Attention to art and culture goes far back in the history of economic thought. In the seventeenth century those activities were viewed suspiciously as likely to be either wasteful extravagances of the aristocracy, or dangerous distractions for the working classes. Eighteenth century economic thinkers offered more positive and thoughtful speculations. Mandeville and Galiani observed that the prices of art works were determined almost entirely on the demand side of the market, often by fashion and the search for distinction. The Enlightenment economic thinkers were intrigued by various aspects of art markets. Hume and Turgot perceived positive social benefits emerging from the arts, and they attempted to understand of what these consisted. Smith picked up some of the hints that were dropped and looked at art markets in a depth that had not been undertaken before. Like some other Enlightenment thinkers, Smith pictured the arts as being mainly about the imitation of perfection. Jeremy Bentham, with his emphasis on utility as a tool by which both to understand and judge market performance, insisted that the arts should not be distinguished from other forms of entertainment: pushpin, he asserted, equals poetry. Other political economists followed Bentham's lead and steered away from exploration of the economics of the arts. To some extent the void thus created was filled by humanistic writers, novelists, and essayists, notably Arnold, Ruskin, Dickens, and Morris, who were highly critical of the industrialization of the period and the emerging discipline of political economy that they perceived to go with it. In the “marginal revolution” of the 1870s the Benthamite injunction against special treatment for the arts was largely observed. At the same time, several of the new economists, notably William Stanley Jevons, became “closet esthetes”, enjoying their guilty pleasures but not often subjecting the arts to economic analysis. Disappointingly little concerning the arts and culture can be found in the distinctive American economics of the late nineteenth and early twentieth century. There was almost a reversion to the seventeenth century view of the arts as the corrupt playthings of the idle rich. However, something like a return to the rich speculation of the eighteenth century Enlightenment occurred in the Bloomsbury Group that included the economist John Maynard Keynes. They rejected “Benthamism” and distinguished between the artistic experience and human consumption, and between the “imaginative life” of the mind and the biological activity of humans and other creatures. They discerned complex effects of the arts throughout society and placed arts policy high on the policy agenda.
