Cuts to culture are not about money, but about politics

31.10.2024 2 Tykkää 0 kommenttia

Austerity policies are destroying a society based on the common good. This includes the exclusion of art and culture from the common good, writes professor Tero Nauha in his blog.

“Poverty in the midst of plenty and joyless prosperity are only symptoms of a deep disorder.”
– Tibor Scitovsky

The Finnish government is cutting funding for arts and culture. It’s not because we have to. It is a conscious choice and therefore at the heart of their policy, it is their narrative. In this blog, I want to expose some of the underlying assumptions and truths accepted at face-value that justify their choice – wrongly, in my view.

Assumption 1: Risks must be anticipated

Risks are narratives. We create narratives that we live by, even though the future is always something different from what we expect. We anticipate risks in a way that tends to place ourselves in a narrative that is often self-fulfilling. Market analyst and physicist Emanuel Derman writes about how complex models of the economy mostly work – until the next crash. 

Are the financial busts uncommon? Quite the opposite. There have been more than 300 sovereign defaults worldwide in the last 200 years, all of them more or less economic and banking crises.^[1]

Assumption 2: This time is different

When politicians ask us to think ahead to future, they tell a story in which everything is different right now. The assumption is based on the belief that economic crises are things that happen to other people in other countries at other times; crises don’t happen to us, here and now. We do things better, we are smarter and we have learned from past mistakes. Or, as the current government tells this narrative: right now, it is them who have the necessary understanding and knowledge to act, and after the austerity measures, a new era can dawn for (some) of us! 

We often forget the old financial adage: more money has been lost because of four words than at the point of a gun: ’This time is different’.

Assumption 3: The law of supply and demand leads to the creation of the best art

According to the populist trolls, the value of art should be measured by the market. They don’t want to consider that no product in our society follows this model. Even growing potatoes here in the North is impossible without subsidies. We finance everything with public money. In our society it is agreed that we support what is important for society as a result of political decisions. Markets are always based on trust and consensus, but like art institutions, they are not neutral infrastructures that bring supply and demand together. They are uncertain processes.

Assumption 4: The value of art is created through competition

Populist economic thinking is based on the idea of the market as a place where supply and demand meet and where new innovations create competition. In other words, art is conceived as innovation and product development, and the market is the place where goods – tangible or services – struggle to survive. This assumption is wrong in many ways, but especially because goods are not just pieces to be sold, but processes.

They continue to be transformed after exchange until they are broken, reused or destroyed. Goods are part of processes that can be called networks. Markets do not exist without social and material processes – processes that continue long after the exchange has taken place.

Assumption 5: Markets are the best way to measure the value of art

This narrative interprets the market as a kind of natural force to be acted upon or protected against or whose movements must be exploited. The market economy is the product of several models of economic thought, broadly based on the so-called neoclassical economic model. One of its main ideas is that the market is a system seeking equilibrium – an ecosystem. 

But the truth is much more complex. Concepts such as money, debt, interest rates, and markets are shaped through social contracts. They change as people and the environment change. For example, we are told the old story that money replaced the barter economy, but ethnographers have shown this to be false. Claims about the laws of the economy are at best choices and contracts – we want to believe in them and politicians build scenarios and stories on them.

Hypothesis 6: Artists are a tax-funded elite

In debate after debate, the trolls and their famous common-sense supporters repeat how the cultural elite are the ones who pander and brown-nose the powers that be. They are, in the trolls’ view, the Prosecco-drinking slugs who need to be put down. In populist and divisive rhetoric, artists and the entire ’cultural crowd’ are painted as a group of freeloaders gliding from shared efforts.

So what, then, is the common good? The common good is an essential part of society because it is a good or service that is not based on competition between products. In this sense, the common good is the essence of politics. The role of politics is to ensure that the market supports the public purpose by involving users in the co-creation of policy. 

The idea that the artist is perceived as an elite outside the public good is simply delusional and distorting. Good economic policy, for the good of society as a whole, must consistently seek to reward behaviour that helps us achieve the goals set for us by, for example, the environmental crisis. Is it not precisely in this context that art and culture – in the broadest sense, all the collective action that culture involves – are of great importance?

Assumption 7: A collective effort is underway, and everyone must participate

It is very difficult for populists to defend the value of culture without being branded a self-centred parasite living in a bubble if the story is that there is now a collective volunteering party. But this common volunteering is perhaps the easiest populist construct to disprove, because the government-driven volunteering for a good cause does not equal housing association’s Sunday afternoon cleaning or a country club maintenance, where everyone is treated to a beer case, a troubadour’s show and a sauna to strengthen a sense of community. 

It is striking how the Minister of Finance talks about the national budget as if it were about missed payments on a mortgage. What is meant by debt is too complicated for the minister to explain. This is not to say that she is unfamiliar with the subject, but that multidimensionality is not part of the rhetorical toolbox of the populist who divides society. IMF analysts Carmen Reinhart and Kenneth Rogoff have tried to decompose the complexity into domestic debt, external debt and public debt. 

The key point in this complex web is that the terms of debt agreements are not set in stone. They can, for example, be determined by the market, which, as I wrote above, is not an environment defined by natural laws.

Assumption 8: Art is not part of the common good, it is a luxury

Art and culture are deliberately removed from the common good in a way that populist rhetoric is invisibly driving down a society based on the common good. Austerity is a policy that uses sharp economic fluctuations, such as lack of investment, as an opportunity to cut public spending and shrink the state. Cuts are not a means, they are an end in themselves. 

Mariana Mazzucato writes that as long as resources are invested in health, education, research and other productivity-enhancing sectors, debt will remain under control^[2], but cuts in public spending mean that those without assets or savings are forced to finance their activities with high-interest borrowed money from the private market. This predicament particularly affects freelance artists and people in the poorly paid service sector. Creditworthiness is becoming a common measure of a person’s ability – and ability to pay.^[3]

Assumption 9: We have run out of money. Now we all have to tighten our belts.

Prime Minister Margaret Thatcher perhaps summed up this narrative best when she said:

“the state has no other source of money than the money people themselves earn. If the state wants to spend more money, it can only do so by borrowing your savings or taxing you more. And don’t think that someone else will pay. That someone else is you. There is no such thing as public money. There is only taxpayers’ money.”^[4]

It’s admirable the kind of nonsense you can get away with without much consequence. In 2012, UK Chancellor of the Exchequer George Osborne repeated the same narrative, saying:

“The British government has run out of money because all the money was spent in the good years.”^[5]
These phrases are used to justify cuts to the cultural sector and the health service by claiming that money is some kind of finite commodity, like corn – or rather, a finite amount of money tied to a gold reserve. But most money in today’s economy is created by loans from private banks.^[6] Money is the other side of credit. Economist Ann Pettifor writes that money is not a commodity, but a concept defined by faith and credit, not a store of gold. Money is a conceptual construct, like language: 

“Faith and credit are at the heart of all monetary transactions.”^[7]

Money is not just a conceptual construct, it is an instrument of faith and credit.

Assumption 10: Economic issues are difficult to understand and therefore it is better to listen to experts

In the early 2000s, people like Robert Hopkins, vice president of mergers and acquisitions at Lehman Brothers, argued persuasively that people in the investment world were the smartest people in the world, so 

“why not invest in the smartest people in the world? They must know what they’re doing.”^[8]

This notion has, of course, at least partly eroded since the international financial crisis of 2007-2009, but in a country like Finland, which believes in the power of experts, the idea is still alive and well.

However, the Society for Political Economy Research and the Centre for New Economic Thinking, not alone of course, have raised the question of why Finnish economic journalism repeatedly emphasises similar perspectives, often in support of continued economic discipline, and why the range of economic policy alternatives seems to be non-existent in the media. At the same time, a lay economist like me has to prove all the more that I have at least some understanding of the ’boundary conditions’ of economics. Indeed, along with medicine and theology, economics is the playground of knowledgeable experts. 

In 2008, Federal Reserve Governor Alan Greenspan appeared before the House of Representatives at a time when the financial crisis that began in the housing market was destroying the entire Western economic model. Greenspan said he had thought he knew what markets were, what they did and how they were regulated, but he had to admit he knew nothing. His job was to protect shareholders and corporate capital.^[9]

End of story

In 2014, during the international and Eurozone financial crisis, Nobel Prize-winning economics professor Joseph E. Stiglitz wrote in the Guardian how: 

“Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: the economy is no longer collapsing, so austerity must be working! But if that is the benchmark, we could say that jumping off a cliff is the best way to get down from a mountain; after all, the descent has been stopped.”^[10]

About the writer

Tero Nauha
Professor, Live Art and Performance Studies
Uniarts Helsinki’s Theatre Academy

Nauha’s research project Financialization of Art education, Practice and Research investigates speculative and epistemological conjunctions between art and finance, and how financial logic has increased its relevance in the non-financial context of the arts.

References

Callon, Michel. 2021 Markets in the Making: Rethinking Competition, Goods, and Innovation. Edited by Martha Poon. Translated by Olivia Custer. Brooklyn: Zone Books.

Ho, Karen. 2009. Liquidated: An Ethnography of Wall Street. Durham: Duke University Press.

Mazzucato, Mariana. 2019 The Value of Everything: Making and Taking in the Global Economy. Harmondsworth: Penguin Books.

Meister, Robert. 2021 Justice Is an Option: A Democratic Theory of Finance for the Twenty-First Century. Chicago: The University of Chicago Press.

Michael McLeay, Amar Radia and Ryland Thomas, ’Money in the Modern Economy: an Introduction’ and ’Money Creation in the Modern Economy’, Bank of England Quarterly Bulletin Vol. 54(1), 2014. 

Pettifor, Ann. The Production of Money: How to Break the Power of Bankers. London: Verso.

Reinhart, Carmen M., and Kenneth S. Rogoff. 2009. This Time Is Different: Eight Centuries of Financial Folly. Princeton: Princeton University Press.

Stiglitz, Joseph. 2014. ”Austerity has been an utter disaster for the eurozone”, The Guardian, https://www.theguardian.com/business/2014/oct/01/austerity-eurozone-disaster-joseph-stiglitz

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^[1] Reinhart and Rogoff 2009, 34

^[2] Mazzucato 2019, 234

^[3] Meister 2021, 55

^[4] Pettifor 2017, 62

^[5] Pettifor 2017, 61-63

^[6] McLeay, Radia and Thomas 2014

^[7] Pettifor 2017, 20

^[8] Ho 2009, 40

^[9] Callon 2021, 31-32

^[10]              https://www.theguardian.com/business/2014/oct/01/austerity-eurozone-disaster-joseph-stiglitz