fbpx
March 31, 2021 Reading Time: 5 minutes

Edmund Burke, the father of conservatism, once said that patronage was “the tribute which opulence owes to genius.” If you were wealthy, it was your moral obligation to give back to the community – not merely by improving the lot of the poor or renovating your local church but also by supporting artists and intellectuals. 

For France’s eighteenth century gens de lettres, patronage was “the consideration and support owing to those who illuminated their age,” as Edward Andrew writes in his Patrons of Enlightenment, a book that explores the financial backing of the Enlightenment’s most prominent names. “No man but a blockhead ever wrote, except for money,” Samuel Johnson famously said, and royal or aristocratic patronage was the highest version of that: writers and thinkers were paid (sometimes handsomely) for their sustenance so that they could devote themselves wholeheartedly to their craft. 

Patronage was how many of the Enlightenment thinkers made a living. John Locke, the property rights theorist and political philosopher foundational to classical liberalism, owed much of his professional success to the backing of Lord Shaftesbury. Adam Smith, the Scottish moral philosopher and early economist, famously accompanied his patron’s son, the young Duke of Buccleuch Henry Scott, on his Grand Tour of Europe in the 1760s. Both Benjamin Franklin and Alexander Hamilton depended on wealthy patrons to support their writing.  

This patronage was, like most things in the old world before the Great Enrichment, top-down: royalty or wealthy gentry supported intellectuals and in return often expected them to contribute to the education of the gentry’s sons or some endeavor the King found important. With the twentieth-century expansion of governments and publicly-funded universities, we collectivized and institutionalized this process: donations and government tax money went into the universities, scholarship and education came out. To a certain extent even these institutions maintain the patronage of old as individual chairs and institutes can still be funded by specific donations, often carrying the names of their donors.  

Ludwig von Mises said about capitalism that it was “mass production to supply the masses” – contrary to the caricature of rich folk producing expensive stuff for yet richer folk. What’s so fascinating is that the digital age is slowly producing its own kind of capitalist patronage, returning us to a world that modernity and Big Government have long since crowded out. 

The Spillovers of Ideas and Why Governments Need to Fund the Arts

We’ve all heard that markets can’t support the arts. Without government financing of state operas and cultural institutes and artistic endeavors, we’ll degenerate into a society of cheesy Netflix shows and the Super Bowl (as if there was something wrong with either of those). The stuff of High Culture – of museums and theatres and orchestras and literary events – would not be viable without such support, or so expensive that only the ultra-rich could enjoy them.

The standard textbook argument for why we need government financing of things like culture and research that’s ostensibly valuable beyond its commercial merits is positive externalities and merit goods. Whoever invests in research cannot, bar patents, be ensured that they’ll reap the benefits from the scientific breakthroughs that may or may not stem from it – and so the private sector undersupplies investment into research. Public goods cannot be provided by the market, as they cannot exclude nonpayers and any provision deteriorates in the face of continued free riding. Culture and history too, it is argued, would be left to the sideline by commercialism if we leave their provision entirely to the market. Some important things may not be commercially viable, and to the extent they are, might not be optimally offered by a tunnel-visioned market system emphasizing profits to the exclusion of all else. Ideas, scientific research, and lots of government spending on culture is justified precisely on those grounds: some things are too important to be left to the market (I say, to illustrate the point, while writing from the commercial café of a public library; in the absence of government funding, do we really think that library lovers wouldn’t pool funds or membership fees to maintain the facility we much treasure?). 

As often is the case with blackboard proofs that show markets underperforming, in the real world, consumers, donors, charities, and companies routinely thwart such economic theories. Cultural or nonprofit organizations can even use the rails of the market economy without passing profit-and-loss tests – as shown by the many publicly listed football clubs in Europe, most of which routinely make losses that the owners, aka hardcore fans, don’t object to (“Investing with your heart – not your brain”). Besides, the centuries-old history of patronage shows us that spillovers and public goods arguments against voluntary provision of these goodies are largely off base. 

For years, a new age of patronage has been bubbling in the corners of the internet, increasingly taking space in the professional world of start-ups as well as the creative world of artists and musicians not (yet?) able to live off their art. Kickstarter, GoFundMe, and Patreon are now household names, where intellectuals and artists receive patronage of the opposite kind of ages past: instead of wealthy patrons giving back to their communities, it is the mass communities giving individually small donations that supply the creative types with livelihood. This is Mises’ “mass production to supply the masses” applied to the provision of ideas, art, and public goods.  

Think of what happened recently to the already-established community of online chess. With the immense success of Netflix’s The Queen’s Gambit, YouTubers and professional chess players alike received hundreds of thousands of new regular viewers. More importantly, on their livestreams over platforms like Twitch, they have seen donations coming in from near and far, in sums far exceeding the patronage of old. Unlike then, it is mass patronage from wide audiences that all benefit from the free content put out there by talented streamers and players. 

Patreon allows creators to connect with subscribers in a variety of ways. Some academics, like the Post-Keynesian economist Steve Keen (who’s managed to garner over $8,000 a month), quit the bureaucratic constraints of academia and relied for their incomes on the patronage of their dedicated subscribers. Many podcasters do this too, either as a separate revenue stream in addition to the usual ads or sponsorships, or as a tiered membership where paid followers receive additional benefits, including extra interview material. Some of the ones I follow and pay for include Sam Harris’ Making Sense and Demetri Kofinas’ Hidden Forces that both use this “freemium” model, giving you more of their excellent content for a small monthly fee. The explosion of Substack newsletters (with or without ads; freely distributed or behind paywalls) is another feature of the new bottom-up economy of ideas. 

The Bitcoin world, as usual, shows us a glimpse of the future. With patronage and grants from major players, exchanges, and other businesses involved, private provisioning of a public good has never been more obvious. Blockchains are open source, belonging to nobody and so subject to perennial underinvestment by the faulty ideas of economists left and right. Still, tons of programmers work on bitcoin core and a myriad of other projects supporting the infrastructure of this emerging field. Kraken, a crypto-currency exchange, gives out developer grants without obligations, all in order to advance the infrastructure of the community that is their business: 

“At Kraken, we recognize Bitcoin and cryptocurrencies would not exist without the hard work and dedication of open-source developers. In recognition of their valuable contributions, Kraken has started a grant program to support promising developers and projects.”

Last year OKCoin, another crypto exchange, donated $100,000 to BTCPay Server, a self-hosted payment provider, again with the intention of supporting crucial infrastructure in the emerging world of bitcoin and cryptocurrencies. 

To a certain extent, these exchanges act in their self-interest as their business relies on a flourishing crypto ecosystem. Then again, Kraken and OKCoin receive nothing (but name recognition) and any infrastructure improvements accrue to them only indirectly. Private provision of public goods in its natural habitat. 

If we widen our scope, large companies have long donated funds to support causes they think are important or channel the values they wish to portray, often entirely detached from their business. In sports, ranging from sponsor agreements with football teams to apparel firms sponsoring individual athletes (nowadays also professional gamers!) with gear, helping talented others achieve creative or athletic success is common practice. 

A twenty-first century age of patronage is here. Perhaps it will support the foundation for a twenty-first century Enlightenment too.

Joakim Book

Joakim Book

Joakim Book is a writer, researcher and editor on all things money, finance and financial history. He holds a masters degree from the University of Oxford and has been a visiting scholar at the American Institute for Economic Research in 2018 and 2019.

His work has been featured in the Financial Times, FT Alphaville, Neue Zürcher Zeitung, Svenska Dagbladet, Zero Hedge, The Property Chronicle and many other outlets. He is a regular contributor and co-founder of the Swedish liberty site Cospaia.se, and a frequent writer at CapXNotesOnLiberty, and HumanProgress.org.

Get notified of new articles from Joakim Book and AIER.
AIER - American Institute for Economic Research

250 Division Street | PO Box 1000
Great Barrington, MA 01230-1000

Contact AIER
Telephone: 1-888-528-1216 | Fax: 1-413-528-0103

Press and other media outlets contact
888-528-1216
[email protected]

Editorial Policy

This work is licensed under a 
Creative Commons Attribution 4.0 International License,
except where copyright is otherwise reserved.

© 2021 American Institute for Economic Research
Privacy Policy

AIER is a 501(c)(3) Nonprofit
registered in the US under EIN: 04-2121305