ECONOMICS OF A GOOD PARTY: SOCIAL MECHANICS AND THE LEGITIMIZATION OF ART/CULTURE, THE

Journal of Economics and Finance, Fall 2007 by Currid, Elizabeth

Abstract

Putting value on cultural goods is a messy business. Cultural value is not just an economic act but instead part of an intense social process of valorization and legitimization. Art/culture is socially consumed and socially aware. Economic value is determined by intangible (and ephemeral) social value formed from and within specific contexts by particular people, the "scene", so to speak. What are the mechanisms by which the social dynamics of art/culture impact its economic legitimacy? This article looks at how art/culture attains market value, focusing on the social contexts by which culture is produced, evaluated and distributed.

Introduction

Putting value on cultural goods is a messy business. Cultural products are inherently tastedriven, not performance-driven, and as such the market does not evaluate a Warhol silkscreen in the same way that it evaluates a dishwasher. Cultural value is determined by form, not function. And thus, whether a painting, a new music single or a fashion designer's fall collection, what makes "good art" (popular or elite) is seemingly arbitrary.

For most goods, successful, even satisfactory performance along with rarity (or scarcity) increases market demand. If a car runs faster, is safer, cheaper (or conversely, is luxurious), has better gas mileage and so forth, objectively speaking, it is better than a car that exhibits less of these qualities. Taste-driven products however are unpredictable and rely on subjective evaluation by gatekeepers and then consumers that reaffirm one another. In a recent controlled music experiment, the subjects' "favorite" song was random when individuals were unaware of other participants' favorite choice, with the ranking of song popularity only exhibiting a pattern when the subjects were aware of what other listeners chose as their favorite songs (Salganik et al., 2006). Increased consumption, market demand and perceived value are inherently tied to the subjective influence of other people (which can mean that everyone wants a particular shirt, book or tickets to the opera or conversely, that only a few elite, "in-the-know" people have access).1 In turn these subjective and social dynamics impact economic variables. Price, in other words, signals aesthetic value.

Despite arguments that art is "nothing but" one example of how goods are valued on the market, price (value) is not just an economic act or a function of the resources put into producing a cultural good (Velthus, 2003). It is unlikely that Andy Warhol or Jackson Pollock used significantly (if any) more expensive paint or canvas than the countless artists who remain anonymous and unable to sell their artwork for pennies. The value of a concert ticket or a pair of limited-edition sneakers is also a function of the intangible value of "cool", "stylish", "hip" or otherwise bestowed upon it by those legitimate tastemakers and evaluators of art/culture.

It has long been noted that the social milieu is instrumental in these processes (Wolff, 1993; DiMaggio, 1987; Caves, 2000; Plattner, 1996; Zolberg, 1990; Currid, 2007; among others). Art/culture is socially consumed and socially aware - people listen to music together, they form opinions about artwork based on others' assessments, they invest in fashionable clothing to garner status. Economic value determined by intangible (and ephemeral) social value formed from and within specific contexts by particular people thus creating a "buzz" around that particular art/culture (Caves, 2000; Plattner, 1996; Lloyd, 2006). As art markets and the fashion industry evidence, more important than physical inputs is the social construction of value placed upon particular cultural goods consumed, evaluated, and seen in particular social contexts. The gatekeepers, the intermediaries, the buyers and the sellers formulate the highly integrated network of assessing and formulating systems of thought on what is "good art/culture" thus informing the market. Art galleries, industry parties, nightlife and "scenes" are often the central nexus where economic meaningfulness of aesthetic goods is constructed. Economic value emerges from within the social system from which it emerges - the "scene", so to speak. But what are the mechanisms by which the social dynamics of art/culture impact its economic legitimacy? The natural line of inquiry is pinpointing these "other" elements of cultural legitimacy and where they occur. This article discusses the mechanisms by which art/culture attains market value, and then looks at where and how legitimization of cultural goods and market value is constructed by discussing the ways in which the social context of art/culture informs its economic value.

The Construction of Cultural Value: Concepts and Theories

The "Veblen Effect"

Cultural goods and cultural economies have long (if sporadically) been studied in the social sciences. Particularly, art/culture has been studied for its role as a commodity form (Veblen, 1899; Leibenstein, 1950; Hebdige, 1979; Frank, 1998; Scott, 2000). As early as 1899, Veblen discussed the "theory of the leisure class" pointing towards the use of consumerism to demarcate higher socio-economic classes from the lower classes. Later, Leibenstein (1950) coined the term "Veblen effect" arguing that consumers attain their utility not only from the quality and composition of a good, but also the price paid for it. Similarly, Simmel (1901) and later Robinson (1961) focusing on a particular type of conspicuous consumption - fashion - argued that such consumption is a product of a class-based society, a way for higher classes to differentiate themselves from everyone else. "In consequence of the vertical contiguity of class groupings, new fashions tend to filter down by stages through the levels of affluence....For an object of fashion to lose its meaning for the top most class it is only necessary for it to be taken up by the second most and so on down the line" (Robinson, 1961, pp. 383). Part of market demand for a cultural good (and thus the assignment of value) is determined by its rarity and "demonstrability", or the ability to display to others the rare cultural good (Robinson, 1961). A more democratic approach, Blumer (1969) argued that fashion's value is determined by "collective selection", meaning that the broader population (not the elites) is instrumental in selecting which types of fashion will be considered successful.