Tomas Träskman, ProPrefekt and Lecturer in Cultural Management, Department of Culture and Media, Arcada UAS
“The Consequences of Intangibles” is the subject of Prof. Baruch Lev’s keynote. I sit and listen. As his story unfolds, and we dig deeper into the fascinating, but sometimes very abstract, world of intangibles, I reflect on my own performance as a worker involved with value that is mainly intangible, and I seem to be performing… incredibly WELL. In a presentation on the benefits from moving from a manufacturing economy into today’s market of intangibles, Lev observes that the benefits are large and widely dispersed. These benefits include 1) democratization of information, 2) the rise of social media (for better or worse), 3) huge advances in media & entertainment and transportation, 4) huge health gains throughout the world from pharmaceutical R&D. He also identifies that five intangible-intensive companies, Facebook, Amazon, Apple, Netflix and Google (FAANG), move the US markets. We now live in the Age of Faang. Arts such as music (Spotify) and TV (HBO), culture, and craft (Etsy (External link)) stand at the heart of the new corporations. Since the craft of making meaning is core to the institution of Culture and Media, at Arcada UAS, where I work, we seem to be performing really, really well. However, we all know that translating the value and work in the arts into the kind of economic capital that the market recognizes as legitimate, is not as simple as one would think. As Bruce Sterling notes in “Australian Culture versus the FAANG (Sterling, 2016)” that the outcome of the democratization of information is millions of views, shares and likes, with followers counted in the hundreds of thousands. This is fantastic, as it creates not only new audiences, but also new professions. For example, in terms of my main responsibility at Arcada, the education of cultural managers, the result of this phenomenon, is that I find my students and alumni in new professions as ‘community managers’ and managing influencers. Another result, highlighted by Sterling, is that we are witnessing:
a massive redistribution of wealth from the cultural sector, where meaning is created, to the technology sector, which has figured out how to market, distribute, reach and make money out of it in ways the cultural industries never imagined possible.
By a fantastic trick of dissociation and decoupling, attention (and capital) is turned away from the source of the intangibles of meaning making and on the technology sector. In terms of investment, this is interesting, since if you are an investor where should your money go? According to Lev, many of the consequences of intangibles are things that we do not understand well enough, and therefore he gave one of his books the provocative title “The End of Accounting.” Thus, major decisions are predicated on financial indicators of profitability and asset/liabilities values. These documents move mountains, so what happens if they are based on faulty indicators that fail to show the true value of the company, he asks. According to Lev, we should look at “future performance”, for example investments in R&D. In a critical comment, one of the chairs from the conference, Prof. Dr. Manfred Schwaiger, from the Institute for Market-based Management (IMM) at Ludwig-Maximilians-Universität Munich however problematized such indicators. At least in part.
Schwaiger acknowledged the need for better predictors. He gave the example of his own university, which as most universities wants to be: ‘the best university in the world.’ So how do they work towards this goal? Their logic is a common one: if you attract the best students, then you become the best university. Simplified: good students are the asset that universities capitalize on. However, this predictor is not a very good one by any measure. According to Schwaiger there is only a 25 % correlation between school grades and success in life. That is shocking news to me. Is this not the indicator that everyone, from ministry representatives to universities and UAS, present in terms of objective efficiency and prosperity? But if only 1 of 4 students actually is an asset and actually performs according to this logic, what does that mean for our future performance?