THE ROLE OF THE THIRD SPHERE IN THE WORLD OF THE ARTS

Unpublished, Erasumus University 1998

Arjo Klamer, Chair economics of art and culture, Erasmus University Rotterdam
Peter-Wim Zuidhof, Research associate, Erasmus University Rotterdam

Anything which a human being might want honor, pleasure, security, salvation could be
categorized as a gain or advantage. This in itself is quite harmless. But when the mind is
brought by degrees to think of all forms of gain as having money equivalents the metaphor
has become a trap. The fact that propositions about basic human motivation are impossible
to disprove further clinched the traps hold on many minds, since converts could find any
amount of evidence that did not contradict [] with their views.
W.M. Reddy, The Rise of Market Culture, 1984
The financing of the arts takes many different forms. Some of the artistic work is entirely paid for by
means of an outright economic exchange. There are distinctive markets for the arts on which artistic objects
and performances are sold for money. Other artistic work is entirely financed by a government grant or
subsidy. A lot of artistic production, probably most of it, is financed in other ways, or in combination with
other ways. Individuals donate time and resources to artistic work; they donate to the local museum,
support a artist friend or partner, or forsake income just to make art. Foundations and businesses provide
resources in support of artistic production. There are clubs and societies that promote and support artistic
work and the government may generate resources by setting up lotteries or it may encourage private
contributions by allowing tax deductions, thus partly footing the bill.
The variety of possibilities for financing artistic work is remarkable. It is this variety in financial
arrangements that is the subject of our inquiry. One of our questions is whether there are reasons for this
variety and whether these reasons have anything to do with characteristics that are peculiar to artistic work.
It could be argued that donations and subsidies constitute such a significant segment of the financial
sources for the arts because of marketfailures. Such an argument implies that if markets would work,
nonmarket arrangements would be superfluous. We are going to argue that even when markets for artistic
work were to function perfectly, alternative financial arrangements would still prevail. The reason is, so we
want to posit, that it matters how artistic work is financed.
Our line of inquiry is part of a project that uses the economics of the arts to subvert conventional
economic wisdom. The thesis is that peculiarities of the art world point at fundamental shortcomings of
the standard economics approach. So rather than being subservient to standard neoclassical economics in
the sense of faithfully applying its concepts and theoretical framework, we see cause to be subversive.
Earlier we have argued that the value of culture, or art, is hard to determine and therefore is established
partly outside the market (Klamer 1996, 1997). Gifts turned out to be an important means for the
realisation of artistic work. An investigation of the gift intimates that the gift itself generates values that are
distinct from the value of the thing being given. Here we pursue the line of questioning by focusing more
intently at the variety of financial arrangements in the arts. We are especially interested in assessing the
importance of all those arrangements that exist apart from market- and government transactions.

OBSERVING THE VARIETY IN FINANCIAL ARRANGEMENTS - STYLIZED FACTS WITH

REGARD TO THE ARTS:
Before we can start analysing the variety in financial arrangements, we first have to make plausible that the
three alternatives do indeed occur in a relevant sense, so that we know what we are talking about. In order
to give further content to the way the three financial arrangements look in the context of the arts we have
derived the following stylised facts from existing literature.
We rely on three different perspectives to frame them. The first two, the international perspective
and the disciplinary perspective show that financial arrangements can vary and that variation takes place

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

along different dimensions. The third perspective, historical in kind, shows that the financial arrangements
in support of the arts can also vary dynamically.
1) International differences: the structure of financial arrangements in Continental Europe are the
inverse of that in the USA; the share of market and gift in the support for the arts in the US equals the
share of government support in Continental Europe (hence: the share of government support in the US
equals the share of the market and gifts in Continental Europe)
Beforehand, we should stress that this stylised fact only expresses an inverse pattern of funding between the
US and Continental Europe. It does not represent a causal relation. Note that it does not include the UK.
The funding of the arts in the UK resembles what is going on in the US.
The most well-known international comparison of funding of the arts is by Mark Davidson Schuster
(1985). The following graph is based on his findings:

Netherlands

Performing Arts in International Perspective,

1980s
source: J. Mark Davidson Schuster
Museum
Orc hestra
Theater
Danc e

Germany

Museum
Orc hestra
Theater
Danc e
Museum

USA

Orc hestra
Theater
Danc e

0%

20%

40%
Government

60%
Gift

80%

100%

Market

Apart from showing the differences between the major sources of funding, countries also differ greatly in
the way the three institutional settings distribute their funds. In the US one attaches to the arms length
principle rules with a deferment of decisions to specialists seated on an arts council model, whereas in
Germany and the Netherlands a ministry model prevails, in which distributional decisions remain under
control of the parliament. Other differences pertain to the format in which funds are transferred. In the US
grants are mainly of fixed amounts whereas on the Continent funds are granted on a long-term basis to
semi-governmental organisations. Also the models of funding differ. In the US grants are awarded to
projects, whereas on the Continent they are intended to cover deficits on the budget. In the U.S. most of
the government support is indirect in the form of tax-deductions on gifts to the arts whereas in Continental
Europe virtual all government support is direct (Davidson Schuster, 1985) Lately, however, these
differences appear to diminish.
There is also a variety in the functioning of the market-sector. Leaving aside box-office, which
constitutes the bulk of market-revenue, we notice especially much more reliance on business sponsoring in
the US. Finally, whereas in Europe the majority of gifts come from foundations and corporations, Netzer
(1992, 178) found that in the US 70% of the gifts to the arts come from individuals. Corporations are a

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

distant second as benefactors, followed by foundations who are good for only a small share. (Netzer also
established that 35% percent of that amount is taxdeductible and hence consists of indirect government
support.)
a)

International differences of non-profit sector in general: the international differences in

funding structure of the arts correspond to differences in funding structure of the non-profit sector
in general.

The John Hopkins Comparative Nonprofit Sector Project provides excellent data on the non-profit sector,
and the role of the arts therein (Salamon and Anheier, 1996). It reveals the following image:

Funding Structures in Non-Profit Sector, 1990

source: Salamon and Anheier, 1996
68

Germany

28
Government

USA

30

19

52

Gift
Market

Average

43
0%

20%

10
40%

47
60%

80%

100%

This picture shows the situation in the arts sector to be similar to the situation in the non-profit sector at
large. In general, funding arrangements in the US are the inverse of those in Continental Europe. The share
of support by the market and the gift in the US equals that of government support on the Continent.
Apparently, the arts sector does not distinguish itself in its financial arrangements from the remainder of the
non-profit sector.
b)

International differences in composition of non profit sector in general: Countries differ in the
sorts of activities which are primarily rooted in the non profit sector.

There are great international differences in the purposes of the non profit sector. Both in the US and
Germany non-profit activity is largely devoted to health care, whereas in the UK education is the primary
target there, and in France social services (Salamon and Anheier, 1996, 51):

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

Composition of Non Profit activity, 1990s

source: Salamon and Anheier, 1996
18

Germany

14

US
Average

10
0%

23
12

9
20%

35

20

42
21

40%

12

Business
Social Service

21
24

60%

Other

Health care
Education

16
80%

Culture, recreation

100%

2) Disciplinary differences: Financial arrangements tend to differ across artistic disciplines. The share of
government support to museums in both the US or Continental Europe is significantly higher than to
the performing arts. The share of gifts is also higher.
The study by Davidson Schuster (1985) underwrites the claim that financial arrangements tend to vary
across artistic disciplines. Museums rely heavily on government support and gifts and relatively little on
market revenue whereas the visual arts can count on very little government support, in the US, that is. One
may expect that market-revenue continue the main source of income of visual artists but our colleague
Abbing points at a significant role for gifts in the form of internal subsidies from the partner or from
income out of non-artistic activities and services which are distributed among artists. These patterns are
consistent across the US and Europe.
Netzer (1992) provides the following overview. As one can observe, this image differs considerably from
the one drawn by Davidson Schuster. This should be interpreted as a warning that due to many
classificatory and measurement problems, macro-data should not be handled too lightly.

Estimated Income of Nonprofit Arts Institutions

USA, 1985
source: Hodgkinson and Weitzman in Netzer, 1992
Total
Public Broadcasting
Museums
Government

Opera

Gift
Market

Classical Music
Dance
Theater
0%

20%

40%

60%

80%

100%

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

Again, this stylised fact only gives a first hint of what is going on. Of course insights would benefit greatly
from distinguishing a variety of sub-categories and their corresponding financial structures. It would be
interesting to observe whether and how financial structures follow differences in style, progressive or
conservative art, art at uncommon places or big art, media art, and the like.
The relation between funding structure and art-activity seems to be straightforward and follow a logic. The
performing arts offer art in an atmosphere of merry and laughter which is related to going-out and
relaxation. The presentation of art in museums is much more serious. The willingness to pay for the
performing arts is than understandably much higher than for museums and hence museums have another
funding structure. This is however not so straightforward as it seems. It may be so when one takes the logic
of economics for granted. Might it not be the case that the willingness to pay of art-consumers is higher for
the performing arts than for museums, simply because museums have always been subsidised and therefore
the museum visitor has never come to learn the true price of cultural preservation?
The following two stylised facts are tentative. We prefer to mention them, not because we want to convey
the specific regularities contained, but rather to suggest some dynamics.
3) Historical differences: Non-market arrangements have generated most of our cultural heritage.
We do not have any conclusive evidence on this point and the perspective is clearly western-oriented. Most
of our material cultural heritage such as buildings, but also artistic products like paintings, plays, and music
which still inform current cultural work, seems to have come from the dominant institutions of power like
churches and the royal courts, the merchant class and well to do bourgeoisie. At any rate, this stylised fact
may be viewed as a (falsifiable) thesis. It remains to be seen whether we can uphold it against the
observation that precisely in the Netherlands, art markets date back to the 17th century.
4) Lifecycle differences: In the Netherlands artistic initiatives start by means of gifts of some form or
another, develop with the aid of government grants and at a later stage turn partially to the market for
their funding. In the USA the role of the government is less pronounced and as a consequence private
gifts (as in donations and voluntary work) remain more important through the life cycle of the
initiative.
Our colleague Bevers (1987) has shown that the establishment of most Dutch music institutions at
the end of the past century took place in a setting of private initiative. From the beginning of this century
onwards, these initiatives were nevertheless eager to engage local governments into their plans. After the
Second World War the funding of these organisations became fully detached from its original benefactors
and advocates. The same situation applies to the establishment of museums (they still carry the names of
their benefactors) and theater-groups. It is only recently that the arts have been forced to search for new
ways of funding.
Where in Europe the development of the arts is largely attributed to the existence of patrons and
authoritarian states, the absence of strong and central institutions in the US raised the need for another
solution. This already inspired Tocqueville to question whether excellence and democracy, (or rather the
absence of elitist cultures) were a feasible combination. The three major institutions which he held
responsible for the making of art, a guildlike structure, aristocratic consumers, and a healthy cultural
climate, were absent in the US (Zolberg, 1990).
In the absence of conventional European solutions to fund the arts, in the US local elites became
the primary target for the funding of the arts. In such a climate artists with an entrepreneurial spirit have
the advantage. Only during the New Deal and after the Second World War did government support come
into existence.

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

HOW TO ACCOUNT FOR THE DIVERSITY OF FINANCIAL ARRANGEMENTS IN THE ARTS

The conventional economic perspective takes an instrumental view of financial matters. The
market and the government are instruments for the generation of funds for the arts. Where markets fall
short in the financing of the arts, the analysis may justify government intervention in the form of subsidies
or other measures, and then it may not. Justification of governmental financial schemes on merely
economic grounds turns out to be very difficult. The merit-good argument makes conventional economists
nervous as it makes a statement about qualitative properties of the arts that is beyond the scope of their
instrumental (or positive) mode of thinking. Conventional analysis also cannot accommodate the argument
that if placed under the discipline of the markets, the content of the arts will adjust to accommodate the
taste of a sufficiently large number of buyers. When the analysis takes into consideration the nonprofit
character of many cultural institutions, it turns inevitably to instrumental questions such as incentives for
people working in such institutions and the variables that should go into their objective function. Are tax
deductions the subject then the obvious question is who pays? (cf. Feld, OHare and Schuster, 1983) or
who benefits? (Clotfelter, 1992)
Insofar we know, the conventional literature does not consider the possibility that the method of
financing and pricing may affect the value of a work of art. The financing is an instrumental matter.
Whether a work of art generates $1000 by means of a commercial transaction, a government subsidy or a
gift should not affect its value, at least that is the (implicit) argument of standard economic analysis. But
why should the way in which the value of art is realised not have an impact on that value? We have found
colleagues whom we posed this question, quite incredulous. Usually they did not understand what we
meant by the question. They are inclined to equate value with price. Admittedly, in that case it is hard to
imagine how the method of pricing can affect the value of that what is priced. Our approach is different in
that it points at other values that a transaction can generate over and beyond the value of the traded good in
and of itself. The reader may intuit that a transaction that involves a governmental subsidiy is of a different
nature than a market transaction. We want to take this intuition seriously. But before we do so, we want to
point at the space between the market and the government. With a few exceptions (notably Boulding,
1981) the economic literature has no attention for this third dimension but if we are right, the arts are hard
to conceive without it. Furthermore, the transactions that take place in this third dimension are of entirely
different nature than either a market or a governmental transaction.

BETWEEN THE MARKET AND THE STATE.

The conventional economic frame makes us distinguish between the realms of the market and the
government. Transactions take place in either of the two. Market transactions allegedly submit to the
invisible hand of the price mechanism whereas government type of transactions are determined by means
of political processes and implemented by bureacracies.
In the economics of the arts a central issue is the pricing of art in markets vis-a-vis the
provisioning of the arts out of collective means. The question is whether the failures of the market for the
arts are such that governmental subsidies are warranted. This thinking in dual options directs the societal
discussion that follows cutbacks in governmental subsidies of the arts (as is now the common experience)
inevitably towards market solutions (pricing, sponsoring). But there are other possibilities as the stylised
facts show. The restraint of US government of the arts does not mean that the market in the US has taken
charge. A major source consists of voluntary contributions by individuals and corporations. Think
furthermore of voluntary labor and the financial sacrifices that artists themselves and their families are
making for the art work, and it becomes clear that a sphere distinct from the government and the market is
operating in the world of the arts (and not only there). It is the sphere of informal associations,
relationships of reciprocity, gifts and donations. It is sometimes called the third sector or dimension, or the
informal sphere. Recently, it is considered as part of the so-called civil society. We will call it here the
third sphere.
Now we need to show that these three spheres generate distinct values and meanings in such a way
that it matters in which one the value of an art work is realised. We focus first on the market in contrast to
the government. For the sake of clarity, we begin with ideal types of both.
In a market transaction a good changes hands in exchange for something of equivalent value,
usually a sum of money. The price is the measured value of that good. It incorporates subjective
assessments (by the buyers) and objective conditions (like the costs and technology of production). A well
functioning market has an efficient outcome and thus serves the value of efficiency. Markets in general
symbolise the value of freedom, like the freedom to set up enterprises, to offer ones labor time to the

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

highest bidder, and, most importantly the freedom of choice for the consumer (cf Lane). Markets work
objectifying in the sense that they render personal and social relations irrelevant (at least for the analysis).
All that counts is the price. Well functioning markets allow individuals to trade in anonymity. When the
market metaphor is pushed, humans become solipsistic individuals who trade with each other with the price
as the only intermediary.
A transaction that the government controls is different insofar that bureaucratic procedures
allocate instead of prices. Rules determine who gets what when the government is in control. The basic
value or outcome that motivates government intervention is that of equity. The government takes charge of
health care on the assumption that it can generate a more equitable distribution of care than the market
does. basis of the argument that a free market of health care would be unjust. It serves not so much the
value of freedom as that of solidarity. The government extends transactions and transfers beyond the
circles of families and small communities to the national and sometimes international spheres (development
aid). Yet, as an ideal type the government works as objectifying as the market. Barring corruption and
nepotism the government ignores personal and social relationships and treats each citizen objectively. The
ideal government does not discriminate. As a consequence, it individualises its citizens just as the market
does.

Table 1 The market and the government

MARKET

GOVERNMENT

Price
Efficiency
Freedom

Rule
Equity
Solidarity
Objectifying
Individualising

Standard economic analysis compels us to concentrate on outcomes. When economists study the
market, they will focus on the (measurable) output such as income generated, quantities sold and realised
prices. We suggest to consider the process as well, that is, to view activities, conversations and
thoughtprocesses that underlie, precede and accompany market outputs. We postulate that the process as
such generates values that are distinct from the value of the good traded. Each sphere has its own
characteristic process. When artists operate in a market, the process must be generally different from when
they deal with governments. In markets they need to know their asking price, they will talk with
intermediaries (dealers, galleryowners, producers) and have to consider marketing and p.r. techniques.
They may even talk about their work as products, and about potential buyers as consumers. The
market sphere generates a specific rhetoric that participants appropriate. In Bourdieuss terms we would
say that the market is a field that calls for a particular habitus. In Hutters terms we would say that the
market dictates a particular play (Hutter 1996)
When involved in the sphere of subsidy the artist will have to fill in forms, consider the opinion of
the so-called experts, socialise with cultural bureaucrats and learn a way of talking that will get their ear.
At the same time the enactment of these interactions affirms the value that the collective attaches to the arts
in general. Subsidies symbolise such a valuation as well as the value of solidarity of the community with
artists who are unable to realise the value of their art in market settings. Artists may appreciate this sphere
as it allows them to avoid the negative values that they connect with the market sphere such as
commercialism, rationality, and anonymity.
These two spheres do not exhaust the possibilities for artists to realise the value of their work as
the stylised facts indicate. Vincent Van Gogh did not receive any government subsidy and did not sell his
work on the market. Instead he traded some of his work with fellow artists and, of course, got supported by

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

his brother. Partners, families and friends can be an important source of financial means for artistic work.
In the past church-authorities, aristocrats, royalty, or merchants were willing to be patrons of the arts or
maintained individual artists. In all these cases there is no immediate quid pro quo as in a market. The
instrument is the gift and the arrangement is one of reciprocity: the artist receives resources and incurs in
turn a mostly unspecified obligation. The brother van Van Gogh may have been satisfied with the
knowledge that Vincent occupied himself in a for him meaningful way. Siblings, parents and partners may
be satisfied to be paid back in terms of an affirmation of their responsibilities as siblings, parents and
partners. The merchants and royalty may have expected something more concrete in return, such as a
masterpiece someday in the future, or, less concretely, artistic success. Foundations that grant money ,
however, may be more specific in terms of performance and finished work.
The essential characteristic of this third sphere is the ambiguity of the exchange. In contrast to the
marketsphere, the value of that what gets exchanged is in the rule not measured explicitly. The participants
do not price their services and products. As a consequence the play involved is deep and intricate;
participating in the play requires special social and interpretive skills by which participants assess the
expectations of their partners, negotiate the terms of the reciprocal relationship (how often do I need to say
thank you when you have put me up for a week so that I could do my workor do I need to bring
flowers?)
TABLE : The third sphere

MARKET

GOVERNMENT
INFORMAL SECTOR

THIRD SPHERE
CIVIL SOCIETY

PRICE

SOCIAL AND QUALITATIVE

RULES
CONDITIONS
EFFICIENCY
SOCIAL AND CULTURAL VALUE(S)
EQUITY
FREEDOM
CONNECTEDNESS, LOYALTY
SOLIDARITY
OBJECTIFYING
INDIVIDUALISING

PERSONALISING
SOCIALISING

OBJECTIFYING
INDIVIDUALISING

What to include in the third sphere we do not quite know. Following those who have written on
civil society (see below) we are inclined to include all voluntary and informal associations like families,
circles of friends, networks, associations of professionals, clubs, churches, non-profit institutions (but not
those that are indistinguishable of for-profit organisations or governmental bureaucracies. The dividing
lines between the three spheres will be blurred. An artist who sells an work of art to a friend may operate
both in the market and the third sphere. Interactions within a corporation will also have the character of
interactions in the third sphere like when they rely on loyalty, involve reciprocity, and deal in values that
are not measured. In order to differentiate between the three spheres we need to develop a sense of the
difference in values that each generates.
As said before, economists do not appear to have an eye for this third sphere. The economics
literature contains very little discussion of its role and its characteristics. Boulding is an exception. Like

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

we do here, he distinguishes between the grants that governments give and the gifts in the third sphere
(although he does not use this latter term). He suggests that reciprocity has a function in building a sense
of community and a more complex structure of personal relationships that pure and simple exchange is
unable to perform (1981, p. 31) (It should be noted that among anthropologists and many sociologists
these observations are obvious but they are not to economists, at least according to our experience.) These
informal interactions in networks of voluntary associations are the main subject in the recent fashionable
subject of civil society. (In the following section we will briefly venture in this literature to see where it
can contribute to our discussion.) For our immediate purposes, it suffices to observe that financial
arrangements in this sphere are of a character that is distinct from the arrangements in the sphere of the
market and the government. As Boulding intimates (his analysis does not go much further that that),
arrangements in this third sphere serve to sustain and affirm connectedness with a particular other or with a
group of people, or with a particular culture. When we referee papers for journals free, we in a way affirm
by doing so our membership of a community of scholars. Theo Van Gogh affirmed by his gift his identity
as a brother. Like in the spheres of the market and the government, a transaction in this third sphere
generates other values in addition to the value of the good that is transacted. Theo and Vincent generated
in their reciprocal relationship the value of brotherhood or, more in general, the value of family.
Organisations affirm in their patronage the value of art in general as well as the value of giving. Some
foundations (like the MacArthur foundation) go out of their way to free the recipient from explicit
obligations. They donate a couple of hundred-thousand dollars with no strings attached. In that way they
affirm the value of free intellectual or artistic work. Thus they prevent being associated with the sphere of
the market where explicit specification and measurement is being valued.
To see the differences between the three spheres consider the case of an artist who tries to realise
the value of a work of art. There are three methods open for him (or her). We assume that in all three cases
the realised value is $1000. How he realised the $100o matters in the following way. When he sold the
work on the market for art he may experience a sense of independence (earning your own money), but
may dislike the anonymity of the process as he does not know the buyer. When he got the $1000 by means
of a subsidy he might appreciate the recognition that such a subsidy implies (even if it means that he still
owns his work), yet he may be bothered by the evaluation process to which he had to submit himself.
When he got the $1000 through the generosity of some well-to-do businesswoman he may enjoy this
personal expression of commitment and appreciation but may be bothered by a sense of obligation or
dependence that such a gift generates. The table below elaborates on the possible values that the processes
in each sphere generates.
The artist may not particularly care about how he got the money as long as he can make a living of
it. At least that is often the reaction we get. Yet it matters in a social sense. Even if an individual does not
care, social consequences are significant when on a societal level the emphasis shifts from one sphere to
another. The (stylised) fact that the US relies much more on the third sphere than continental Europe (and
has the institutions to support that sphere), attests to cultural differences at large.
In the following table we summarise the preceding discussions. The point of departure is an artist
who realises $1000. The question is how the way by which he acquired this amount for his work, matters.
The answer requires us to consider the values that each sphere of exchange generates.

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

10

TABLE

THE FINANCIAL ARRANGEMENTS MATTER

OBJECTIVE ACTIVITY:
Work of Art
Artist

Benefactor
1000 $

METHOD OF FINANCING IMPLIES GENERATION OF VALUES

The process of the market generates values such
Entrepreneurial spirit
Independence

Consumer Sovereignty
Ownership

Freedom of Choice
Calculation
Anonymity
Commercialism
Competition

A process which involves the Government sphere generates values such as

Public Recognition
Collective Appreciation
Dependence
Non Arbitrary
Sense of Solidarity
Bureaucratic Procedures
Elite Culture/Paternalism

The Third sphere generates values such as

Social Recognition
Mutual Dependence

Involvement
Subjective

Reciprocity
Relationship
Loyalty

Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.

11

THE IDEA OF CIVIL SOCIETY: AN EXCURSION IN THE LITERATURE

In our discussion of the existing variety in financial arrangements in the arts we referred to a third sphere,
other than those of the market or the state. In order to give further content to this sphere we try to benefit
from intellectual work captured under the rubric of Civil Society. In its most elementary form the concept
of civil society stands for voluntary associations of free individuals. This is supposed to be a synthesis of
private and public good and of individual and social desiderata. It harmonises, the conflicting demands
of individual interest and social good. (Seligman, 1992, x) Walzer refers to it as the space of uncoerced
human association and also the set of relational networks formed for the sake of family, faith, interest,
and ideology that fill this space (Walzer, 1995 [1991], 7).
It is a popular view to present civil society as a means to overcome the opposition between the
market and the state. In the form of a voluntary association, in civil society the functions of the state, as
guarantor for the public good and the function of the market as the realm where individual enact their wants
are integrated. Since this opposition of the market and the state was also shown to be present in the issue of
funding the arts, civil society may present a valuable alternative.
The idea of Civil Society has become in vogue in the past ten years. Its recent upsurge is
commonly attributed to changes in Eastern Europe. With the collapse of centralist forms of social
organisation, the reformists, in search of a new mode of social order, are painfully confronted with a
deteriorated state of civil society, it is argued. Although in Poland, for instance, the origins of the revolution
can be traced back to civil organisations like labor unions and Solidaridad, it has become common practice
to take recourse to prospering some form of civil society as a prerequisite for redefining the market and
state.
Apart from its application in Eastern Europe, notions of civil society also figure in political
reorientations that currently take place all over Europe. The civil society is sometimes even being heralded
as the impersonation of post-modern societies.
It would nevertheless be wrong to think that the idea of civil society is entirely new. The idea
perhaps dates back to as far as early stoic thought and natural law theory and has from thereon experienced
a number of revivals, revisions, and re-appropriations. The reason for resurgence is in most cases found in a
crisis of social order, similar to the one in Eastern Europe. For its modern form, the idea of civil society is
rooted in the Scottish Enlightenment. Authors like Hutcheson, Ferguson, and our Adam Smith have
invested us with a model of social order, that of civil society. It seeks to synthesize oppositions such as the
social versus individual, public and private, passions and reason, altruism and egoism. From thereon the
tone for the idea of civil society had been set and a wide variety of reinterpretations were to follow, the
most important ones being Tocqueville and Gramsci. These various reformulations have left their traces in
current representations (Seligman, 1992). The following definition of civil society by Ernest Gellner (1994,
32) for instance has a great number of Tocquevillian remnants: civil society is that set of nongovernmental institutions, which is strong enough to counterbalance the state, and, [] can nevertheless
prevent the state from dominating and atomizing the rest of society.
Due to its long and lingering intellectual history, current use of the concept of civil society is far
from unequivocal. It is invoked in a wide range of disciplines such as sociology, political theory, history of
political thought, and ethical theory. Besides, its use has not remained restricted to the academic forum, but
the idea invaded public opinion and became a buzzword among politicians and policy-makers. The idea of
civil society sells. Our flirt with the idea nevertheless intends to reduce the concepts frivolity by making it
productive in our particular setting, that of the arts.
Had it been conceived in the Scottish Enlightenment as an idea where a descriptive account of
social order coincided with a moral account of social individuals, the course of history shows an inclination
to detach the two, a development which has been incited by Humes famous separation of is from ought.
Also a number of contemporary social scientists seek to use it as a description of the social world without
having to take recourse to its moral dimension. Despite these intentions, the conflation of descriptive uses
of civil society with prescriptive ideals is still common, a fact which at the same time may very well
account for its persuasiveness. In addition, its use is often punctuated with a romantic desire for
associationalism as depicted in the happy life of small circles where people live well embedded, in mutual
care and support.
We hope that by referring to its historical roots, the impression can be upheld that the conflation of
social organisation and values is essential to the idea of civil society. Hall (1995, 2) refers to it as a
package deal which contains both a particular social institution and a related process of valuation.

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Current research into civil society can broadly be divided into two groups. One attaches to the
divide between descriptive and moral accounts and chooses to study the organisation of civil society as if it
were a separate sector. This strand relies on rubrics like the third-sector, the non-profit-sector and poses
them on equal footing with the market and the state.
Research questions are directed at drawing up a picture that shows the relative size of the three
sectors. This serves to ask further attention for the importance of that part of social life that has remained
undiscovered. Furthermore, it can serve to test hypotheses on the corrosion of civil life due to the expansion
of either the market or the state (and vice versa). Within economics, important contributions in this area
come from the group surrounding Lester Salamon at John Hopkins, but may also be found among a large
variety of authors such as Wuthnow (1991), Weisbrod (1988), Clotfelter (1992), Hodgkinson and
Weitzman, Hansmann (1980) Ben Ner-Gui (1993) and the like.
In the second tradition one rethinks the dominant paradigms for thinking about society, namely the
market and state by explicitly invoking the pair of social organisation and moral order as contained in the
idea of civil society. This is to view civil society as a moral phenomenon. Relinquishing it of the somewhat
distant vocabulary of the Scottish Enlightenment, this view amounts to the idea that in civil society
individuals act as civilians whose actions are an integral part of the particular social structure they belong
to. The key idea is that people care for their social context and act in order to sustain it. This differs
considerably from those areas of social life where social relations are organised in a much more
instrumental fashion. In the market there is no social objective to care for, whereas in a state we have
disembodied our care for the social objective. In a civil society one wishes to make the social whole ones
own. Authors that fit to the second approach are Oakeshott, Enzensberger, Habermas, Walzer, Charles
Taylor, Bell, and Shils.
Following up on the first strand research of civil society and to apply it to the arts, the first thing to
do is to recognise that most artistic activity already takes place in a civil environment. Most art
organisations are non-profits. Yet, its application to the arts would have to go a step further and would have
to elaborate on those funding arrangements that we have put under the rubric of the gift. Standard
conceptions of support by foundational and individual giving can be expanded by a number of informal
supportive structures for the arts. To name a few: volunteer work in art organizations, informal networks
among artists in which services are exchanged and market information gets distributed, Akerlofs thesis
of labor gifts of people who like to work in an artistic environment, internal subsidies, Friends-of
organisations, and the like. It can be researched whether the existence of those funding structures also
implies higher levels of participation and whether it enhances how people perceive the cultural climate of
their region.
Research in this direction could also help establish the size of these arrangements. We dare to say
that due to these activities that come out of civil society, it even exceeds the money value of private support
to art-institutions.
Consequences reach further when considering the second line of research on civil society for the
context of the arts. Walzer (1995) refers to civil society as the place where we realize the good life. In civil
society we generate social goods and at the same time establish how these goods are distributed. Put in
language of the economists, the various kinds of voluntary associations establish their own public goods
and define the way they ought to be allocated. In establishing a particular voluntary association like a
museum the initiators establish what goodies it is supposed to produce and secondly they decide how
these are distributed; the trustees pay for it and everyone can come in, or the trustees make a building and
the people pay for what they want to see.
Subsequently, there are two ways to view the relation between the civil society and market or
state. First, and this is much more in line with the social-scientific research strand on civil society, is to
conceive of civil society as just one setting among others. The other is to view civil society as a more
fundamental social setting in which the market and the state are embedded. Lets call this the
embeddedness thesis. The operations of the market and the state rest upon civil society. An instance of this
view, most familiar to economists is Mark Granovetters (1985) critique of the under- and oversocialized
view of man in economics.
However that may be, we may learn that just like acts that take place within civil society, also the
activities that take place on the market or through the state, represent a particular moral order.
Some skepticism with regard to the idea of civil society is nevertheless appropriate. As Seligman
(1992, 200) puts it: the idea of civil society has been taken up by mainstream Western intellectual as
the new cause clbre, the new analytical key that will unlock the mysteries of the social order.

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His criticism is largely geared against the use of civil society as a moral phenomenon. He accuses it of
being to general by merely claiming that humans are moral and that the idea does not present any further
clues to overcome the age-old problem of how society can be constituted out of individuals. It does not help
to understand the fundamental contradiction of social life.
Hence, some caution is warranted. The presence of a particular social structure that looks like a
civil society structure is not a guarantee that it is an instance of a civil society. This criticism is largely
applicable to those who seek to study civil society like structures detached from its moral content.
Particular social structures function as idealtypes. Civil organisations may become marketised or turn into
bureaucracies. Just like a friendship is by some people valued according to the values of the marketplace,
whereas for instance in fraternities or army units friendships have become bureaucratised.

CONCLUSION
We have not precisely accomplished what we set out to do. Even though we have conceptualised the space
that allows considerations of values that are generated in the process of realising economic value and have
shown the distinctive values of three different spheres, we are unable to indicate the relative size and
importance of each of these spheres in the world of the arts and have failed to make tight connections
between the empirical and conceptual part. Furthermore, our array of values are tentative. We need to do
surveys and ethnographic research to determine which values actually apply and function in a particular
setting. We also fear that the reader will be easily confused about the distinctions between the three
spheres as in reality they get easily mixed up. Nevertheless, we think that we have made a start with this
conceptualisation of the issue. We are confident about our thesis that financial arrangements matter. They
matter to the lifeworld of artists who have to consider the consequences of realising the value of their art in
one sphere rather than another. They matter to policy makers as their policy may favor one sphere over
another. This framework suggests that they consider the values that heir policy affirm of reject. They
also matter to cultural institutions who may think twice before they decide to embrace a market strategy.
They matter to us researchers because as for now we have little insight in how they matter.

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Klamer, A. and Zuidhof, P.W. (1998) The role of the third sphere in the world of arts.