Humane Studies Review

Volume 7, Number 2 Spring 1992


Art and Economics

For many people art is an area of life where economics has nothing to say. Works of art such as paintings, music, and literature are not products like soap or automobiles and cannot (or should not) be produced in the same way, subject to the forces of supply and demand. This is the root of the various arguments used to justify state support of the arts.

William D. Grampp attacks these notions in his new book, Pricing the Priceless: Art, Artists, and Economics (New York: Basic Books, 1989). Though the book is concerned primarily with the visual arts, the arguments apply to other art forms as well. Grampp points out that historically most artists have been entrepreneurs, producing artworks explicitly for customers. Grampp adds that this practice has not led to poor quality work nor to slavish adherence to the patron's wishes and loss of artistic independence. He also shows that the purchases of art collectors and the prices of art works are not mystical or peculiar but, like any other market price or purchase, reflect various factors, including supply, demand, and quality. Further, Grampp demonstrates that there is a general agreement among collectors and public as to what constitutes quality and which works have it, that this generally persists over time, and that the reason why most artists are forgotten is that they are eminently forgettable. Contrary to popular belief, the price of an artist's work usually declines after his or her death and is little affected by fashion.

Historically, when art of all types has been produced "like soap," in the market place, the result has been that art is produced to suit the public taste, with a complete range of quality, and with a leavening of what are recognized to be great and original works. Why then do governments support the arts, even when there seem to be numerous examples of this leading to work of questionable quality? For Grampp this is a clear instance of rent-seeking, by some powerful consumers who have their own tastes subsidized and by artists, particularly the less able.

Another question is why public subsidy of arts and the arguments in its favor are so generally accepted by those without direct interests. The answer is probably the success of the notion, derived from the Romantic movement, that art is a peculiar activity and artists a delicate and higher form of life, above mere money-grubbing. For a convincing argument that this is not the case, one should consult Martin Feldstein, ed., The Economics of Art Museums (Chicago: University of Chicago Press, 1991). This collection is a treasure trove both of information on the financing and operation of art museums, and on the quite recognizable commercial and financial concerns of their administrators and users. While some of the volume features individuals bewailing the hard times they now face and the problems in getting public support, there is also much realistic discussion of the nature of museums as enterprises selling a product and of ways of improving their sales and marketing techniques.

Feminism Revisited

It is a rare thing these days to find a book discussing feminism which does not assume that the only way to cure women's victimization is to substitute a feminized version of society for the status quo. Wendy McElroy's anthology, Freedom, Feminism, and the State (New York: Holmes and Meier, 1991), now in its second edition, stands virtually alone in its exploration of feminist issues from an individualist perspective. Here we see the state, rather than males in general, as the oppressor. For women are to be regarded first and foremost as people who claim human rights to life, liberty, and property, and this is where individualist feminism diverges from so much of contemporary feminism: "sameness" is emphasized and "difference" played down (though not ignored, as the chapters on prostitution and abortion illustrate).

In this new edition a few of the original articles have been cut, and a very thoughtful chapter by McElroy on abortion has been added, providing both a timely and incisive discussion of the controversial issue using a rational and systematic application of rights theory.

McElroy begins with a historical overview that is followed by a series of articles drawing on works by both men and women, liberals and non- liberals (but those who nevertheless share a commitment to some aspect of individual freedom), academics, theoreticians, and others. The excerpts are both modern and old, and while they are accessible to those who are unfamiliar with these ideas, they are also useful to readers who already have a knowledge of feminist concerns.

The Influence of Ayn Rand

One particularly important figure in twentieth-century classical liberalism has been Ayn Rand. Her novels have caught the imagination of successive generations of young people, and her writings suggest, inter alia, a way of moving from an Aristotelian approach in philosophy to more Lockean ideas about individual rights, and thence to classical liberalism. Her approach has been found suggestive by a small number of professional philosophers, who have attempted to develop arguments along similar lines, in the style of more academic philosophy. One recent and stimulating book in this genre is Tibor Machan's Individuals and Their Rights (La Salle, IL: Open Court, 1989). It has now been joined by Douglas Rasmussen and Douglas Den Uyl's Liberty and Nature: An Aristotelian Defense of Liberal Order (La Salle, IL: Open Court, 1991).

This work -- by the editors of an important critical anthology, The Philosophic Thought of Ayn Rand (Chicago and Urbana: University of Illinois Press, 1984) -- brings together material upon which they have worked individually for many years, some of which has previously been published in professional journals. They make out a more systematic and rigorous case for this approach than has been attempted before, and their book is also distinguished by engaging with the views of many major figures in analytical philosophy, and with objections that they have raised to approaches like the authors'.

Liberty and Nature will be of particular interest to those attracted to a broadly natural law approach to classical liberalism, and who would like to see this approach developed in a particularly systematic way. It should also be read by those who are not sympathetic to such an approach, as they should find Liberty and Nature challenging and provocative. If the book has one fault, it is that it takes for granted the authors' own understanding of Aristotelian metaphysics. As this is not something that will necessarily be too familiar to those schooled within analytical philosophy, one hopes that the authors might produce a companion volume which sets out and defends this approach against contrary views.

The Scottish Enlightenment

Oxford University Press has recently issued a paperback edition of M.A. Stewart's collection, Studies in the Philosophy of the Scottish Enlightenment (1990). While the collection is of a rather specialized character, it contains some first-rate material that should be of interest to anyone concerned with classical liberal thought in the eighteenth century and beyond. Roger Emerson offers a wide-ranging discussion of the interrelation between religious, scientific, and moral ideas in the Scottish Enlightenment. Jim Moore and Knud Haakonssen offer differing interpretations of the moral philosophy of Hutcheson and of the continuity -- or lack of same -- between him and Adam Smith. Richard Sher discusses the social history of the Chair of Moral Philosophy at Edinburgh University, P.B. Wood the interplay of ideas about science and moral philosophy in Aberdeen, and John P. Wright the interplay of metaphysics and ideas in physiology at Edinburgh.

Finally, there are some interesting papers on David Hume: Mike Barfoot has written a fascinating piece on the kind of science that Hume studied at the university, and its relation to discussions by Hume of scientific and related issues in his later works; David Wootton compares Hume's "Of Miracles" with contemporary writings on the same theme; and David Raynor discusses Hume and George Berkeley's Three Dialogues. All told, the papers in this volume not only provide much interesting reading in their own right, but also provide much useful background to contemporary scholarship on the Scottish Enlightenment.

The Costs of Prohibition

Increased scrutiny of the war on drugs in America has recently led some observors to question the wisdom of this policy, and to begin exploring alternative approaches. As a result, discussions of the legalization of the sale and use of narcotic drugs by adults are now attracting more attention than they have in years past.

The authors of two recent works have closely examined the effects of the war on drugs, and have each discussed legalization from a different perspective. In his article "A Drug Free America -- Or A Free America?" (U.C. Davis Law Review, Vol. 24, [1991], pp.617-636), David Boaz succinctly summarizes all of the main arguments about the negative effects of drug prohibition: increased crime, "harder" and more dangerous drugs and drug combinations, massive expansion of state power and erosion of individual liberty, and on top of all that, complete failure to achieve the ends of prohibition, those being a cessation or at least reduction of drug use. Although Boaz makes reference to economists' arguments, the main thrust of his arguments is a moral one, concentrating on the way the "drug war" threatens individual rights, corrupts the agencies of government and, above all, undermines the idea of personal responsibility through the mischievous doctrine of addiction.

By contrast, Mark Thornton's The Economics of Prohibition (Salt Lake City, UT: University of Utah Press, 1991) puts much of this argument on a different footing by developing an economic model derived from Austrian economics and Public Choice theory which tries to explain the origins, nature, and consequences of prohibition in general -- the argument applies as much to bans on activities such as gambling as to the outlawing of substance abuse.

For Thornton, "prohibition is designed to curtail the production, exchange, and consumption of a good with the ultimate aim of extinguishing it". There are two key problems with this, both highlighted and explained by economic analysis. The cost of enforcing prohibition is subject to the law of diminishing marginal utility, and in reality this makes it impossible to come anywhere near "extinguishing" the prohibited activity. The cost of enforcing prohibition starts to cut into other, more desirable or productive uses of resources and runs up against limits of practicality -- you can't have the entire police force, FBI, and Coast Guard do nothing but enforce prohibition. So in reality economic forces will generate an acceptable level of illicit consumption, arrived at by trading off the costs of enforcement against the costs of the usage. Moreover, prohibition inevitably produces the negative results identified by Boaz. Thornton shows, clearly and simply, how these necessarily result from the economics of prohibiting the sale and use of a product for which there is a demand. Most serious is the increased crime directly caused by prohibition (as Thornton and Boaz both point out, the murder rate after the repeal of alcohol prohibition decreased for 11 consecutive years). Next in importance is the decline in quality and the increase in potency of prohibited substances: the 1920's saw a big move from beer to spirits, and the present "drug war" has produced a steady move towards ever more potent and dangerous narcotics.

The most significant element of the book is the part derived from Austrian economics. Thornton argues that the real costs of drug use would, in the absence of prohibition, lead the discovery mechanisms in the market to produce voluntarist solutions to these problems. For example, the observable trend in non-prohibited substances such as tobacco and alcohol is for potency to diminish and less harmful alternatives to be produced -- the exact opposite of the trend under prohibition. In the nineteenth century in both England and America the market produced institutions such as the saloon and the pub which worked to reduce the desperate problems of alcohol abuse which existed at the start of the century -- and which reappeared under prohibition. By contrast, the bureaucracy involved in prohibition acts to stifle market mechanisms except those operating in the distorted black market caused by prohibition.

Beito and Smith Win Urban History Award

David Beito and Bruce Smith recently received the Urban History Association's award for Best Scholarly Journal Article Published in 1990. The article appeared in the Journal of Urban History 16: May 1990, pp. 263-303, and is entitled "The Formation of Urban Infrastructure Through Non-Government Planning: The Private Places of St. Louis, 1869-1920."
Copyright 1992 by the Institute for Humane Studies.

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