The Political Economy of New Deal Art as Seen
Through the Lens of State Theory
Methodology:
Theoretical formulation and precise operational definitions of “propaganda”,
“government”, “state”, “tastes”, “preferences” and “self-interest”.
Historiography of critiques on relationship between New Deal Roosevelt
Administration and the art and public works created by New Deal.
Case study approach using artist Ben Shahn archival records with
Smithsonian as well as Federal Art Project records from National Archives.
III. The Political Economy of New Deal Art as Seen
Through the Lens of State Theory
Harris Federal Art and National Culture: the Politics of Identity in New
Deal America (1995) claims the radio speeches of President Roosevelt
(FDR) and the public art created under the New Deal were, “’nationalpopular’ rhetoric supporting Roosevelt’s reformist policies”.
In final analysis, Harris finds that the New Deal supported monopoly
capital, where the state is seen as subservient to capital.
III. The Political Economy of New Deal Art as Seen
Through the Lens of State Theory
My research takes different tack and assigns agency to a self-interested
state whose goal is to maximize its discretionary power (de Jasay 1998).
News item on US Solicitor General D.B. Verrilli
The “state” is the entity which has the monopoly power to tax, the
“government” is the form that represents this state (Wagner 2007).
In a democratic form of government the state must maintain its
perceived legitimacy (Weber 1919).
US federal government revenues doubled as a percentage of the
economy between 1933 and 1940 (US OMB President’s Budget 2013).
III. The Political Economy of New Deal Art (1933-1943)
as Seen Through the Lens of State Theory
We are defining propaganda as follows:
“Propaganda is the means by which charismatic leadership,
circumventing intermediary social and political institutions like
parliaments, parties and interest groups, gains direct hold upon the
masses.”
- Schivelbusch Three New Deals 2006
III. The Political Economy of New Deal Art as Seen
Through the Lens of State Theory
If we find in archival research of the New Deal art-production that
there is intervention into the content of the public art in order to 1)
create more discretionary power on behalf of the state and/or 2) to
maintain perceived legitimacy we can call this art in service of the state
(“art statism”).
If both 1) and 2) are absent the art-production is not art-statism.
III. The Political Economy of New Deal Art (1933-1943)
as Seen Through the Lens of State Theory
Archives used,
Archives of American Art, Smithsonian Institution, Washington DC
US National Archives, College Park, MD
Stephen Lee Taller Ben Shahn Archive, Harvard University, Cambridge,
MA
New York Historical Society
III. The Political Economy of New Deal Art (1933-1943)
as Seen Through the Lens of State Theory
Case from the Ben Shahn papers at the Archives of American Art about
the Jersey Homesteads which was to resettle 200 families from the
garment district in a back-to-the land “subsistence” and “cooperative”
project. Shahn was to live there and to create a mural for the
Community Center.
Primary sources include the March 10, 1935 Press Release about the
project and letters to and from Shahn and New Deal administrators
from March 2, 1936 to February 21, 1938.
III. The Political Economy of New Deal Art (1933-1943)
as Seen Through the Lens of State Theory
Political Economy of the
New Deal Art
Letter to Shahn from
Adrian J. Dornbush,
Director of Special Skills
Office in the
Resettlement
Administration,
dtd. 1/17/1938
III. The Political Economy of New Deal Art as Seen Through
the Lens of State Theory
III. The Political Economy of New Deal Art as Seen
Through the Lens of State Theory
Does “Re-elect Roosevelt” push the bounds of a legitimate message for public art in
a democracy? Is the International Workers of the World excluded from the labor
movement timeline because they are too radical for FDR electoral coalition? Does
the AFL-CIO question pertain to the fact that FDR needed both conservative
southern white votes and northern city labor votes? Relatedly is CIO leader John L.
Lewis to be homogenized because he built up the CIO with unskilled black labor
and therefore would be anathema to white southern voters?
It is plausible that the answer is yes to at least one of these questions.
III. The Political Economy of New Deal Art as Seen Through the
Lens of State Theory
http://music.columbia.edu/roosevelt/pop_mural.html
III. The Political Economy of New Deal Art as Seen Through the
Lens of State Theory
Three Essays on the Political Economy of Art
Thank you.

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