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What Does a “Political Economy” Approach to Study of the Creative and Cultural Industries Involve? What Are Its Advantages and Disadvantages?

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Creative and Cultural Industries, MA
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What does a “political economy” approach to study of the Creative and Cultural Industries involve? What are its advantages and disadvantages?

ID: 10048001
Anastasia Davydova

1. Introduction

The intention of this paper is to define what we mean by political economy? What does this approach involve to study the Creative and Cultural Industries and what its advantages and disadvantages. This work will search through definitions, different schools and historical periods to better understand the background of Political Economy. Also this approach will be compared with another approach which examines cultural industries namely cultural studies approach to underline the main key point of political economy. This essay will briefly discuss specifics features of Creative and Cultural industries and moves to political economy approach itself with the final observation of advantages and disadvantages.

“Culture is our business and business is our culture” [1]

Definitions

The term political economy addresses to relationship between politics and economy, how political power cooperate with economics, so politics responsible for the society and economy, in other words in charge of wealth of the society. Hence it is possible to declare that political economy examines the production and distribution of wealth in society. But there are also combination of such factors as political, economic and as well as cultural that actually affects the production and distribution of wealth. Political economy approach is employed by many academics to study different industries or social science, media and communication and cultural industries. The political economy approach can be defined in a more general and determined way that “is the study of control and survival in social life” (Mosco, 2009: 3). But before that Vincent Mosco describes political economy as “the study of social relations, particularly power relations that mutually constitute the production, distribution and consumption of resources, including communication resources”. (Mosco, 2009: 2). His formulation of political economy reflects both sides of the economical process a product production cycle and the consumer choice. Also the author proposes three processes of the political economy such as commodification, specialization and structuration as an entry points to actually to better understand political economy. Robert Babe’s declares that “political economy studies focus on economics, financial and politic causes and consequences of culture.” (Babe 2009: 4) His position is to merge political economy approach and cultural studies. McChesney is close to Mosco’s view of the effect of the power on economic. “Political economy is the scholarly discourse studying power relations affecting the production, distribution, and consumption of wealth, income, and resources—including information and communication resources” (McChesney 2000). Hesmondhalgh assumes political economy as “studies of production” as a short term, but broadly “political economy is a general term for an entire tradition of economic analysis at odds with mainstream economics” (2007: 34). Cvetkocski when talking about popular culture mentions political economy approach as “how popular culture is produces, developed and expressed…..popular culture’s system organisation” (2007: 17)
Other theorists like Peter Golding and Graham Murdock (1991) criticised political economy in inequities of power, prestige and profit oriented interests. By contrast North American model – Schiller – McChesney characterised that the approach strategically uses of power which links to growth in wealth and power of cultural industries to political and business interests.

Schools

Political economy is the early science of economics dating from 18th century’s Scottish Enlightenment thinking and continued throughout the 19th century. Adam Smith represents Classical Political Economy with his concept of The Wealth of nations. He believed that minimal role of state in the economy and whether people act out of self-interest will benefit to the society. “Invisible hand” will regulate the market which at once satisfies self-interest and the needs of the community. Hence Smith's considered political economy “as the study of wealth generation”. (Babe 2009: 14)
Karl Marx with other economists worked on Labour theory of Value (Babe: 14) believing that workers have rights to be paid for their work (labour). This is another important characteristic of classical political economy. But on the other hand he claimed that (to be in opposition to Adam Smith’s theory) free market polarises wealth where rich people get richer and poor get even poorer. So the public ownership of the means of production is the only way of equal distribution of wealth. People act out unity and for the good of society.
Neoclassical Political Economy is all about consumers “taste and preferences” which is valued and preferred more than labour. Class does not matter at all, but everyone is a consumer and cultural goods and services became treated as commodity. In this neoclassical period of political economy the main question is how humans want be most satisfied? And how markets function at the best? (Hesmondhalgh 2007) “Economics became essentially a mathematical-deductive system—in stark contrast to classical political economy, which was fully engaged with the cultural/political/economic environment“.[2]
“New” Political Economy represents Chicago School also known as the positive political economy, where according their theorists almost every aspect of human life is to be to make profit from.
Critical political economy is the approach which used in this paper to analyse Creative and Cultural Industries presents Frankfurt School (Adorno, Horkhiemer along with others theorists). They criticised commodification of culture; capitalism’s culture industry is operating to maximise profit.

Political Economy vs. Cultural Studies

Cultural Studies is another approach to study media, communications and creative industries. It can be defined as “the branch of economics devoted specifically to culture and to the arts” (Hesmondhalgh 2007:30). In general, cultural studies examine the culture across various social aspects such as knowledge and beliefs, customs and practices. Also concentrates on interaction of ideologies of class, gender, race, ethnicity, and nationality in cultural texts and audience. It operates with such issues as subjectivity, identity, discourse and pleasure in relation to culture. There is no materialism in cultural studies and this is one of the major point that distinguishes cultural study from political economy (Adorno, Innis, Williams and Hoggard are defending by this statement cultural studies).[3]
Normally, researchers and theorists very often confront and compare, argue over political economy approach and cultural studies. (Mosco, Hesmondhalgh, Babe, Curran.)
Political Economy is often accused of only focus on economy which is too narrow and deterministic to study such complex discipline as culture. This approach is neglecting texts, discourse, audiences and consumption. But Hesmondhalgh (2007) argues that cultural industries approach does not ignore activity of audiences. Audience becomes a commodity (Andrew Calabrese) where audience component is from Cultural Studies domains (Babe 2009 : 7) On the other hand Cultural Studies are seen as lacking consistent and strong analysis of institutional, structural context. Too narrow focus on media texts, identity, and audience reception. But cultural economy as cultural studies has relations between culture and commerce. Robert Babe demands that political economy of media and cultural studies were actually interactive, supportive and their approaches mixed together to some extent, “but the poststructuralist turn in cultural studies caused media studies to split into hostile political economy and cultural studies camps”. (Babe: 2009:4) In his research Robert Babe tries to “reintegrate” political economy and cultural studies, by calling it some sort of urgent matter. A political economist, Murdock, has also looked at bringing together the two critical schools in media studies. He has suggested that cultural studies should broaden its core concerns by becoming more pragmatic in their research; pay more attention to economic structure; and should connect with social science (Murdock, 1989). He was basically calling to bring together cultural studies and political economy. Hesmondhalgh beyond doubt has noticed that the way to characterise approaches to the media and popular culture is neither an accurate nor useful way. (2007:44) For example, to study television, film or popular music it would be more enhanced by examining its formulas, conventions and investigation of production of culture. The Madonna’s phenomenon difficult to understand without discussing her market strategies, her political environment, her cultural artefact and their effects analysing production.
In relation to the Music industry, the political economy approach is looking at how the products and texts from the industry (everything from the CDs to advertising to intellectual property) reaches us as consumers are formed by government controls, ownership patterns, advertising, and the complex model of distribution and consumption. At this moment It is important to recognize that the political economy approach doesn't identify that readers of texts make their own meaning in the same way cultural studies does.

Characteristics of Creative and Cultural Industries

Political Economy approach involves the analysis of economic organisation, structures and processes through political view. In other words, how industries operate and organised; how they produce and distribute cultural goods and hence generate their profit.
This approach is based on a Marxist point of view of capitalism with it exploitative natures where rich become richer and poor become poorer. Creative and Cultural Industries became a part of this capitalistic activity where in modern days investors and producers get rich while working class struggle to make living.
“Cultural industries add value to contents and generate values for individuals and societies”. (UNESCO 2000a:11-12)[4] The rise of the cultural industries was very much due to the rise of ‘mass culture’, a phenomenon that troubled so many twentieth century intellectuals. But to use this tool to examine what political economy approach involves studying Creative and Cultural Industries it is useful to see which factors make those industries different from any other industries in terms of its operation and are there any specific features or characteristics to consider. Originally, the cultural industry concept is a thesis proposed by Theodor Adorno and Horkheimer (called The Culture Industry), who both were theorists of the Frankfurt school. By inventing this analytical construct Adorno applied the approach of political economy to media and culture. Thus it helped greatly to explain, describe and investigate the consequences of mass producing culture for purposes of profit (Babe 2009). Adorno’s Cultural Industry (as he referred to entertainment industry as a whole) was just a single meaning of industry not as we nowadays use term in plural, by differentiating media, communications, and culture itself. He criticised it and saw the negative side in it and was the one who recognized that the leisure and entertainment industry is a major site of elite domination within contemporary capitalist societies. Adorno developed one of the first critiques of the political economy of the culture industry with its capitalist forms of production and commodity (Cook 1996: xiii). Furthermore, Cook describes Adorno’s culture industry as being “geared to profit-making, controlled by centralized interlocking corporations, and staffed with marketing and financial experts, management, and production teams, technicians, ‘star’ reporters, writers, actors, musicians, and other creative talent.”[5].
Contradiction between culture and industry initially make it hard to study and by so that is what differ cultural industries from any other “traditional” industry.
Modern theorist Nicholas Garnham has declared that the production of culture has been wholly industrialised today. However there are some specific features of the process of industrialisation differs from those of other sector. Production of cultural goods depends on characteristics of the industry; novelty is what consumers require, so they want their cultural products to be different from one another. This method also works to maximise an audience as a source of profit. (Curran, 2000). Another feature of the cultural industry is that the product can be used many times and not destroyed after its use. This is where piracy, one of the biggest problems of the industry occurs and so companies have to deal with it by limiting the access to cultural goods where Garnham suggest here vertical integration of distribution and retail channels control release of these cultural products (i.e. films, records, magazines and video). Demand of the audience is unpredictable which drives companies to take risk to offer wider range of cultural products to survive. This factor leads to oligopoly (Curran, 2000).

What does political economy approach involve?

The political economy approach is definitely a useful tool to analyse how the culture can generates wealth. In this approach is necessary to consider two main aspects. The first one examines how the different economic structures together with governmental policies and regulations influence the cultural industries and its content. So here is to look at how the state controls the trade, industry, and also the production and distribution of cultural goods, who owns biggest share. Also government may control the content (censorship). For example; there are numerous researches in the media and communication sector about governmental control of media content. In some cases the government itself owns the media, say countries like China, Korea or Russia. In Europe and America media owned by private sector, but still they are dependent on officials for the largest amount of source material. Like in America, the US government even provides a number of subsidies to media companies. This may easily be a manipulation of the media, have a sort of prescriptive character. Also the state can control access to particular information or sources. For that reason is kind of disadvantage of this approach. State subsidies are a standard practice in small countries, due to the size of their markets where it’s not possible for them to achieve economies such as in big countries. (Towse 2010). “This constructive turn is particularly evident in Graham Murdock’s (1992) research where he looks at the concurrent rise of mass consumption and mass democracy. He calls for a communications for democracy where citizens have access to information, advice and analysis. It should have the broadest possible views and where citizens could propose alternatives as well represent themselves. He believes that such a public sphere should be open and diverse and presupposes the following: civil freedoms, political rights, the right to challenge social and cultural life, and the right policies”[6].
Political economic theory (through theorists like Curran et al, 1987) argues that media is not only in the service of the powerful but owned by big corporations. Media very often has monopolistic (or oligopolistic) structure where a small number of people or organisations have high level of control over the media. Normally these companies are large and if as broadcasting then their control may be linked to the state. (Garnham 1990). As en example, there are four music companies that control 80 percent of the market, six major book publishers and so on. There are also state oligopoly where the government in control, with a heavy censorship. On the other hand, there is governmental censorship to control media or any other subsector of Creative and Cultural Industries (such as film, publishing or visual arts etc.), to stop content from being broadcast or published if considered offensive or discriminatory.
Globalization is about global relationships of culture and economic activity. It is the "process enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications” (Collins Dictionary). According to this statement it could be an important source of earnings to export cultural goods and services which will contribute to the cultural industries economics growth. Globally, the most transnational corporations are American corporations; good example here could be Hollywood. Its studios and television production companies generate up to 50 per cent of their revenues outside of the US. Hollywood films are in big demand all over the world which protects Hollywood’s status in the world market. So, that makes it a big advantage. Nevertheless, the side effect of this process is that local cultures are quite resistant to be consumers of such content. As a result, local governments in order to protect and support their own culture they are trying to adopt different approaches to preserve its national identity. Australia is one of the countries that present aboriginal rights in society, by doing so it is a definitely contribution to the economy overall.
New technologies can seriously change (if not already) the structure and process of how cultural industries organised. “Technology has significantly influenced the organisation of the music industry since its inception. However recent technologies have posed a threat to the traditional modes of production in the industry”. (Cvetkovsky 2007:7) So the author claims that the new technologies allowed independent artists or labels to promote themselves at the very low cost. This led to decentralisation of the way the music industry works (how it composed, recorded, produced and distributed). Moreover, the development of new technologies also challenged the traditional role of the main companies in the music industry. As a result some major companies downsize their business by cutting their staff or trying to survive by offering non-musical products and integrate horizontally with other industries such as TV or Internet. (TimeWarner includes 5 businesses: Publishing, Film, Television, Cable, Music, Computer services, Professional Sport). Thus let the impendent (Indie) labels to increase their market share in the industry[7]. To find out whether the Music industry can be examined by a political economy approach, it is essential to look at the industry itself. For one thing, the recording industry is always changing (new technologies as mentioned above) the structures and organisations in place today are very different than those even a few decades ago. One of the reasons for this might be a move in the target demographic that the music industry is trying to reach with the products.
The strong point of political economy is that it deals not only with the big players, for example say in media, Rupert Murdoch or World Disney, but also smaller institutions as well as factors such as time and money constraints, and the need for profit and even the structure of various organisation.
As a part of state controlled or state subsidised organisation the government policy is about that the cultural industries can provide job market for many artists and actors who potentially may increase the status as well as simply give jobs services. All this is definitely may recover economic situation (Hesmondhalgh and Pratt (2005).

Another key point of political economy approach is about the assumption that public good is not served by an uncontrolled free market: the control of the market has to be in place. Besides controlling the market there is another attribute to it like “prescription mission” of the political economy. According to Adorno’s theories who considered cultural goods (music industry in particular) as a commodity that is preselected and equivalent[8]; preselection is where the culture industry forces a predetermined and technically prescribed series of cultural commodities on consumers – even though the industry constantly tries to win its audience. Equivalence: means that the power of goods is for exchange through money.

Market of cultural good is a “capitalist mode of production” where good are still sold in a traditional way (goods and services are bought and sold). However, this particular cultural market is not the traditional commercialism of high culture, but a complex system of interaction both freedom and control. (Garnham 1990). In the market of cultural goods and services is very often to see price discrimination due to the monopolistic nature of the cultural industries. The auctions are the places this practice is common (thus actually improves the welfare of people who are willing to buy it.) An example, In contemporary arts fashion often dictates prices.

Due to that the Cultural and Creative Industries are variety of subsectors (arts, publishing and media etc.) their cultural products are marketed, advertise and sold in different ways which affect the control of the market. Many cultural goods and services are produced by private enterprise in the cultural industries; amongst them is art market, books, music publishing and newspaper publishing. Cultural products are traded in a mix economy, that is to say state-owned, state-subsidised private non-profit companies or profit-making private organisations. (Towse 2010). Market today can be characterised by ‘turbulence’, which arises from the very rapid changing style preferences of millions of mainly young consumer. (Attali 1991)

Commodification is a process of transforming goods or ideas, which have a value for their use into commodities or when use value transforms into exchange value as defined by Mosco. Goods and services on the cultural industry are the subject of commodification and then they produced to be sold in a market. Mosco offers three types of commodification: there are commdification of content, of audience and of labour. (2000:156). Contents became a marketable products; they produced by a series of creative processes like the development of a film, newspaper article, or recording and then are packaged up and distributed to consumers.
In commodification of audience the main target is to sell audiences to advertisers. That is the primary function of mass media, not as many think that, for example, media is to serve people with information or entertainment. (Smythe 1981). This kind of trade of various audiences to advertising companies basically constitutes the main revenue stream for media corporations. Interesting fact that Frankfurt School had failed to recognise audience as a commodity and even though as Smythe notes the trend began in the late 19th century in major urban centres in North America. The relationship between capital and the audiences is what political economy examines as a result of this type of commodity. As Mosco states that with expansion of new technologies the audience’s activity can be measured and monitored when using different form of media. Media also regulates cultural forms narrowing public discourse. If one has to look at the audience reception, or cultural consumption, one must consider their social context such their class, expendable income to buy media, leisure time engage with media, the space available to watch or read and the cultural capital they have at their disposal to interpret. (Golding and Murdock, 1991)
The commodification of labour is not studied enough in academic literature and has been also ignored in the process of production, for example. The key point here is that skills can be bought and sold in order to make profit.[9] This practice is widely in use especially in big corporations and enterprises, where the role of such “skilled” managers to get maximum returns on investment. (They also called top-managers, e.g. in music industry there are Colonel Tom Parker and Brian Epstein).

Advantages and Disadvantages

All above mentioned in this paper allows drawing attention to the advantages and disadvantages of political economy approach to study Creative and Cultural Industries.
To start with disadvantages according to Marxist theory of value of labour where working class was neglected by bourgeoisies in terms of their wages that today’s situation can not, of course, be compared with 19th century. Toynbee criticises capitalism saying that “In the first place we can note criticism of the theory that capital is a process of accumulation based on the exploitation of labour” (Toynbee 2000 :15). The value of labour in cultural industries relatively remains the same: the artist in some cases is exploited as monopolies make much more money out of artists work.
Second point here is manipulation of the audiences by media where we are carefully directed towards advertisers being on different media forms. As well as manipulation of audiences’ tastes on music, films or television programs on a big scale, using above mentioned “prescriptive mission” of media. Considered as disadvantage.
Governmental control can be seen as advantage where censorship in place, to prevent public from offensive or violent content. Also government involvement to prevent piracy and protect intellectual property will serve as advantage here as well.
Globalisation is can be treated as advantage for corporations to increase their profit by expanding even more and increase their power on an international market. It also gives easy access and wide availability of cultural products and services anytime and anywhere in the world. But as we seen that another side of globalisation has negative effect especially in developing countries to bringing down their economy.
Disadvantage is also a monopolisation and control of market and prices. It is likely for independent artists to promote themselves (but due to new technologies as mentioned above, these barriers can be removed).
In defence of capitalism theory as was largely criticised by Frankfurt School there is assumptions that consumers are active and “their activity extends beyond deciding which brand of entertainment to passively absorb” (Roberts 2004: 130).

Conclusion:

To end this paper it is important to conclude that by taking criticism into account political economy approach is still more realistic way to analyse the economic factors in relation with politics. Political economy realises that society is not made up of a group of individuals who agree on common values of society, as in the pragmatic approach, and so is a better judge of the current political situation. Creative and Cultural Industries have now become a leading sector of the economy that’s the fact.
But merging political economy approach with cultural studies might be necessary to better analyse and explain of Creative and Cultural Industries.
.

Word count 4 127
-----------------------
[1] Babe, R (2009). Cultural Studies and Political Economy. Toward A New Integration Lexington Books p.4
[2] Babe refers to Samuels, The Classical Theory of Economic Policy (Babe 2009:
[3] Babe, R (2009). Cultural Studies and Political Economy. Toward A New Integration Lexington Books p.5

[4] Cited from Towse R 2010 p.377
[5] Robert Babe citing Deborah Cook
[6] Cited from (last accessed 20.12.2012) http://everything2.com/title/Political+Economy+approach+to+Media+Studies+and+the+Recording+Industry
[7] http://www.digitalstrategyconsulting.com/intelligence/2011/05/music_sales_indie_labels_marke.php
(last accessed 22.01.12)
[8] Lecture Notes Week 6
[9] Mosco refers to Frederick Winslow Taylor, who pioneered this practices (p.139)…...

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