Size does matter

Eu strategy picWhen in the early 70s, the European institutional system was still a conglomerate of associations and various treaties in a context of economic crisis, a plane designed with British and French synergies was commercially exhibited on both sides of the Atlantic. It was the Concorde, ingenuity made ​​possible by the concord of companies and former rival states. With the Concorde, the adventure had just begun. In 1970, France’s Aerospatiale and Germany’s Deutsche Aerospace created the Airbus consortium. In 1971, the Spanish Casa joined the consortium, followed by the English British Aerospace in 1979. A few years after its creation, in the 1980s, the Airbus already produced appropriate economies of scale to be competitive and to become a direct competitor to U.S. giant Boeing, as well as to devise projects where European research and engineering could be exhibited as global leaders.

The history of post-war Europe is closely linked to its economic history. We could even admit that the European integration process has kept pace and followed the steps set by the needs of the world economy. And there might be some truth in it, because the history of Airbus is the most visible example of how national capitalism succumbed to a business and economic project at a larger scale, at a European level. Sectors such as the automotive, pharmaceutical, metal, chemical, petrochemical, energy, and telecommunications, among others, have experienced integration processes which have quickly even surpassed the European level. The objective was clear: to acquire the right size to compete globally. Industrial sectors previously protected by national elites seemed to be changing them into more international elites.

The process has affected the areas of the economy that generate greater and faster value, but many economic, social, cultural resorts, strongly held to varying degrees of localism, still resist which prevents greater integration of European economic structures.

With this economic introduction, I would like to take you to the core of this text, more focused on the field of culture but not so far, as it might seem, from the world of economics. What I would like to argue here is that in the field of culture, particularly in the cultural industries, there is a glass ceiling for business growth: the national ceiling. This ceiling has hindered a variety of integration projects of companies and cultural agents, with the resulting loss of competitiveness and global value. I suspect that this problematic ceiling exists not only in the cultural sphere but also in many other economic sectors which I have previously described as being closer to local or national protection. Therefore, when we analyse culture, we should not lose sight of the broader context, where we can find other sectors following similar dynamics.

As an example of what I mean, when we speak of the problem of European cinema, we quickly put the blame for our misfortunes on the superiority of Hollywood: its large studios, large distributors, large marketing apparatus. But, have we ever wondered why we do not have in Europe some other major film producer, or better yet, a large distributor to distribute all over Europe? No, dear readers, we do not have such an industry like the US, but we have X film industries (replace X with the number of countries or European cultures). This model which, it is said, was the structure on which cultural diversity is based, found an ideological and political model that protected it: the cultural exception. A model which undoubtedly contributed to European cultural success in past decades, ensuring cultural diversity. However, this model may also have prevented the creation of a model of film industry capable of competing globally.

I have chosen the example of cinema, but we can isolate any cultural sector to observe how these glass ceilings, wherever they existed, or still exist, hinder the development of the European cultural industry in a globally competitive context. A context which, affected to a greater or lesser extent by the economic crisis, continues to be disadvantageous for Europe. The sales of tangible cultural goods outside the EU have fallen by 4.1% on average annually from 2004 to 2007; whereas imports fell by only 1% on average annually over the same period. This contrast is further accentuated if we consider much more detailed data such as:

  • In the art market, we depend in 72% of exports and 78% of imports on two markets: USA and Switzerland.
  • In the case of musical instruments, in recent years we have become net importers of “low cost” instruments from Southeast Asia (56% imports from China and Indonesia).
  • In the case of books, we have reached 40% of imports from China (maybe because they are printed there at low cost?).
From EU Statistics Culture 2011
From EU Statistics Culture 2011

But if we move to another identifying sector of European culture – publishing – and analyse it in detail, we might find surprises that lead to reflection.

From EU Statistics 2011
From EU Statistics 2011

Publishing houses are larger in two of the most culturally active economies, although due to different market dynamics: United Kingdom and Germany. They also produce more balanced levels of business concentration: with a greater percentage of medium-sized companies (10-50 employees), around 13%, and large companies (>50 employees), around 3%, which participate in a juicy part of the income distribution. Saying this would draw criticism: that model would imply the disappearance of small businesses. And my reply would be to return to the data, to reality: more unstable is the Spanish system where small businesses (<10 employees), representing 90% of publishing houses participate in 15% of total industry revenue only, compared to the UK where the ratio is 84% of small businesses participating in 7% of the pie. Compare these data with the business figures I have provided before. What publishing industry would then enjoy better health?

It is no coincidence that the UK and Germany have led the most ambitious publishing merge in recent decades, Penguin and Random House. Two companies which have achieved the economies of scale I have previously discussed, and which are globally positioned.

My proposal needs further clarifications, though. The fact that I am advocating for corporate concentration, asking for a larger number of medium and large companies at a European level, does not mean that I degrade and forget small businesses, creators and artists. Let me be clear, the proposal is not against them but on their behalf. Only those cultural sectors with various balanced levels can guarantee sustainable and active dynamics for the artistic network. In other words: cultural sectors with no medium and large companies capable of visualizing talent internationally, are sectors which cultivate mediocrity at the lower levels, and expressed differently: large corporations which conduct talent can only exist if based on a rich and broad creative base.

Perhaps the best way to find that balance in Europe is, again, the principle of subsidiarity. European institutions already adopt cultural policies to promote intra-European transnational projects. But, perhaps, what we would claim now would be promotion lines for the integration of projects and companies. And the same thing would be required from the States: to let go their cultural creatures. We would also ask the EU for a proposal that convinces and replaces the old concept of «cultural exception» in the negotiations of the current US-EU bilateral treaty. And from the European Parliament, a greater vigilance on the harmonization of state cultural policies would be demanded in order to preserve identities and cultural diversity. Europe can work in both lines: global cultural industries and cultural and creative diversity.

My demand is also for the European cultural sector to try to advance their conception of cultural policies and their inclusion into the economic framework; to put into question the current validity of protectionist theories because in the long run, they might have a negative impact on European culture. I understand that some of the ideas I present may generate criticism on the commercialization of culture, but to deny the economic dimension of culture would be like denying the creative, unexpected and artistic dimension of it. The interesting thing is, in my opinion, to reconcile both views in a changing and much more complex context than it was twenty or thirty years ago.

It is not about producing culture for Europeans only, we will continue doing that, but making the kind of culture for which we have been so much appreciated worldwide. But, today, the argument that our products and cultural proposals are authentic is no longer enough, we also have to generate interest, to tell and do things which capture the world’s interest. That’s what we’ve been doing for centuries, and now requires a new effort on our part. We can take refuge in making films for European alternative cinemas, publishing select books of thought and pushing the music to unforeseen limits. And we will keep doing it because this is our cultural identity. But we must also aim to produce a culture that goes beyond our borders, that awakens interest in Africa, in Asia, in the Arab world … If we do not, others will come and they will do it for us. It has been a constant in the history of mankind.

David Márquez Martín de la Leona (Trad. Alba Adell Carmona)

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