Transcript Economics_2006 04

Economics of the
Cultural Industries
Examine changes in capitalism, and
especially cultural economics over time
Explore the nature of the cultural
commodity
Look at the nature of the cultural
production process
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Learning Objectives
Identify three main similarities and three
main differences between industrial
consumer good and cultural consumer good
production
Key Q: what is special about the cultural industries? (Hes:
pages 17-22)
Key Q: within the cultural industries, what are some key
differences?
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Part One: Changes in
Capitalism
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Review of Hesmondalgh
 Chapter 2 examined some of the basics in the issue of transition to
a new form of cultural capitalism, concurrent with the shift to the
so-called information economy
 Is there a radical shift?
 Chapter 3 highlights the reasons for the ‘shift’ thesis ( however
continuous and not discontinous)
 Especially impact of the big recession of the 70s ( starting what
Hesmondalgh calls the Long Downturn))
 Rise of neoliberal thinking: growth of world trade
 Accelerated with fall of communism in Eastern Europe around 1990
 Chapter 5 explores the complex professional capitalist form of
organization
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Decoding Hesmondalgh
-
Defines his approach
-
Political economy from a cultural industries perspective
Particularly likes the theories Miege ( page 22): why?
Notes what Cultural Studies Has to Offer ( page 38-41)
Starts from an epistemological position of realism
-
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Realism: the assumption that there is a material world
external to our cognitive one which is accessible to
understanding
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Defining Hes’ Approach
-
NOT Neoclassical Economics
Wants to ask questions beyond what efficiently satisfies want
-
-
Determining human needs and social justice
NOT Liberal Pluralist
-
Does not posit a competitive universe of policy interests
Wants to look at power over time; structured forms of inequality
Not only procedural
- Hesmondalgh the Humanist:
-
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“we need to rethink how massive presence of entertainment in people’s lives
affects not only our notions of how democracy works, but also how we think about
other aspects of human life, including ourselves as feeling, emotional beings”
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Defining Hes’ Approach
- Indebted to Raymond Williams
- Aligns with political economy which places a greater
emphasis on ethics and normative questions
- Aligns with critical political economy
- Characteristics:
-
Holistic
Historical
Look at the balance between private and public
Ask questions of justice equity and public good ( page 32)
-
An organic, historical thinker in the tradition of media historian John Thompson in Media and
Modernity
-
Note: he rejects the dichotomy of political economy versus cultural
studies ( page 41)
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Hesmondalgh on the
Cultural Industries
- Likes Miege and Garnham and others because they are better
dealing with:
- Contradiction between structure and agency and contradictions
within industrial segments
- Specificity
- Tensions between production and consumption
- The sociology of creation
- Popular contents like entertainment
- Historical variations in cultural production
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The Historical
Trajectory
 Like many historians, asking himself: what, if anything is unique about
contemporary capitalism and cultural production after 1980?
 Looks for patterns of continuity and change
 What is at issue:
 Discussions of fordism and post fordism
 Is there a radically different transformation of capitalism underway?
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Fordism and Post Fordism Compared
 Fordism
 Mass Production
 Unionized Labour
 Standardization
 Market aggregation
 Centralization
 Technology of
Production
 Concentration
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 Post Fordism
 Flexible Production
 Casual Labour
 Individualization/
 Niches/Segregation
 Decentralization
 Technology of
Consumption
 Coordination:
Networks
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Historical Changes in
Capitalism
 Shift away from manufacturing and resource
sectors to service
 Rise in cultural employment
 Rise in advertising as a proportion of GDP
 Internationalisation
 Owners of business invest abroad to spread fixed costs,
and exploit lower labour in LDCs
 Removal of trade barriers
 Emergence of international networks
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Changes 2
 The Networked Economy
 New methods of interfirm networking, especially to lower
costs of R & D
 New strategic alliances
 Changing work: flexible, part time workers
 Implications of Cultural Industries
 Propagate neo liberalism
 Appeal to changing values, rising leisure
 Growing discretionary budgets
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Changes 3
Rise in demand for computer innovation
Implication of military, and transnational
corporations
Key innovations: miniaturization, mobility,
taping
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PostFordism Today
 Transition uneven
 Thesis of radical transformation disputed by many scholars
 Both continuity and change
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Hesmondalgh’s Bottom Line
Cannot ignore the broader economy
Cannot ignore continuity
Argues there is not, as yet radical change in the
modes of cultural production
Disputes myth of new technologies
Disputes power shake up of the Internet
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Mapping the Historical Trajectory:
Four Periods of Cultural Economic
Production
Once again, begins with Williams who
identified three historical moments or eras
in cultural production
Hesmondalgh introduces a fourth era
Patronage
Market Professional
Corporate Professional
Complex Professional
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Patronage ( 1400-1800)
Where rulers or aristocracy support the
artists
Prevalent from middle ages to 19th century
as the dominant form of social relations
between symbol creators and wider society
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Market Professional ( 18001940)
When works offered for sale,
creative production becomes a market,
offered through intermediaries which make more money
need middle class to emerge with both the time and money
to acquire cultural products
 Characterized by:
 More complex division of labour
 Small to medium size enterprises (SMEs)
 Mostly contained geographic markets
 Higher levels of competition
 Viable public studios




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Corporate Professional
(1950s -1980s)
 Increasing agglomeration into very large
companies
 Oligopoly power
 more creators become employees
 commissioning of works more professionalized
 New technologies, new techniques for marketing
 It is this period the Frankfurt school Critiques as
the emergence of the mass society
 Shift to commercial dominance/eclipse of public
sector
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Complex Professional
(1980s+)
 Defined by Increasing division of labour in
production of texts
 Hesmondalgh prefers this concept
 Features new relations of small, independent, and
large companies, together with free lance workers
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Historical Contrasts
 Before
 After
 Creative stage carried out by
individuals
 Now carried out by a project
team with various roles
 Creator/Owner simple diadic
relationship
 Craft/Creator;
Owner/Manager now
differentiated
 Large degree of autonomy
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 High degree of autonomy;
BUT control tightens in later
stages of cultural production

( source:
Hesmondalgh, 54)
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Contrasts Continued
Before
 Regular wages
 Multiple, competitive
companies usually in one
industry
 Internationalisation of narrow
elite markets followed trade
flows/imperial centre
periphery relations
 Highly regulated( eg: role of
US state in film.. Page 52)
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After
 Royalties
 Concentration and oligopoly–
firms now in multiple
industries( conglomeration)
 Successive waves since 19th
century of:




Cultural forms
Technologies
Industries/Texts
Capital Intensification( H:63)
 Growing business selfregulation
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Importance of the “Long
Downturn”
 50s to 70s
 Period of global economic boom
 Characterised by central role of the State ( welfare state)
 Twin Recessions (1974-1975; 1979-1982)
 OPEC energy crisis triggers economic stagnation
 High inflation
 Fiscal crisis of the state
 80s-90s Neo Liberal Economic Adjustment





Dismantle state monopolies
Seek to contain wage costs
Increase in mobile money/investment/labour substitution
Shift to service sector
Deregulation
 Effects: accelerates emergence of oligopoly; internationalisation
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Internationalization
 Waves of investment and trade in film, then sound recording,
then television
 After the 1970s the US dominates the complex professional
era in creative production
 US cultural industries benefit from:
 Large domestic market where cultural producers can recover
their costs at home, and lower costs abroad to gain price
advantage for entry to foreign markets
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Recurrent Historical
Continuities
 Miege:
 Creative labour is underpaid
 Tends to bear full costs of creative risk: foregoes secure work
 Why? Permanent oversupply of non-professional cultural workers in
reservoirs
 These ‘amateurs’ take other work to subsidise artistic activities
 Wages kept down by transferability from other cultural industries
 So, historically, successive job markets where most creative
workers are under employed to underpaid– limited penetration of
guilds, and where there are guilds, guilds tend to be technical
 BUT, complex professional/contemporary era is increasingly
characterised by several ‘vastly overpaid’ supernumeraries
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Recurrent: Cont’d
Creative workers and distributors struggle
to negotiate rewards via contract to set
royalties: now overseen by Copyright Law
which is increasingly international in focus
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The Bottom Line

Hesmondalgh downplays the proposition we are in a radical,
transformative shift in the cultural industries


1. Large size of cultural industries still does not approach the size of the world’s
largest corporations… not yet the new core
2. The distinctive feature of this period is the emergence of the cultural industry
networked economy:



-
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Large and small are increasingly interdependent and mutually entangled in complex
networks of licensing, financing,and distribution
But this a change in form, not power
3. There is greater challenge to the US in international markets ( Bollywood,
Latin America, Hong Kong) but these not new: Hollywood hegemony rises and
falls, but new production centres do not yet approach the size and power of the
US market control– significant inequality of access remains
4. Increasing rate of technological innovation, but Internet is increasingly
commercialized and a supplement to other media… thus WHAT IS THE AUTHOR’S
CONCLUSION?
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Hesmondalgh’s
Conclusion:Less than
Radically Transformative?
- There is sufficient continuity to undermine the
suggestion that we have entered a new era of
cultural production.
- Rather, we should think of the last twenty years
as representing a new phase within the complex
professional era,
- Which is marked by greater
competition,balanced by oligopoly in complex
arrangements and greater centrality for the
cultural industries within advanced industrial
economies as a whole ( h: 260).
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Part 2 The Nature of
the Cultural
Commodity
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Why Cultural
Commodities are
Unlike Others
-
Nature of the Product
Nature of Labour
Nature of the Production Process
Anatomy of Marginal Cost
Substitutability
Nature of Demand
Nature of Pricing
Type of Consumption
Source: Peter S. Grant and Chris Wood, “Curious Economics” in Blockbusters and Trade Wars, 2004, p. 45.
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•Nature of Product
 An ordinary product is:
 A material thing
 serving a utilitarian function
 A cultural product is:
 An immaterial thing ( an idea)
 Serving a symbolic function
 If it is advertising supported: what is commodified in
trade is the audience, not the content
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Labour
An ordinary product:
To reduce/rationalize costs of production, a business will always seek a) to reduce
material and labour input costs and b) substitute technology for human labour
A cultural product
Cannot achieve ‘perfect’ substitution of technology for labour: always human labour
intensive
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Nature of Production Process
Ordinary Commodity
Assembly Line, Routinized
Each Unit Requires Significant Resources
Cultural Commodity
Expensive, One time Process
Craft Line, Non Routinized
Each Subsequent Unit Requires Trivial Resources
to replicate
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Marginal Cost of Unit of Production
Ordinary Commodity
Very High
Cultural Commodity
Very Low
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Substitutability
Large Degree of Substitutability Between Competing Brands
Limited Substitutability: Copyright Law Protects Monopoly on Each
Product
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Predictability of Demand
Demand Predictable: Amenable to Standard Curve Plotting ( Risk can be
quantified)
Demand Difficult to Predict: Limited Forecast Plotting ( Risk much harder to
quantify)
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Time Line of Demand
Demand for Product Continues until next product cycle: measured in years
Demand Drops Sharply after introduction until replaced: product cycle
measured in weeks or months
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Nature of Pricing
Ordinary Product:
-
-
subject to supply and demand
Assumes ‘perfect’ competition
Pricing tends to be non-discriminatory
Cultural Product
-
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Limited supply if using scarce technology: eg. spectrum, limited bandwidth
Assumes period of monopoly over intellectual property
Pricing tends to be discriminatory
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Nature of Consumption
Ordinary Product
 Exclusive: destroyed/discounted in consumption
 Cultural Product:
 Non-Exclusive
 Original (book) may be consumed or read, but after it is available to others
 Attributes of a Semi-Public Good
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Who Determines Demand
 Ordinary Product
 Ultimate end consumer
 Cultural Product
 Books and Movies/DVDs: ultimate consumer
 Television and Magazines ( advertising supported): advertiser determines demand
( ie demand is intermediate/)
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