The Economics of the Arts by Mark BlaugReview by: D.M. WinchThe Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 11, No. 1 (Feb.,1978), pp. 143-145Published by: Wiley on behalf of the Canadian Economics AssociationStable URL: http://www.jstor.org/stable/134557 .

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Reviews of books / Comptes rendus / 143

that under user charges. Clearly, Bird has provided a starting point, as he set out to do.

Charging for Public Services is incomplete, as the author himself acknowl- edges. The author is also a very strong advocate of user charges and as such underestimates some of the problems associated with user charges. Yet, the book is worthy of some major attention in that it debunks some myths that persist in Canada about the advantages of the income tax over other forms of finance. Another strong point is the presentation of much background which should serve as the starting point for someone else. For layman and economist alike, this book is a valuable addition to the literature of government finance.

DOUGLAS J. MCCREADY, Wilfrid Laurier University

The Economics of the Arts edited by Mark Blaug. London: Martin Robertson, 1976. Pp. 272. No index. $25.35

This collection of reprinted articles, concerned with various aspects of the arts that have evoked the interest of professional economists, opens with a preface by W.J. Baumol and an introduction by M. Blaug. Baumol reviews the causes of the recent and current financial difficulties of the arts and their future pros- pects. He explains with his usual lucidity why the performing arts are particu- larly vulnerable in periods of either recession or inflation or both. Blaug presents the usual editor's summary of the collection of articles and his reasons for assembling them. His final paragraph presents an impressive array of as yet untackled problems that should appeal to any student in search of a thesis topic.

The readings themselves are arranged in three groups. The first is concerned with the rationale for public subsidy of the arts. Summaries of the standard arguments raise problems of both practical and methodological importance. How can the state subsidize selectively without implicitly suppressing that which is not selected? Is there a form of censorslhip implicit in selective subsidy? The arguments that subsidized arts are part of the education systenm, and that subsidies to infant industries are warranted while the public acquires appro- priate tastes, both imply that the demand for the arts can be manipulated. It follows that appropriate policy does not derive from current popular tastes. The equality-of-opportunity argument implies that the arts are not quite like other private goods with access governed by the pattern of income distribution. The public-goods and national-pride arguments make this explicit. Beneath the surface, but never quite explicit, is the gut feeling that the arts are good and warrant subsidy for that reason. But the standard reasoning of economics never really explains by what criteria merit goods are deemed meritorious. T. Scitovsky is explicit that 'consumers' preferences are mainly to blame and changing them [is] the best remedy' (59). In the next article A.'. Peacock

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144

eschews paternalism, yet focuses on the education argument for subsidy. Despite the standard cases of economic theory, which somehow do not quite fit, one is left with the impression that the real rationale for subsidy is that people of taste know the arts to be good and this justifies the use of taxes and sub- sidies to encourage the masses to consume them in greater volume. That such arrogance would be neither popular nor scientific might explain the search for acceptable economic reasoning that reaches the same conclusion.

The second group contains five articles concerned with evaluating public expenditure on the arts. Two attempts at cost effectiveness analysis fail for want of clearly stated objectives. One simply classifies the sources and uses of funds, the other attacks the Arts Council for failing to state its objectives clearly. The latter evokes a debate over whether the Arts Council could or should state its objectives clearly and consistently. The Council, it is argued, should be judged by its deeds, but by whom and by what criteria remain unanswered questions. Blaug argues that cost effectiveness analysis would in principle enable us to examine whether the realized effect of subsidy, a wider dispersion of the arts among geographic regions but not among social classes, is compatible with the avowed purpose of subsidy. Baumol and Bowen survey the composition of audiences by age, education, and income, showing that the arts are consumed mainly by rich, well-educated, professional people. Again one wonders why the public at large should subsidize the tastes of the well-educated for any reason other than that well-educated people know that they are good tastes.

Finally come seven articles concerned with special problems. While the first two groups focused on the performing arts, this section addresses the problems of galleries and museums: the effect of tax provisions on the bequest of works of art, controls on the export of important works, the degree of dis- cretion by public galleries over the sale of works in the collection, the question of admission charges to galleries and museums. The classic article of Baumol and Bowen explaining 'Baumol's disease' is included. Finally come a statistical analysis of Broadway audiences that gives some insight into the demand func- tion, an analysis of the rationality of choosing a career in ballet or opera, and a look at the supply side in terms of costs and the scope for increased produc- tivity which contains an interesting comparison of the different performance practices of us and UK orchestras.

The whole collection serves well to demonstrate that while the Economics of the Arts is far from a mature branch of the subject, there are available a number of interesting first steps. Much of standard economics is relevant and useful in analysing particular problems of the arts, but does not persuasively come to grips with the fundamental issues of public policy. Economists, particu- larly those with a personal interest in the arts, will find this catalogue of the uses and limitations of our subject interesting. The theory used is elementary, and the book should appeal to a wider audience than professional economists. There is no Canadian content, but the analysis of the attempts, achievements, and failures of the United Kingdom and the United States to tackle the problems

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Reviews of books I Comptes rendus / 145

that now arouse increasing concern in Canada makes the book most timely reading for those with responsibility for, or an interest in, public policy towards the arts in Canada.

D.M. WINCH, McMaster University

Imperial Economic Policy 1917-1939: Studies in Expansion and Protection by I.M. Drummond. Toronto: University of Toronto Press. Pp. 496. $17.50

In this further study of British imperial history Professor Drummond con- centrates on two major issues of the interwar period - empire population re- settlement and the imperial preferential system: how the agreements relating to these matters were negotiated, applied, and amended; their impact and significance; their motivation and place in British economic policy-making. Extensive use is made of documentary material supplemented by the memoirs and private papers of politicians.

There is something rather pathetic about the story of the attempts by Com- monwealth statesmen to fashion a set of policies out of stopgap agreements arrived at through ad hoc concessions, last-minute compromises, and mutual back-scratchings, which were supposedly aimed at conferring separate benefits upon the contracting parties while cementing their ties as a 'community of interest.' As Dr Drummond shows, not only was there no thought-out imperial strategy for handling empire problems, but proposals and negotiations were bedevilled by confusion and indecisiveness, especially on the British side. The tedious history of empire settlement is largely one of 'formless talk' leading to frustrated efforts and limited accomplishments. It is argued that the emigration schemes of the twenties were useful within their limits and that they were sponsored for a variety of reasons - paternalistic and humanitarian, economic and political. Of course, all plans to fill up empty spaces in the Dominions and get rid of Britain's surplus population met with stiff opposition from the Treasury. In the event, subsidized emigration ground to a halt with the onset of the great depression.

A considerable part of this work is devoted to administrative matters. Pro- fessor Drummond winds his way with skill and patience through a lot of dull stuff (staid minutes, dry docurnents, unexciting memoranda) concerning the preparations for the Ottawa Conference, the sessions themselves, committee deliberations, the subjects debated and views advanced, the arrangements agreed upon, and so on. How the humid Ottawa weather might have affected the proceedings is even raised! Quotas, barter deals, and tariffs are examined in detail. It is suggested that the Conference would have been more fruitfully occupied with exchange rates than with tariffs, and that the agreements which emerged did little to increase the level of activity among the countries con- cerned, while probably harming the export performance of foreign nations.

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