The Third System

Paper delivered at 'Populist Politics and its Consequences for Cultural Production and Display' 8 March 2003, DCA, Copenhagen

In summary my talk will focus first of all on my own economy, then I'll discuss recent developments relating to the balance of public and private funding in England, and then I'll end by suggesting a new category that might add something to the public/private debate.

A few weeks ago when I started thinking about the subject of this seminar, I drew a diagram. On the left I wrote 'public' and on the right 'private'. Then I attempted to sketch in where exactly my own practice might be situated. Up until a year ago I was firmly located in the public sector with a salaried job at the Victoria & Albert Museum in London. However, I resigned from that post at the end of 2001 and since then I've been surviving on a variety of odd-jobs.

For the first ten months I worked part-time as an assistant editor at Mute magazine, which is funded through a combination of private investment, state subsidy, and sales through subscriptions and advertising. Over the course of the year I received a commission to produce a bibliography on British art for the Kunstmuseum Wolfsburg, a state-funded museum in Germany, and an essay on sculpture for the Henry Moore Foundation, a registered charity based in Leeds. I also received some royalties from a book I wrote in 1999 and received an advance on a book to be published this May, both published by private companies. And finally I've received a small income from giving papers at conferences, such as this one. So, with all these elements in mind, I would describe my economy, as a mixed economy. I'm flexible in that I solicit and accept money from both the public and private sector.

Such a position is obviously far from unique, but it is a long way from the late nineties position of the culturepreneur: a term invented by Anthony Davies and me to describe a type of art world operator who sold services and traded knowledge to a variety of clients outside the traditional museum and gallery system, such as advertising companies and property developers. I do trade in knowledge but my market is very specialised and restricted. Anthony and I see this restricted market as reflecting a general entrenchment both within the economy in general and the art world in particular. It reflects a return to core values, the traditional roles and professional competencies of curators, dealers, lecturers, writers, artists, and administrators. 'Hard times' in the British art world has therefore led to an emphasis on tried and tested media, chiefly painting, and sculpture being exhibited in tried and tested environments, namely galleries.

Art still functions, however, as a key element of urban regeneration schemes but this no longer applies just to London but has been exported as a model to other cities in England such as Gateshead, Walsall, Milton Keynes, Liverpool, Manchester, and Oldham. And I'm sure this is also taking place in many other countries around the world. Many of these schemes have been produced in partnership with the private sector and to add some concrete figures to this discussion, in the financial year 2001/2002, according to the Arts & Business organisation, £111 million was spent by the private sector on arts funding in Britain (although over 50 per cent of this support went to London-based projects). Interestingly this represented a 3 per cent drop on the previous year. Meanwhile, this year Arts Council England will distribute 337 million pounds plus 200 million pounds of National Lottery money. Add to this direct grant-in-aid to the National Museums plus the millions contributed through local authorities and the various European Union funding schemes and although the private sector's contribution is significant, it still represents a small percentage, and a shrinking percentage at that, of the total funding of the arts in England.

Later this month Arts Council England launches a new strategy for the arts with a key concept being an increase in the size and number of direct grants given to artists. This subtle realignment of the balance of power between artists and institutions can be seen as a move towards turning artists into key budget holders. Much of this money will be used to indirectly subsidise the traditional gallery system, but another place it might be spent is in neither the public nor private sector, but in 'another place', which I will now turn too.

In many ways the restriction of the arts economy to either public or private sectors is as limiting as those other great binary divisions, such as nature/culture, East/West, civilised/savage, and even clean and dirty, as in clean and dirty money. So to this already complicated system, I am proposing a third sector that takes place in the shadow of both the public and the private sphere. European Union researchers have called this sector the Third System. It can be defined as that part of the total economic activity that evades state measurement and regulation. The Third System consists of two main elements. Firstly there is the Shadow Economy, which is comprised of the illegal or 'black' economy, and secondly there is the Social Economy, which includes the family economy, plus community and various self-help groups and collectives. And before I go on its interesting to note how these EU researchers put non-profit social formations and organized crime in the same category.

The Third System is an area of the economy that is both taken-for-granted and seriously under-analysed. The first part of this system alone, the shadow economy, is already massive and one researcher, Friedrich Schneider, an economics professor in Austria, puts its size globally as equivalent to the GDP of the United States. It's long been an established part of the art world and includes such obvious art crimes of theft, handling, forgery, money-laundering and the smuggling of artworks. But it also includes anti-trust scandals like the recent Christies and Sotheby's case, and could even extend to benefit fraud and tax evasion by individual artists, dealers and collectors.

On the other hand the second part of the system, the social economy, is characterised by non-profit organisations, and meets social aims by engaging in economic and trading activities usually organised on a co-operative basis with equal rights accorded to all members. These run partly on the social capital that lies in networks of trust, shared ideals and co-operation for mutual benefit. This would also include various Local Economic Trade Systems, also known as LETS, and social credit schemes. In the art world this manifests itself in the many forms of co-operative work, the many favours that get passed around, and the many and various forms of unpaid and voluntary work. And I have to make a public confession here, that I have accepted artworks in exchange for texts.

With both public and private investment in the arts in Britain likely to fall, it might be that the only real growth will take place in this Third System. This will obviously cause problems for both public institutions and private companies. Any legal entity has various responsibilities not least of which is to abide by the law. It also has responsibilities to its workforce as regards salaries and benefits, and it also must be accountable to its paymasters, the state and shareholders. Such restrictions, however, do not apply to deinstitutionalised artists, or criminals. In conclusion, I admit that the Third System needs some further investigation, but I present it here as a on-going speculative counter-model.

Simon Ford