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Cultural capital and social capital: cultural economics perspective

David ThrosbyProfessor of Economics

Macquarie University, Sydney

International Summer School: Valuing Cultural Diversity in Cities: Challenges to Cultural Economics Island of Procida, Italy, 6 September 2009

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Types of capital in economics

• physical capital: buildings, equipment, machinery

• human capital: people’s skills, talents, intellectual ability

• natural capital: renewable and non-renewable resources

• cultural capital: tangible and intangible cultural assets

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Flow of services

Stock of assets

Cultural capital

Heritage buildings, sitesArt works and artefactsMusic and literatureInherited traditions

Community participationConsumption of the artsHeritage tourism

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Natural Capital Cultural Capital

Natural ecosystems Cultural ecosystems

The real economy

Inherited from pastCreated by NatureImpose a duty of care

Inherited from pastCreated by humansImpose a duty of care

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Cost-benefit analysis of cultural projects

• identify capital costs• estimate time-stream of benefits and costs• include non-market values• calculate benefit-cost ratio, net present value

(NPV) and/or internal rate of return (IRR)• consider similar assessment of cultural value• is there a trade-off between economic and

cultural value generated by the project?

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Economicdevelopment

Preserving natural capital

Sustainable development

Maintaining ecosystems

Human development

UN World Commission on Environment and Development (WCED, 1987)

“The Brundtland Commission”

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Sustainability principles:

1. Provision of material and non-material wellbeing

2. Intergenerational equity

3. Intragenerational equity

4. Maintenance of diversity

5. Interdependence

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Material wellbeing

•tangible benefits from rising real incomes

Non-material wellbeing

•intangible benefits or “quality of life”

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Intergenerational equity

An efficiency issue

Efficient intertemporalallocation of resources

A moral or ethical issue

Ethical responsibility to have concern for future generations

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Intragenerational equity

• fairness in treatment of present generation

• non-discrimination

• equity in access to cultural participation

• observance of fundamental human rights

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Social capital

• relationships between and within social networks

• cooperation, reciprocity, trust

• social interaction as a resource for the social good

• social norms or values (overlaps with intangible cultural capital)

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Relationships with cultural economics

• arts and culture in urban development

• creative sector and economic growth

• culture in development