Klamer, A. and P.W. Zuidhof. The Role of the Third Sphere in the World of the Arts. Paper presented at the XX Conference of the Association of Cultural Economics ....pdf

THE ROLE OF THE THIRD SPHERE IN THE WORLD OF THE ARTS Unpublished, Erasumus University 1998 Arjo Klamer, Chair economics of art and culture, Erasmus University Rotterdam Peter-Wim Zuidhof, Research associate, Erasmus University Rotterdam

Anything which a human being might want honor, pleasure, security, salvation could be categorized as a gain or advantage. This in itself is quite harmless. But when the mind is

brought by degrees to think of all forms of gain as having money equivalents the metaphor has become a trap. The fact that propositions about basic human motivation are impossible

to disprove further clinched the traps hold on many minds, since converts could find any amount of evidence that did not contradict [] with their views.

W.M. Reddy, The Rise of Market Culture, 1984 The financing of the arts takes many different forms. Some of the artistic work is entirely paid for by means of an outright economic exchange. There are distinctive markets for the arts on which artistic objects and performances are sold for money. Other artistic work is entirely financed by a government grant or subsidy. A lot of artistic production, probably most of it, is financed in other ways, or in combination with other ways. Individuals donate time and resources to artistic work; they donate to the local museum, support a artist friend or partner, or forsake income just to make art. Foundations and businesses provide resources in support of artistic production. There are clubs and societies that promote and support artistic work and the government may generate resources by setting up lotteries or it may encourage private contributions by allowing tax deductions, thus partly footing the bill.

The variety of possibilities for financing artistic work is remarkable. It is this variety in financial arrangements that is the subject of our inquiry. One of our questions is whether there are reasons for this variety and whether these reasons have anything to do with characteristics that are peculiar to artistic work. It could be argued that donations and subsidies constitute such a significant segment of the financial sources for the arts because of marketfailures. Such an argument implies that if markets would work, nonmarket arrangements would be superfluous. We are going to argue that even when markets for artistic work were to function perfectly, alternative financial arrangements would still prevail. The reason is, so we want to posit, that it matters how artistic work is financed.

Our line of inquiry is part of a project that uses the economics of the arts to subvert conventional

economic wisdom. The thesis is that peculiarities of the art world point at fundamental shortcomings of the standard economics approach. So rather than being subservient to standard neoclassical economics in the sense of faithfully applying its concepts and theoretical framework, we see cause to be subversive. Earlier we have argued that the value of culture, or art, is hard to determine and therefore is established partly outside the market (Klamer 1996, 1997). Gifts turned out to be an important means for the realisation of artistic work. An investigation of the gift intimates that the gift itself generates values that are distinct from the value of the thing being given. Here we pursue the line of questioning by focusing more intently at the variety of financial arrangements in the arts. We are especially interested in assessing the importance of all those arrangements that exist apart from market- and government transactions.

OBSERVING THE VARIETY IN FINANCIAL ARRANGEMENTS - STYLIZED FACTS WITH REGARD TO THE ARTS: Before we can start analysing the variety in financial arrangements, we first have to make plausible that the three alternatives do indeed occur in a relevant sense, so that we know what we are talking about. In order to give further content to the way the three financial arrangements look in the context of the arts we have derived the following stylised facts from existing literature.

We rely on three different perspectives to frame them. The first two, the international perspective and the disciplinary perspective show that financial arrangements can vary and that variation takes place

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

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along different dimensions. The third perspective, historical in kind, shows that the financial arrangements in support of the arts can also vary dynamically. 1) International differences: the structure of financial arrangements in Continental Europe are the

inverse of that in the USA; the share of market and gift in the support for the arts in the US equals the share of government support in Continental Europe (hence: the share of government support in the US equals the share of the market and gifts in Continental Europe)

Beforehand, we should stress that this stylised fact only expresses an inverse pattern of funding between the US and Continental Europe. It does not represent a causal relation. Note that it does not include the UK. The funding of the arts in the UK resembles what is going on in the US. The most well-known international comparison of funding of the arts is by Mark Davidson Schuster (1985). The following graph is based on his findings:

Performing Arts in International Perspective, 1980s

source: J. Mark Davidson Schuster

0% 20% 40% 60% 80% 100%

Danc e

Theater

Orc hestra

Museum

Danc e

Theater

Orc hestra

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Danc e

Theater

Orc hestra

Museum

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erm

any

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Government Gift Market

Apart from showing the differences between the major sources of funding, countries also differ greatly in the way the three institutional settings distribute their funds. In the US one attaches to the arms length principle rules with a deferment of decisions to specialists seated on an arts council model, whereas in Germany and the Netherlands a ministry model prevails, in which distributional decisions remain under control of the parliament. Other differences pertain to the format in which funds are transferred. In the US grants are mainly of fixed amounts whereas on the Continent funds are granted on a long-term basis to semi-governmental organisations. Also the models of funding differ. In the US grants are awarded to projects, whereas on the Continent they are intended to cover deficits on the budget. In the U.S. most of the government support is indirect in the form of tax-deductions on gifts to the arts whereas in Continental Europe virtual all government support is direct (Davidson Schuster, 1985) Lately, however, these differences appear to diminish. There is also a variety in the functioning of the market-sector. Leaving aside box-office, which constitutes the bulk of market-revenue, we notice especially much more reliance on business sponsoring in the US. Finally, whereas in Europe the majority of gifts come from foundations and corporations, Netzer (1992, 178) found that in the US 70% of the gifts to the arts come from individuals. Corporations are a


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distant second as benefactors, followed by foundations who are good for only a small share. (Netzer also established that 35% percent of that amount is taxdeductible and hence consists of indirect government support.)

a) International differences of non-profit sector in general: the international differences in funding structure of the arts correspond to differences in funding structure of the non-profit sector in general.

The John Hopkins Comparative Nonprofit Sector Project provides excellent data on the non-profit sector, and the role of the arts therein (Salamon and Anheier, 1996). It reveals the following image: This picture shows the situation in the arts sector to be similar to the situation in the non-profit sector at large. In general, funding arrangements in the US are the inverse of those in Continental Europe. The share of support by the market and the gift in the US equals that of government support on the Continent. Apparently, the arts sector does not distinguish itself in its financial arrangements from the remainder of the non-profit sector.

b) International differences in composition of non profit sector in general: Countries differ in the sorts of activities which are primarily rooted in the non profit sector.

There are great international differences in the purposes of the non profit sector. Both in the US and Germany non-profit activity is largely devoted to health care, whereas in the UK education is the primary target there, and in France social services (Salamon and Anheier, 1996, 51):

Funding Structures in Non-Profit Sector, 1990 source: Salamon and Anheier, 1996

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30

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52

28

0% 20% 40% 60% 80% 100%

Average

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Germany

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Gift

Market


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Composition of Non Profit activity, 1990ssource: Salamon and Anheier, 1996

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7

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US

GermanyOther

Business

Social Service

Health care

Education

Culture, recreation

2) Disciplinary differences: Financial arrangements tend to differ across artistic disciplines. The share of

government support to museums in both the US or Continental Europe is significantly higher than to the performing arts. The share of gifts is also higher.

The study by Davidson Schuster (1985) underwrites the claim that financial arrangements tend to vary across artistic disciplines. Museums rely heavily on government support and gifts and relatively little on market revenue whereas the visual arts can count on very little government support, in the US, that is. One may expect that market-revenue continue the main source of income of visual artists but our colleague Abbing points at a significant role for gifts in the form of internal subsidies from the partner or from income out of non-artistic activities and services which are distributed among artists. These patterns are consistent across the US and Europe. Netzer (1992) provides the following overview. As one can observe, this image differs considerably from the one drawn by Davidson Schuster. This should be interpreted as a warning that due to many classificatory and measurement problems, macro-data should not be handled too lightly.

Estimated Income of Nonprofit Arts InstitutionsUSA, 1985

source: Hodgkinson and Weitzman in Netzer, 1992

0% 20% 40% 60% 80% 100%

Theater

Dance

Classical Music

Opera

Museums

Public Broadcasting

Total

Government

Gift

Market


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Again, this stylised fact only gives a first hint of what is going on. Of course insights would benefit greatly from distinguishing a variety of sub-categories and their corresponding financial structures. It would be interesting to observe whether and how financial structures follow differences in style, progressive or conservative art, art at uncommon places or big art, media art, and the like. The relation between funding structure and art-activity seems to be straightforward and follow a logic. The performing arts offer art in an atmosphere of merry and laughter which is related to going-out and relaxation. The presentation of art in museums is much more serious. The willingness to pay for the performing arts is than understandably much higher than for museums and hence museums have another funding structure. This is however not so straightforward as it seems. It may be so when one takes the logic of economics for granted. Might it not be the case that the willingness to pay of art-consumers is higher for the performing arts than for museums, simply because museums have always been subsidised and therefore the museum visitor has never come to learn the true price of cultural preservation? The following two stylised facts are tentative. We prefer to mention them, not because we want to convey the specific regularities contained, but rather to suggest some dynamics. 3) Historical differences: Non-market arrangements have generated most of our cultural heritage. We do not have any conclusive evidence on this point and the perspective is clearly western-oriented. Most of our material cultural heritage such as buildings, but also artistic products like paintings, plays, and music which still inform current cultural work, seems to have come from the dominant institutions of power like churches and the royal courts, the merchant class and well to do bourgeoisie. At any rate, this stylised fact may be viewed as a (falsifiable) thesis. It remains to be seen whether we can uphold it against the observation that precisely in the Netherlands, art markets date back to the 17th century. 4) Lifecycle differences: In the Netherlands artistic initiatives start by means of gifts of some form or

another, develop with the aid of government grants and at a later stage turn partially to the market for their funding. In the USA the role of the government is less pronounced and as a consequence private gifts (as in donations and voluntary work) remain more important through the life cycle of the initiative.

Our colleague Bevers (1987) has shown that the establishment of most Dutch music institutions at

the end of the past century took place in a setting of private initiative. From the beginning of this century onwards, these initiatives were nevertheless eager to engage local governments into their plans. After the Second World War the funding of these organisations became fully detached from its original benefactors and advocates. The same situation applies to the establishment of museums (they still carry the names of their benefactors) and theater-groups. It is only recently that the arts have been forced to search for new ways of funding.

Where in Europe the development of the arts is largely attributed to the existence of patrons and authoritarian states, the absence of strong and central institutions in the US raised the need for another solution. This already inspired Tocqueville to question whether excellence and democracy, (or rather the absence of elitist cultures) were a feasible combination. The three major institutions which he held responsible for the making of art, a guildlike structure, aristocratic consumers, and a healthy cultural climate, were absent in the US (Zolberg, 1990).

In the absence of conventional European solutions to fund the arts, in the US local elites became the primary target for the funding of the arts. In such a climate artists with an entrepreneurial spirit have the advantage. Only during the New Deal and after the Second World War did government support come into existence.


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HOW TO ACCOUNT FOR THE DIVERSITY OF FINANCIAL ARRANGEMENTS IN THE ARTS The conventional economic perspective takes an instrumental view of financial matters. The

market and the government are instruments for the generation of funds for the arts. Where markets fall short in the financing of the arts, the analysis may justify government intervention in the form of subsidies or other measures, and then it may not. Justification of governmental financial schemes on merely economic grounds turns out to be very difficult. The merit-good argument makes conventional economists nervous as it makes a statement about qualitative properties of the arts that is beyond the scope of their instrumental (or positive) mode of thinking. Conventional analysis also cannot accommodate the argument that if placed under the discipline of the markets, the content of the arts will adjust to accommodate the taste of a sufficiently large number of buyers. When the analysis takes into consideration the nonprofit character of many cultural institutions, it turns inevitably to instrumental questions such as incentives for people working in such institutions and the variables that should go into their objective function. Are tax deductions the subject then the obvious question is who pays? (cf. Feld, OHare and Schuster, 1983) or who benefits? (Clotfelter, 1992)

Insofar we know, the conventional literature does not consider the possibility that the method of financing and pricing may affect the value of a work of art. The financing is an instrumental matter. Whether a work of art generates $1000 by means of a commercial transaction, a government subsidy or a gift should not affect its value, at least that is the (implicit) argument of standard economic analysis. But why should the way in which the value of art is realised not have an impact on that value? We have found colleagues whom we posed this question, quite incredulous. Usually they did not understand what we meant by the question. They are inclined to equate value with price. Admittedly, in that case it is hard to imagine how the method of pricing can affect the value of that what is priced. Our approach is different in that it points at other values that a transaction can generate over and beyond the value of the traded good in and of itself. The reader may intuit that a transaction that involves a governmental subsidiy is of a different nature than a market transaction. We want to take this intuition seriously. But before we do so, we want to point at the space between the market and the government. With a few exceptions (notably Boulding, 1981) the economic literature has no attention for this third dimension but if we are right, the arts are hard to conceive without it. Furthermore, the transactions that take place in this third dimension are of entirely different nature than either a market or a governmental transaction.

BETWEEN THE MARKET AND THE STATE. The conventional economic frame makes us distinguish between the realms of the market and the government. Transactions take place in either of the two. Market transactions allegedly submit to the invisible hand of the price mechanism whereas government type of transactions are determined by means of political processes and implemented by bureacracies.

In the economics of the arts a central issue is the pricing of art in markets vis-a-vis the provisioning of the arts out of collective means. The question is whether the failures of the market for the arts are such that governmental subsidies are warranted. This thinking in dual options directs the societal discussion that follows cutbacks in governmental subsidies of the arts (as is now the common experience) inevitably towards market solutions (pricing, sponsoring). But there are other possibilities as the stylised facts show. The restraint of US government of the arts does not mean that the market in the US has taken charge. A major source consists of voluntary contributions by individuals and corporations. Think furthermore of voluntary labor and the financial sacrifices that artists themselves and their families are making for the art work, and it becomes clear that a sphere distinct from the government and the market is operating in the world of the arts (and not only there). It is the sphere of informal associations, relationships of reciprocity, gifts and donations. It is sometimes called the third sector or dimension, or the informal sphere. Recently, it is considered as part of the so-called civil society. We will call it here the third sphere.

Now we need to show that these three spheres generate distinct values and meanings in such a way that it matters in which one the value of an art work is realised. We focus first on the market in contrast to the government. For the sake of clarity, we begin with ideal types of both.

In a market transaction a good changes hands in exchange for something of equivalent value, usually a sum of money. The price is the measured value of that good. It incorporates subjective assessments (by the buyers) and objective conditions (like the costs and technology of production). A well functioning market has an efficient outcome and thus serves the value of efficiency. Markets in general symbolise the value of freedom, like the freedom to set up enterprises, to offer ones labor time to the


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highest bidder, and, most importantly the freedom of choice for the consumer (cf Lane). Markets work objectifying in the sense that they render personal and social relations irrelevant (at least for the analysis). All that counts is the price. Well functioning markets allow individuals to trade in anonymity. When the market metaphor is pushed, humans become solipsistic individuals who trade with each other with the price as the only intermediary.

A transaction that the government controls is different insofar that bureaucratic procedures allocate instead of prices. Rules determine who gets what when the government is in control. The basic value or outcome that motivates government intervention is that of equity. The government takes charge of health care on the assumption that it can generate a more equitable distribution of care than the market does. basis of the argument that a free market of health care would be unjust. It serves not so much the value of freedom as that of solidarity. The government extends transactions and transfers beyond the circles of families and small communities to the national and sometimes international spheres (development aid). Yet, as an ideal type the government works as objectifying as the market. Barring corruption and nepotism the government ignores personal and social relationships and treats each citizen objectively. The ideal government does not discriminate. As a consequence, it individualises its citizens just as the market does.

Table 1 The market and the government

MARKET GOVERNMENT

Price Rule Efficiency Equity

Freedom Solidarity Objectifying Individualising

Standard economic analysis compels us to concentrate on outcomes. When economists study the

market, they will focus on the (measurable) output such as income generated, quantities sold and realised prices. We suggest to consider the process as well, that is, to view activities, conversations and thoughtprocesses that underlie, precede and accompany market outputs. We postulate that the process as such generates values that are distinct from the value of the good traded. Each sphere has its own characteristic process. When artists operate in a market, the process must be generally different from when they deal with governments. In markets they need to know their asking price, they will talk with intermediaries (dealers, galleryowners, producers) and have to consider marketing and p.r. techniques. They may even talk about their work as products, and about potential buyers as consumers. The market sphere generates a specific rhetoric that participants appropriate. In Bourdieuss terms we would say that the market is a field that calls for a particular habitus. In Hutters terms we would say that the market dictates a particular play (Hutter 1996)

When involved in the sphere of subsidy the artist will have to fill in forms, consider the opinion of the so-called experts, socialise with cultural bureaucrats and learn a way of talking that will get their ear. At the same time the enactment of these interactions affirms the value that the collective attaches to the arts in general. Subsidies symbolise such a valuation as well as the value of solidarity of the community with artists who are unable to realise the value of their art in market settings. Artists may appreciate this sphere as it allows them to avoid the negative values that they connect with the market sphere such as commercialism, rationality, and anonymity.

These two spheres do not exhaust the possibilities for artists to realise the value of their work as the stylised facts indicate. Vincent Van Gogh did not receive any government subsidy and did not sell his work on the market. Instead he traded some of his work with fellow artists and, of course, got supported by


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his brother. Partners, families and friends can be an important source of financial means for artistic work. In the past church-authorities, aristocrats, royalty, or merchants were willing to be patrons of the arts or maintained individual artists. In all these cases there is no immediate quid pro quo as in a market. The instrument is the gift and the arrangement is one of reciprocity: the artist receives resources and incurs in turn a mostly unspecified obligation. The brother van Van Gogh may have been satisfied with the knowledge that Vincent occupied himself in a for him meaningful way. Siblings, parents and partners may be satisfied to be paid back in terms of an affirmation of their responsibilities as siblings, parents and partners. The merchants and royalty may have expected something more concrete in return, such as a masterpiece someday in the future, or, less concretely, artistic success. Foundations that grant money , however, may be more specific in terms of performance and finished work.

The essential characteristic of this third sphere is the ambiguity of the exchange. In contrast to the marketsphere, the value of that what gets exchanged is in the rule not measured explicitly. The participants do not price their services and products. As a consequence the play involved is deep and intricate; participating in the play requires special social and interpretive skills by which participants assess the expectations of their partners, negotiate the terms of the reciprocal relationship (how often do I need to say thank you when you have put me up for a week so that I could do my workor do I need to bring flowers?)

TABLE : The third sphere

MARKET GOVERNMENT INFORMAL SECTOR

THIRD SPHERE CIVIL SOCIETY PRICE SOCIAL AND QUALITATIVE RULES CONDITIONS EFFICIENCY SOCIAL AND CULTURAL VALUE(S) EQUITY FREEDOM CONNECTEDNESS, LOYALTY SOLIDARITY OBJECTIFYING PERSONALISING OBJECTIFYING INDIVIDUALISING SOCIALISING INDIVIDUALISING What to include in the third sphere we do not quite know. Following those who have written on

civil society (see below) we are inclined to include all voluntary and informal associations like families, circles of friends, networks, associations of professionals, clubs, churches, non-profit institutions (but not those that are indistinguishable of for-profit organisations or governmental bureaucracies. The dividing lines between the three spheres will be blurred. An artist who sells an work of art to a friend may operate both in the market and the third sphere. Interactions within a corporation will also have the character of interactions in the third sphere like when they rely on loyalty, involve reciprocity, and deal in values that are not measured. In order to differentiate between the three spheres we need to develop a sense of the difference in values that each generates.

As said before, economists do not appear to have an eye for this third sphere. The economics literature contains very little discussion of its role and its characteristics. Boulding is an exception. Like


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we do here, he distinguishes between the grants that governments give and the gifts in the third sphere (although he does not use this latter term). He suggests that reciprocity has a function in building a sense of community and a more complex structure of personal relationships that pure and simple exchange is unable to perform (1981, p. 31) (It should be noted that among anthropologists and many sociologists these observations are obvious but they are not to economists, at least according to our experience.) These informal interactions in networks of voluntary associations are the main subject in the recent fashionable subject of civil society. (In the following section we will briefly venture in this literature to see where it can contribute to our discussion.) For our immediate purposes, it suffices to observe that financial arrangements in this sphere are of a character that is distinct from the arrangements in the sphere of the market and the government. As Boulding intimates (his analysis does not go much further that that), arrangements in this third sphere serve to sustain and affirm connectedness with a particular other or with a group of people, or with a particular culture. When we referee papers for journals free, we in a way affirm by doing so our membership of a community of scholars. Theo Van Gogh affirmed by his gift his identity as a brother. Like in the spheres of the market and the government, a transaction in this third sphere generates other values in addition to the value of the good that is transacted. Theo and Vincent generated in their reciprocal relationship the value of brotherhood or, more in general, the value of family. Organisations affirm in their patronage the value of art in general as well as the value of giving. Some foundations (like the MacArthur foundation) go out of their way to free the recipient from explicit obligations. They donate a couple of hundred-thousand dollars with no strings attached. In that way they affirm the value of free intellectual or artistic work. Thus they prevent being associated with the sphere of the market where explicit specification and measurement is being valued.

To see the differences between the three spheres consider the case of an artist who tries to realise the value of a work of art. There are three methods open for him (or her). We assume that in all three cases the realised value is $1000. How he realised the $100o matters in the following way. When he sold the work on the market for art he may experience a sense of independence (earning your own money), but may dislike the anonymity of the process as he does not know the buyer. When he got the $1000 by means of a subsidy he might appreciate the recognition that such a subsidy implies (even if it means that he still owns his work), yet he may be bothered by the evaluation process to which he had to submit himself. When he got the $1000 through the generosity of some well-to-do businesswoman he may enjoy this personal expression of commitment and appreciation but may be bothered by a sense of obligation or dependence that such a gift generates. The table below elaborates on the possible values that the processes in each sphere generates.

The artist may not particularly care about how he got the money as long as he can make a living of it. At least that is often the reaction we get. Yet it matters in a social sense. Even if an individual does not care, social consequences are significant when on a societal level the emphasis shifts from one sphere to another. The (stylised) fact that the US relies much more on the third sphere than continental Europe (and has the institutions to support that sphere), attests to cultural differences at large.

In the following table we summarise the preceding discussions. The point of departure is an artist

who realises $1000. The question is how the way by which he acquired this amount for his work, matters. The answer requires us to consider the values that each sphere of exchange generates.


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TABLE THE FINANCIAL ARRANGEMENTS MATTER OBJECTIVE ACTIVITY:

Work of Art Artist Benefactor 1000 $

METHOD OF FINANCING IMPLIES GENERATION OF VALUES

The process of the market generates values such Entrepreneurial spirit Consumer Sovereignty Independence Ownership

Freedom of Choice Calculation Anonymity

Commercialism Competition

A process which involves the Government sphere generates values such as Public Recognition Collective Appreciation Dependence Non Arbitrary

Sense of Solidarity Bureaucratic Procedures Elite Culture/Paternalism

The Third sphere generates values such as Social Recognition Involvement Mutual Dependence Subjective

Reciprocity Relationship

Loyalty


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THE IDEA OF CIVIL SOCIETY: AN EXCURSION IN THE LITERATURE In our discussion of the existing variety in financial arrangements in the arts we referred to a third sphere, other than those of the market or the state. In order to give further content to this sphere we try to benefit from intellectual work captured under the rubric of Civil Society. In its most elementary form the concept of civil society stands for voluntary associations of free individuals. This is supposed to be a synthesis of private and public good and of individual and social desiderata. It harmonises, the conflicting demands of individual interest and social good. (Seligman, 1992, x) Walzer refers to it as the space of uncoerced human association and also the set of relational networks formed for the sake of family, faith, interest, and ideology that fill this space (Walzer, 1995 [1991], 7).

It is a popular view to present civil society as a means to overcome the opposition between the market and the state. In the form of a voluntary association, in civil society the functions of the state, as guarantor for the public good and the function of the market as the realm where individual enact their wants are integrated. Since this opposition of the market and the state was also shown to be present in the issue of funding the arts, civil society may present a valuable alternative.

The idea of Civil Society has become in vogue in the past ten years. Its recent upsurge is commonly attributed to changes in Eastern Europe. With the collapse of centralist forms of social organisation, the reformists, in search of a new mode of social order, are painfully confronted with a deteriorated state of civil society, it is argued. Although in Poland, for instance, the origins of the revolution can be traced back to civil organisations like labor unions and Solidaridad, it has become common practice to take recourse to prospering some form of civil society as a prerequisite for redefining the market and state.

Apart from its application in Eastern Europe, notions of civil society also figure in political reorientations that currently take place all over Europe. The civil society is sometimes even being heralded as the impersonation of post-modern societies.

It would nevertheless be wrong to think that the idea of civil society is entirely new. The idea perhaps dates back to as far as early stoic thought and natural law theory and has from thereon experienced a number of revivals, revisions, and re-appropriations. The reason for resurgence is in most cases found in a crisis of social order, similar to the one in Eastern Europe. For its modern form, the idea of civil society is rooted in the Scottish Enlightenment. Authors like Hutcheson, Ferguson, and our Adam Smith have invested us with a model of social order, that of civil society. It seeks to synthesize oppositions such as the social versus individual, public and private, passions and reason, altruism and egoism. From thereon the tone for the idea of civil society had been set and a wide variety of reinterpretations were to follow, the most important ones being Tocqueville and Gramsci. These various reformulations have left their traces in current representations (Seligman, 1992). The following definition of civil society by Ernest Gellner (1994, 32) for instance has a great number of Tocquevillian remnants: civil society is that set of non-governmental institutions, which is strong enough to counterbalance the state, and, [] can nevertheless prevent the state from dominating and atomizing the rest of society.

Due to its long and lingering intellectual history, current use of the concept of civil society is far from unequivocal. It is invoked in a wide range of disciplines such as sociology, political theory, history of political thought, and ethical theory. Besides, its use has not remained restricted to the academic forum, but the idea invaded public opinion and became a buzzword among politicians and policy-makers. The idea of civil society sells. Our flirt with the idea nevertheless intends to reduce the concepts frivolity by making it productive in our particular setting, that of the arts.

Had it been conceived in the Scottish Enlightenment as an idea where a descriptive account of social order coincided with a moral account of social individuals, the course of history shows an inclination to detach the two, a development which has been incited by Humes famous separation of is from ought. Also a number of contemporary social scientists seek to use it as a description of the social world without having to take recourse to its moral dimension. Despite these intentions, the conflation of descriptive uses of civil society with prescriptive ideals is still common, a fact which at the same time may very well account for its persuasiveness. In addition, its use is often punctuated with a romantic desire for associationalism as depicted in the happy life of small circles where people live well embedded, in mutual care and support.

We hope that by referring to its historical roots, the impression can be upheld that the conflation of social organisation and values is essential to the idea of civil society. Hall (1995, 2) refers to it as a package deal which contains both a particular social institution and a related process of valuation.


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Current research into civil society can broadly be divided into two groups. One attaches to the divide between descriptive and moral accounts and chooses to study the organisation of civil society as if it were a separate sector. This strand relies on rubrics like the third-sector, the non-profit-sector and poses them on equal footing with the market and the state.

Research questions are directed at drawing up a picture that shows the relative size of the three sectors. This serves to ask further attention for the importance of that part of social life that has remained undiscovered. Furthermore, it can serve to test hypotheses on the corrosion of civil life due to the expansion of either the market or the state (and vice versa). Within economics, important contributions in this area come from the group surrounding Lester Salamon at John Hopkins, but may also be found among a large variety of authors such as Wuthnow (1991), Weisbrod (1988), Clotfelter (1992), Hodgkinson and Weitzman, Hansmann (1980) Ben Ner-Gui (1993) and the like.

In the second tradition one rethinks the dominant paradigms for thinking about society, namely the market and state by explicitly invoking the pair of social organisation and moral order as contained in the idea of civil society. This is to view civil society as a moral phenomenon. Relinquishing it of the somewhat distant vocabulary of the Scottish Enlightenment, this view amounts to the idea that in civil society individuals act as civilians whose actions are an integral part of the particular social structure they belong to. The key idea is that people care for their social context and act in order to sustain it. This differs considerably from those areas of social life where social relations are organised in a much more instrumental fashion. In the market there is no social objective to care for, whereas in a state we have disembodied our care for the social objective. In a civil society one wishes to make the social whole ones own. Authors that fit to the second approach are Oakeshott, Enzensberger, Habermas, Walzer, Charles Taylor, Bell, and Shils.

Following up on the first strand research of civil society and to apply it to the arts, the first thing to do is to recognise that most artistic activity already takes place in a civil environment. Most art organisations are non-profits. Yet, its application to the arts would have to go a step further and would have to elaborate on those funding arrangements that we have put under the rubric of the gift. Standard conceptions of support by foundational and individual giving can be expanded by a number of informal supportive structures for the arts. To name a few: volunteer work in art organizations, informal networks among artists in which services are exchanged and market information gets distributed, Akerlofs thesis of labor gifts of people who like to work in an artistic environment, internal subsidies, Friends-of organisations, and the like. It can be researched whether the existence of those funding structures also implies higher levels of participation and whether it enhances how people perceive the cultural climate of their region.

Research in this direction could also help establish the size of these arrangements. We dare to say that due to these activities that come out of civil society, it even exceeds the money value of private support to art-institutions.

Consequences reach further when considering the second line of research on civil society for the context of the arts. Walzer (1995) refers to civil society as the place where we realize the good life. In civil society we generate social goods and at the same time establish how these goods are distributed. Put in language of the economists, the various kinds of voluntary associations establish their own public goods and define the way they ought to be allocated. In establishing a particular voluntary association like a museum the initiators establish what goodies it is supposed to produce and secondly they decide how these are distributed; the trustees pay for it and everyone can come in, or the trustees make a building and the people pay for what they want to see.

Subsequently, there are two ways to view the relation between the civil society and market or state. First, and this is much more in line with the social-scientific research strand on civil society, is to conceive of civil society as just one setting among others. The other is to view civil society as a more fundamental social setting in which the market and the state are embedded. Lets call this the embeddedness thesis. The operations of the market and the state rest upon civil society. An instance of this view, most familiar to economists is Mark Granovetters (1985) critique of the under- and oversocialized view of man in economics.

However that may be, we may learn that just like acts that take place within civil society, also the activities that take place on the market or through the state, represent a particular moral order.

Some skepticism with regard to the idea of civil society is nevertheless appropriate. As Seligman (1992, 200) puts it: the idea of civil society has been taken up by mainstream Western intellectual as the new cause clbre, the new analytical key that will unlock the mysteries of the social order.


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His criticism is largely geared against the use of civil society as a moral phenomenon. He accuses it of being to general by merely claiming that humans are moral and that the idea does not present any further clues to overcome the age-old problem of how society can be constituted out of individuals. It does not help to understand the fundamental contradiction of social life.

Hence, some caution is warranted. The presence of a particular social structure that looks like a civil society structure is not a guarantee that it is an instance of a civil society. This criticism is largely applicable to those who seek to study civil society like structures detached from its moral content. Particular social structures function as idealtypes. Civil organisations may become marketised or turn into bureaucracies. Just like a friendship is by some people valued according to the values of the marketplace, whereas for instance in fraternities or army units friendships have become bureaucratised. CONCLUSION We have not precisely accomplished what we set out to do. Even though we have conceptualised the space that allows considerations of values that are generated in the process of realising economic value and have shown the distinctive values of three different spheres, we are unable to indicate the relative size and importance of each of these spheres in the world of the arts and have failed to make tight connections between the empirical and conceptual part. Furthermore, our array of values are tentative. We need to do surveys and ethnographic research to determine which values actually apply and function in a particular setting. We also fear that the reader will be easily confused about the distinctions between the three spheres as in reality they get easily mixed up. Nevertheless, we think that we have made a start with this conceptualisation of the issue. We are confident about our thesis that financial arrangements matter. They matter to the lifeworld of artists who have to consider the consequences of realising the value of their art in one sphere rather than another. They matter to policy makers as their policy may favor one sphere over another. This framework suggests that they consider the values that heir policy affirm of reject. They also matter to cultural institutions who may think twice before they decide to embrace a market strategy. They matter to us researchers because as for now we have little insight in how they matter.


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Klamer, A. and P.W. Zuidhof. The Role of the Third Sphere in the World of the Arts. Paper presented at the XX Conference of the Association of Cultural Economics ....pdf

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