Presentation on the creative an cultural industries to the 'Thirty Years Crisis' conference of the Geopolitical Economy Research Group, September 2015

1. The second great
transformation
© GERET 2015
Alan Freeman

2. The strange non-disappearance of labour
30%
40%
50%
60%
70%
80%
90%
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
UK US Japan Germany
USA
UK
Japan
Germany
Share of employment 1948-2007
0%
5%
10%
15%
20%
25%
30%
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Retail+Wholesale Information
Financial Activities Leisure and Hospitality
Government Health and Education
Business services
GovernmentRetail and Wholesale
Business Services Health and Education
Leisure and Hospitality
Financial Activities
Information
Share of employment in US services

3. What’s really been happening to consumption?
0%
5%
10%
15%
20%
25%
30% 1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Leisure goods and services
Food and Non-alcoholic drinks
Services
Source: UK Family Expenditure Survey, author calculations. Reproduced from Freeman, A. 2014. Twilight of the Machinocrats: Non-substitutable labour
and the future of production. In van der Pijl (ed). The International Political Economy of Production. Routledge
-2% -1% 0% 1% 2% 3% 4%
Leisure goods and services
Transport
Household goods and
services
Dwelling costs
Personal goods and
services
Food and non-alcoholic
drinks
Clothing
Alcohol and Tobacco
Annual Growth Rate of Major Categories of
Family Expenditure, 1976-2008
Proportion of major Categories of Family Expenditure,
1976-2008

4. Do industries still exist? If so, what are they?
• Smith: and industry is a branch of the division of labour
• Universal concept in economics
• Physiocrats ‘town and country’
• Marx Schemes of Reproduction (consumer goods and means of production)
• Victorian “ProductionAccounts” (measuring output of various industries)
• National accounts ‘sectors’
• SIC/NAICS codes in the national accounts
• Leontieff input-output
• Sraffa system
• Etc etc etc

5. Taken as obvious, but it’s not
• Is a grain elevator part of the agriculture sector?
• Is forestry an agricultural activity and if not, why not?
• What do a ship and a train have in common?
• What is the ‘industry’ that produces shirts, tractors,
chairs and nuclear power plants?

6. The problematic concept of service
• Smith: “The labour of the manufacturer fixes and realises itself in some particular subject or
vendible commodity, which lasts for some time at least after that labour is past”
• ‘Service’ or ‘intangible’ really has not advanced beyond ‘not a vendible commodity which lasts’.
Beyond this, definitions differ wildly
• Actually feudal in origin! (it is what a servant does)
• What is the use value of a tape recording? Is it the same use value as a CD? Or are these merely
bearers of the same service as a performance?
• One extreme: ‘services of capital’ refers to any use delivered over time. So a toothpaste tube is
a service provider
• Petit 1987: service requires the direct and simultaneous presence of a human consumer and a
human producer
• Both definitions are in common use in statistical circles and nobody points out the
contradiction!

7. So what’s left of the concept?
• Specialisation is a constant of capitalism
• It’s driven by competition
• It works as Smith describes, by increasing the productivity of labour
• It’s the most ‘primitive’ mechanism for this
• But it’s still operative
• So we need to ask ‘what do modern capitalists specialise in?’

8. The working definition (ISIC manual)
• Resource in common
• Process in common
• Product in common
Note 1: specialisation in any of these will bring economies of scale
Note 2: almost no modern industry specialises in all three
• We can therefore begin with the empirical question
• Where do we find enterprises that use common resources?
• Where do we find enterprises that use common processes?
• Where do we find enterprises that produce common products?

9. A methodological note:
on the interaction of empirical
reality and theory in the
production of definitions

10. Freud on culture
“[C]ulture, by which I mean everything in which human life has risen
above its purely animal circumstances…
includes on the one hand all the knowledge and skill that humanity has
acquired in order to control the forces of nature and obtain from it
goods to satisfy human needs, and on the other hand all the
institutions that are required to govern the relations of human beings
one to another and in particular the distribution of such goods as can
be obtained.”

11. Symbolic texts model
“processes by which the culture of a society is formed and
transmitted are portrayed in this model via the industrial
production, dissemination and consumption of symbolic texts
or messages, which are conveyed by means of various media
such as film, broadcasting and the press”

12. Concentric Circles Model
“This model is based on the proposition that it is the cultural value of
cultural goods that gives these industries their most distinguishing
characteristic.Thus the more pronounced the cultural content of a
particular good or service, the stronger is the claim for inclusion of the
industry producing it (Throsby, 2001).
The model asserts that creative ideas originate in the core creative arts
in the form of sound, text and image and that these ideas and influences
diffuse outwards through a series of layers or “concentric circles”, with
the proportion of cultural to commercial content decreasing as one
moves further outwards from the centre.
UNESCO, op cit

13. Intellectual Property Model
“This model is based on industries involved directly or indirectly in the
creation, manufacture, production, broadcast and distribution of
copyrighted works (World Intellectual Property Organization, 2003).
“The focus is thus on intellectual property as the embodiment of the
creativity that has gone into the making of the goods and services
included in the classification. A distinction is made between industries
that actually produce the intellectual property and those that are
necessary to convey the goods and services to the consumer.”

14. The concept of non-substitutability
• In discussion of automation it is universally assumed that all labour
can be replaced by a machine
• So why isn’t all labour mechanised? What happened to ‘post-
industrial society’
• We must question the assumption that machines and people are
universally substitutable
• In fact particular new forms of labour are rising to dominance whose
characteristic is that they are not replaced by machines

15. Why wouldn’t you replace a human?
• Type 1: because there is a social preference
• Care
• Child-raising
• Performance
• Type 2: because the labour by its nature cannot be mechanised
• Church-Turing theorem
• Syntax-Semantic distinction
• Tasks which cannot be achieved by repetition
• Design is such a task: it works from a partial semantic description “what the
consumer wants”

16. Non-substitutable labour as a productive resource
[1] [2] [1]/[2]
Group' (creative sector)
Creative Jobs
in this group
Total jobs in
this group
Creative
Intensity
Growth
2011-
2013
Architecture 65 94 69% 9%
Music, performing and visual arts 167 243 69% 16%
Design: product, graphic and fashion design 75 122 61% 9%
Film, TV, video, radio and photography 141 231 61% 12%
Crafts 4 7 57% -2%
Advertising and marketing 83 153 54% 3%
Publishing 102 198 52% 12%
IT, software and computer services 236 576 41% -3%
Museums, galleries and libraries 17 85 20% -9%
Total Creative Industries 890 1,708 52% 18%
Non-creative industries 907 28,027 3% 0%
Source: DCMS January creative industry estimates table 3 and figure 1, pages 9-10, author calculations
All job numbers in thousands
Year: 2013

17. Creative Industry Density
0.178 to 0.583
0.12 to 0.178
0.078 to 0.12
0.046 to 0.078
0.003 to 0.046
The production process of creation
• Open Innovation
(Chesborough)
• Motley Crew (Caves)
• Pre-market selection
(Caves)
• Geographical micro-
clustering
Caves, R. 2002. Creative Industries:Contracts between Art and Commerce. Cambridge, Mass.: HarvardUniversity Press.
Chesbrough, H.W. 2008. ‘Open Innovation:A New Paradigm for Understanding Industrial Innovation’. In H. Chesbrough,W.Vanhaverbeke and J.West, eds. Open Innovation: Researching
a New Paradigm, Oxford:Oxford University Press.

18. Revenue from recorded music
Revenue from Live
music
Music as share of consumer spending
The paradox of live performance
Source: Page,W.; Carey, Chris; Haskel, Jonathan, and Goodridge, Peter. 2011. ‘Wallet Share’. Economic Insight 22, 18 April .
http://prsformusic.com/creators/news/research/Documents/Economic%20Insight%2022%20Wallet%20Share.pdf

19. What is the use value of culture?
• Throughout the age of mechanisation, culture takes the form of human
interactions that are excluded from the production process
• But actually, it is the ‘hidden’ component of all product innovation
• The industrial revolution might equally be termed ‘the clothing revolution’
• Now, cultural products are becoming ‘vendible’ as such
• So what, actually, is sold?
• The most characteristic feature of cultural commodities is differentiation –
eg fashion, art, performance
• Differentiation is now spreading to more and more sectors of the
economy (consider the car)
• Reduced to the most abstract, what is sold is distinction itself

20. The class function of distinction
• The ‘use’ of aesthetics is to demarcate class position
• Classes reproduce through culture – society does not reproduce itself ‘classlessly’ but in and
through the reproduction of classes
• The most important requirement of class is to be distinct.
• Inheritance is becoming less and less the key mode of class reproduction (and with it, the
bourgeois family dissolves)
• Thus the markers of class – the ‘kind of person you are’ becomes ever more important
• This is on the one hand the characteristic feature of the age
• And the greatest obstacle to a further great transformation
• To realise fully the potential of the new technologies, capitalism would need to abolish class
distinction.This is a central contradiction

21. If this is an industry, what is it doing?
Source: DCMS January 2015 estimates, figure 5 and table 6
The engine of
creation

22. UK Department of Culture Definition
…those industries which have their origin in individual
creativity, skill and talent and which have a potential for wealth
and job creation through the generation and exploitation of
intellectual property
– DCMS Mapping Document 1999