The Arts and Economic Policy

Consumer sovereignty is taken to be the aim of policy by which the nature and form of public intervention is identified, both in order to influence the provision of and also the demand for cultural services. Such services are defined by enumeration and include creative arts, performing arts and heritage. In practice, some such services, such as museums and galleries, are publicly provided and paid for, and others, such as artists, theatre, opera and ballet companies and broadcasting receive substantial financial support in the form of grants and tax relief. The interesting question is why such support, coupled with regulatory measures to control the provision and sale of historical artefacts, is found in the arts, whereas in other forms of productive activity, such support is increasingly reduced, as instanced in privatisation measures. The answer seems to lie in scepticism by governments about the ability of consumers to choose for themselves the cultural services that they wish to enjoy and therefore the strong influence of producer interests on government policy exploiting the argument that peer group assessment is the sole guarantee of quality. The consequences of this situation are then explored with reference to both allocative and productive efficiency. Suggestions for policy changes are given seriatim and a view is taken as to how such changes might be influenced by possible future economic trends.