Valuing culture in a transformational economy

The artistic and cultural sectors are facing significant pressures due to a reduction of public funding and the impacts of globalisation. Grant-in-aid funding for UK arts and cultural organisations fell by 18% between 2010 and 2023. So increasingly, organisations must explore other avenues to boost their earned income.

Austerity measures across this period, as well as the UK’s cost-of-living crisis, have created an environment where the need to prioritise economic returns has never been felt so sharply. The budget presented by the Chancellor on 30 October offers a settlement for the Department of Media Culture and Sport (DCMS) equivalent to a real-terms growth rate of 2.6%, among other measures. 

This is welcome news indeed but the road to recovery remains a long and challenging one for most. 

A case for change

Arts Council England’s Case for Change strategy report captures this need for transformation in the sector and more widely:

“The business models of publicly funded cultural organisations are often fragile, and generally lack the flexibility to address emerging challenges and opportunities, especially around the decline of public funding and the growth of new technologies…

Many creative practitioners and leaders of cultural organisations report a retreat from innovation, risk-taking and sustained talent development.”

We frequently hear about the need to innovate, to develop new business models, to improve resilience – the latter often used as a synonym for competitiveness. But when organisations are stretched to the limits, who feels they have the capacity and energy to do so?

It’s for this reason we need to consider whether the conversation should shift from the organisational level to the wider economy in which the cultural sector operates. An approach to help create a resilient environment through which freelancers, micro arts organisations and cultural institutions can focus on what they do best – delivering cultural value to society.

Classical economics v circular economy

Classical economics has always grounded itself in the conception of a mechanistic system, where resources flow from the abstract space of supply to that of demand.   The traditional assumption being that supply would inevitably respond to any given level of demand. In this sense, production and consumption are held in equilibrium and maintained through the self-regulation of competition. 

Obviously, this simplistic view of economics has been widely criticised. It’s been over 50 years since The Limits to Growth report was commissioned by The Club of Rome – a major influence on our thinking about sustainable development and environmental policy.

Recently, the notion of the circular economy has emerged as an important way of addressing how traditional economic equilibrium has failed to consider finite resources and the global impacts of growth.

However, while circular thinking is crucial for a sustainable planet, its interpretation in practice has still attracted criticism that the social impacts and implications of a circular economy shift remain under-explored. 

Embracing the human aspect

What’s missing from this rethinking of the economic systems we inhabit is still the human aspect – our communities, society and the richness and value of culture. In 2012, Max Marmer’s Harvard Business Review article described the need for societal impact in the business environment.

Drawing upon transformational economics and the need for a productive economy that serves human needs, Marmer underlines the necessity to balance economic and social value. One should be pursued with the other in equal measure for our economy to deliver socially and culturally transformative effects.

Transformational economics emerged in the 1990s from ideas around the experience economy whereby meaning-making and personal engagement become important drivers of economic value.

Over the last decade, it’s developed and gained traction as we appreciate the importance of balancing cultural, technological and sustainability needs – a balanced pursuit of economic impacts, with long term societal impacts to form a transformational economy.

And a more human-centred, 21^st century-fit economic model focussing on how we might aim to redesign economic systems and institutions to incorporate sustainability goals, as well as being equitable and socially just.   

Getting that balance right

Transformational thinking goes beyond the traditional emphasis on gross domestic product (GDP) as a measure of economic health. Instead, it balances this with the need to enhance well-being, ecological sustainability and social justice. It critiques mainstream, neoclassical economics for overemphasising growth and profit, calling for a more holistic and human-centric view of the world. 

Not all businesses can achieve long-term positive societal impact – although all can reduce any negative effects – but those in the arts and cultural sector can, given the space and ability to prioritise this. A systemic view of our industrial sectors helps us appreciate the contributions the cultural sector makes in helping us find balance to achieve a transformational economy.

Advocating for this social and cultural value in the economy is an important role for the Centre for Cultural Value as greater pressure is felt by our arts and cultural sector to monetise services and seek new forms of revenue streams through different business models.

So, as finances and economic concerns take centre stage, we need to ensure our adaptation and indeed our strategies for resilience – a term in desperate need for reinvention – don’t lose sight of the socio-culture half of this balancing act.