56 Throsby (1996) 232-4 presents evidence of better payment.

57 According to Throsby (1996) 233 and Throsby (1996a) the relationship be-tween arts training and income from art is weak, while the relationship between training and income from arts-related activities as teaching is relatively strong.

58 Menger (1999) 602-606.

59 Menger (1999) 604.

60 The professional bureaucracy in the arts is discussed in chapter 10.

61 Menger (1999) 607.

62 This implies that the survival constraint for artists loses signi.cance.

63 According to O'Brien and Feist (1997) only half of those with cultural occupa-tions in Britain in 1981 were still employed in these occupations ten years later. According to Menger (1999) 553-554 however, fewer artists withdraw from artistic careers than one might expect. The Dutch .gures in Linden and Rengers (1999) show that comparatively speaking, more artists leave the profession within the .rst year and a half after graduation, but after that they tend to stay for a comparatively long period. (Those who leave almost immediately after col-lege could be people for whom education is basically a form of consumption rather than a preparation for professional activities.) 64 The criterion is spending as opposed to earning. Therefore satisfaction is not relevant. A producer who enjoys a lot of satisfaction while at work, as many artists probably do, can still be a producer.

65 Towse (1996b) 316-320 and Menger (1999) 606-609 speak of oversupply. Blaug (2001) uses the more cautious term 'excess supply'. The terms 'oversup-ply' and 'overproduction' can also be used in a welfare economic sense. See sec-tion 9.8.

66 See also O'Hagan (1998) 148-151.

The Cost Disease 1 Baumol and Bowen (1965) and Baumol and Bowen (1966) 161-176. More recent writings on the subject by Baumol and colleagues can be found in Towse (1997). A small collection of sometimes-critical writings by other authors was pub-lished in a special issue of the Journal of Cultural Economics 20, 3 (1996).

2 Baumol (1996) and Towse (1997) 438-522.

3 Towse (1997) 103-244 and Throsby (1996). Peac.o.c.k, Shoesmith et al. (1982) 39 demonstrate that there would have been a cost disease in the performing arts in Britain if they had not lowered wages in the performing arts. The existence of a cost disease is disputed by Cowen and Grier (1996). However, as Towse (1996a) 245 notes, their results are dubious because they used census data for artists' .gures and incomes. Many artists are not included in this data.

4 Because quality is never constant, Blaug (1996) argues that the notion of the cost disease has little relevance. Nevertheless, I believe that the notion of the cost dis-ease is useful. As a theoretical concept it can in.uence one's perspective. More-over, if the a.s.sumptions are not interpreted in an all-or-nothing sense, the cost disease can be applied to the real world to varying degrees.

5 Baumol and Bowen (1965) and Baumol and Bowen (1966).

6 Using the terminology of Goodman (1954) 113-123 by using notational systems, allographic art replaced autographic art. I discussed the implications this has for productivity in Abbing (1989) 89-91.

7 Cowen (1998) 136-137.

8 In 1985 in the Netherlands attending an average (subsidized!) live concert cost some 50 times more than enjoying a concert at home on television. Abbing (1989) 119. For a concert by a well-known ensemble the difference would be much larger.

9 Cowen and Grier (1996) 10-12.

10 Cowen (1996).

11 If the soloist earns more than other members of an orchestra, the difference is still large but not as large.

12 The costs per 'unit of consumption' like attendance, or hours of consumption, or purchases matter when it comes to the severity of the cost disease and not the costs per production or performance. Two performances can have the same production costs, but if one production is performed only twice and the other two hundred times the ticket prices of the latter can be much lower. This allows the latter to compete more effectively with alternatives such as cinemas. Costs of production can only be used when the attendance of a production remains constant. This is what Baumol a.s.sumes. However, other than in cla.s.sical music and the theatre, attendance is seldom constant. Baumol and Baumol (1984), in discussing technical reproduction, sometimes also, but not consistently, used costs per unit of consumption. Nevertheless, it is understandable, that costs per production are sometimes used because costs per unit of consumption can be dif.cult to measure. It is often the case that there isn't even a unit of consump-tion to measure. For instance, for a live performance that is rebroadcast on tele-vision a different unit of consumption is needed to count home viewers. The question is how to divide total costs.

13 Baumol (1997).

14 Baumol (1997).

15 Cf. Goodman (1954).

16 Most conductors do not follow Stravinsky's directions of a very strict tempo be kept with a metronome. This is often simply too dif.cult for the performers; moreover a less strict tempo is thought to sound better. Stravinsky himself did-n't even stick to his own prescription. Nevertheless, these performances are, in a formal sense adaptations.

17 Stage sets for Macbeth exist that can be considered authentic copies because all of the directions have been followed, and still be so different that the author might as well have been someone completely different. Or people who see the .lm version of Romeo and Juliet with Leonardo DiCaprio are watching a true copy, even though it takes a while before viewers realize that the text is the origi-nal Shakespearean text. Despite the totally modern setting and characters, no lines or directions have been altered.

18 In the Anton Philips Hall in Eindhoven, the Netherlands, experiments with electronic ampli.cation were stopped, because the audience resisted ampli.ed performances. However, nowadays, the Muziek Theater audiences in Amster-dam seem to appreciate similar experiments, because they improve the hall's terrible acoustics.

19 Cf. Smithuijsen (2001).

20 Sometimes the opposite occurred. This was the case when musicians began re-turning to older and quieter instruments. It may not be mere coincidence that this movement has been particularly strong in Austria, Switzerland, and the Netherlands. In these countries the cla.s.sical music subsidies have been relatively generous, enabling orchestras to ignore the effects of the cost disease.

21 Because of the pressure of a host of under-employed performers, one would ex-pect the average income of performers in established companies to be not much higher than of performers generally. However, due to barriers, considerable in-come differences can exist.

22 Frank and Cook (1995) 61-84.

23 Cf. Langenberg (1999).

24 Evidence was previously presented in 5.4.

25 It can be argued that the cost disease must be added to the explanations of low income presented in chapter 5. That would be incorrect. The cost disease does not explain poverty; it only exacerbates poverty. Cowen and Grier (1996) 8 tell a similar story, but their criteria differ: because of general prosperity and be-cause of the joy of creating art, artists are prepared to work for low incomes and thus the cost disease is contained.

26 Baumol and Baumol (1984), Baumol, Blackman et al. (1985) and Baumol, Blackman et al. (1989) 131-5 have argued that the cost disease also applies to most of the technically reproduced art products such as literature, .lms, and cds. Even a large increase in productivity related to technical production will sooner or later be offset by the rising cost of the indispensable, often real time, personal service that is essential to the production of art products. For instance, there is an audience size limit in the case of .lms, even when the limit might be the population of the entire planet. Baumol et al. however overlook the possibil-ity that new cost-saving techniques will be developed in future reproduction and diffusion techniques. Moreover, Cowen and Grier (1996) 209 present a more fundamental criticism. They have pointed out that any production process in-volves an irreducible amount of labor. In the agricultural sector, for instance, the share of total costs of an irreducible amount of labor will also increase in the long run, if no new savings occur elsewhere in the production process.

27 In their original discussion of the cost disease Baumol and Bowen (1965) and Baumol and Bowen (1966) neglected the effects of rising income among the population as an antidote to the effects of the cost disease. This has been noted, among others, by Heilbrun and Gray (2001, ed princ 1993) 146-47.

28 Menger (1999) 542 and Benhamou (2000) 303. For the performing arts, see for the us Heilbrun and Gray (2001, ed princ 1993) 15, see for Britain Feist and Hutchison (1990) 2, and for the Netherlands Statistiek (2000) 11, as well as earlier editions of Statistiek (1996).

29 Linder (1970).

30 Cf. Baumol (1973).

31 As noted, this is the opinion of Woude (1987) 309. This opinion does not go undisputed. Nevertheless, even if the real number is much higher, for instance .ve times higher i.e., 5% the percentage of surviving paintings is still amaz-ingly low.

32 Cowen (1996) 145.

33 Cowen (1996) 176 predicts that with more and more music created in the stu-dio dance and techno music will become more composition-based again. He could be right in the long run, but the emergence of the popular DJ as an authen-tic and charismatic artist demonstrates that the need for performer-based au thenticity is still strong.

34 Because the visual aspect in traditional theatre, opera, and dance is stronger, these art forms do not compete with cds, but with video, .lm, and above all tel-evision. Although both live performances and technical (re)productions have important qualities of their own, the latter have gained an ever-increasing share of the market. Therefore it would not amaze me, if in these areas as well in new forms of live performances we will see the emergence of new techniques and of-fer new formats and products comparable to successful live pop music perform-ances.

35 Cowen (1996) a.n.a.lyzes cultural pessimism.

36 Cf. Doorman (1994).

37 Cowen (1996) 182 notes that Indian cla.s.sical music is more complex than West-ern cla.s.sical music. He also states that there is considerable complexity in some of our new musical genres.

38 Ploeg (1998) 412 stresses the choice the government necessarily makes when it a.s.sists one victim of the disease and not another.

39 Because donations and subsidies are additional sources of income, they neces-sarily relieve the cost disease, i.e., in a literal sense. When the directors of art companies succeed in attracting more donations and subsidies, their organiza-tions become 'healthier', at least in the short run and from their own point of view. From the point of view of governments they probably seem less healthy, however, because governments generally see their a.s.sistance as temporary the aim of a.s.sistance is to make art companies less dependent on a.s.sistance over time.

40 In the case where a government is consistently subsidizing the de.cits of partic-ular companies, they will actually be punished for introducing successful inno-vations. Cf. Pommerehne and Frey (1990), Frey (1999).

41 See section 6.6.

42 Schuster (1985), O'Hagan (1998) 135-138. In the present context, the higher tax deduction in the us can be ignored.

43 Throsby (1994) 7-9 presents a number of references. For the Netherlands, see Goudriaan (1990).

44 As noted, higher indirect subsidization through tax deductions in the us re-duces the difference to almost zero, but in the present context this is irrelevant.

45 O'Hagan (1998) 135-9.

46 For instance, in the case of theatre, the average audience size for performances by regular theatre companies was in 1992 in the us 50% higher than in the Netherlands; see Hoogerwerf (1993) 100 and 109. When the same performance is repeated for years the performers are often replaced.

47 Even though the share of donations in the us is no larger than the share of mar-ket-generated income, the in.uence of donors is relatively large in the us. This is not so amazing because in practice many personal ties exist between paid em-ployees at art companies and private donors and their representatives in donor organizations. The latter often hold key positions on the boards of directors of the various art companies. The in.uence of donors is often (but not always) conservative. The reasoning that applies to governments largely applies to donors as well. On the other hand, European governments, with their connec-tions to the new cultural elite, sometimes have a more progressive 'taste'. This is most evident in the visual arts.

The Power and the Duty to Give 1 O'Hagan (1998) 157.

2 Cf. Komter (1996).

3 Sometimes regulations just exacerbate the situation. For instance in the Nether-lands, structurally subsidized performing arts companies receive approximately 85% of their income in the form of subsidies on the condition that they pay rea-sonable wages.

4 In the short term, government subsidies beholden to national laws are forced transfers. If the government refuses to 'give' to the applicants, applicants can appeal in court. Nevertheless, most arts subsidies must be seen as gifts, because in the long run government can simply change the laws.

5 Schwartz (1967) emphasizes the importance of 'ident.i.ty' for both giver and re-cipient.

6 On the basis of the characteristics of the gift, not only private individuals but also corporations, large foundations, and government agencies give to the arts. If however, 'symmetrical groupings' became a requirement for gift-giving, as in the approach of Polanyi (1992, 1957) 35, most donations from corporations, foundations, and government agencies could no longer be considered gifts.

7 Cf. Mauss (1990 ed.princ. in French: 1923), Malinofsky (1970 ed.princ. 1922) 39-45, Levi-Strauss (1957 ed. princ. in French 1949) 84-94, Sahlins (1978) 185-205 and Gouldner (1960). According to Oliner and Oliner (1988), however, reciprocity can be absent under extreme circ.u.mstances. (With the exception of Mauss, these texts are reprinted in Komter (1996)).

8 This struggle was discussed in 3.8.

9 Epstein (1967) and Lash (1968) 63-113. More references in: Guilbaut (1983) 237-8.

10 Klamer, Mignosa et al. (2000).

11 Cf. Abbing (1992).

12 This also applies to the Dutch foundations, the 'Nationaal Inst.i.tuut' and the 'Prins Bernhard Fonds', which were originally primarily privately funded. Cf. Pots (2000) 274-5.

13 Cf. Veblen (1934).

14 Meulenbeek, Brouwer et al. (2000).

15 As mentioned earlier, the English moralist and aesthetician Arnold (1875) has already successfully promoted the view that the .ne arts embody the highest values of civilization.

16 In this respect, the Dutch royal family paled by comparison with other royal families in Europe. It did not have a strong court tradition to rely on. The pres-ent monarch, however, Queen Beatrix, has a.s.sumed the more traditional role. She is a fervent collector of visual art.

17 See the .rst ill.u.s.tration of Chapter 10.

18 The nouveau riche, like pop stars, athletes and IT experts, usually prefer to give to charities rather than to art. Pop stars veil their commercial background by giving, but they have no real need to legitimize their wealth.

19 Cf. Komter (1996) 118.

20 Drees Jr. founded a new social democratic party in the Netherlands called ds70. His father, Drees sr., is better known. After the Second World War he presided over a number of cabinets.

21 Meulenbeek, Brouwer et al. (2000) 41.

22 For the incomes of visual artists in the Netherlands see Meulenbeek, Brouwer et al. (2000) 34. (The amount of 1200 Euro is a speci.cation that was presented to me by one of the authors of the report, Natasha Brouwer.) In 1998, in the Netherlands the annual net income, i.e., after taxes, of the average forty-year-old employee with a higher education was 25,000 Euros.

23 An obligation to give plays an important role in almost every profession, not just in the arts. What appears to be exceptional is that in the arts this kind of ob-ligation is vested in a loosely organized art world.

24 If partners, family and friends would form a so-called economic household with the artist, their support of the artist would also be a form of internal subsi-dization. However, presently relatives are most of the time .nancially independ-ent and therefore the term 'donation' is more .tting.

25 Cf. Allen and Ramaekers (1999) 18.

26 The power to help a partner, son or daughter or close friend also brings at least some rewards in highlighting the power difference between donor and artist. Nevertheless, in modern families the difference in power must be veiled and overtly 'helping the artist' can be problematic. It can lead to all sorts of hilarious misunderstandings as in the last ill.u.s.tration.

27 Volunteer-labor from private donors is likely to be substantial. Klamer and Zuidhof (1999) 52 found that museums in the Netherlands save 27% on their labor costs by the use of volunteer labor. In the case of other art-organizations no estimates exist, but this type of donation is bound to contribute substantially to the large gift-sphere in the arts.

28 For the history of private giving in relation to government giving in the Nether-lands, see Bevers (1993) 38-109 and Pots (2000).

29 In this context it is worth noting that Kushner and Brooks (2000) 65-77 argue that street performances have certain ef.ciency advantages in comparison with indoor performances with tickets-sale.

30 Donors may however be aware of the costs and bene.ts of giving. For instance, donors realize that although in the short run it is possible to consume street art without giving, street artists only return when they earn enough money. Never-theless, conventions are likely to over-shadow calculation. Therefore, for many donors free riding, enjoying the performance without paying, stops being an al-ternative.

31 Ostrower (1995) 132.

32 Ostrower (1995) 133.

33 In some circles veiling the gift is regarded chic. However, to earn the reputation of 'somebody who inconspicuously gives' gifts must be noticed by at least a few people, who then spread the news.

34 Because donors can sometimes ask for their money back, when they don't re-ceive the agreed upon exclusive perks, these transactions can also be considered as commerce with prices that are arti.cially high, i.e., prices that don't conform to the market. The surcharge then represents the net gift.

35 See note 30.

36 Cf. Boogaarts and Hitters (1993) 165-6, Council (2000) and Feist and Hutchi-son (1990) 24. For theatre in the us, see Janowitz (1993) 7. According to Wijn-gaarden (1995) 43 the total sum of corporate sponsorship in the Netherlands amounts to less than 5% of the ministry of culture's budget. See also Bevers (1993) 64-8. Moreover as noted, sponsoring cannot be considered giving. Therefore, according to O'Hagan and Harvey (2000) corporate philanthropy is almost absent in Europe.

37 Wijngaarden (1995) 43 states that the requirements art-sponsoring must meet are increasingly the same as other forms of communication must meet.

38 In this respect, it is noteworthy that a particularly sincere Dutch intermediary, who brings .rms and art inst.i.tutions together, only uses the term 'patronage' or 'partnership' as they call it if the value of contracted returns does not ex-ceed 30% of the total donation.

39 O'Hagan and Harvey (2000). In the Netherlands as well, philanthropy is unim-portant but not altogether absent as Wijngaarden (1995) shows.

40 Cf. O'Hagan and Harvey (2000).

41 O'Hagan and Harvey (2000) 222. According to O'Hagan and Harvey, cohesion in the supply chain is another important return. As a form of goodwill it can be attributed to the imago of the .rm.