Creative cities and the reflexivity of the urban creative economy

Abstract

The paper addresses the abundant literature on the creative city that has been generated following publication in 2002 of Richard Florida’s work on the creative class. In particular, it is maintained that the discussion should be based more on a robust social economic analysis of urban economies. The paper starts with a brief review of the polarized debate on the creative city in which either the optimist obsession with a new growth sector is stressed or there is a focus of attention on its negative impact on urban society. Building on the idea of cultural production as a reflexive economic activity and on three empirical vignettes about how culture, the economy and the city interact, it argues that cultural production is an adaptable activity which is, however, permanently forced into a state of adaptation. Urban space and society have an ambivalent role here. On the one hand, the city offers adaptability: on the other hand, however, because this is the case, it fosters the need for permanent adaptation.

Keywords

Creative cities creative industries cultural production reflexive production system

Introduction

Welcome to the ‘Warhol Economy’ (Currid, 2007)! While mass production manufacturing industries were considered, for much of the 20th century and certainly into the 1970s, to be the economic engines of urban development and growth, to be replaced in the 1980s by flexible high-tech firms, the future of the urban economy today seems to be recognized in urban nightlife, cultural scenes and the creative chaos of urban society – at least it does if one agrees with the arguments put forward by Elizabeth Currid and others. Urban cultural life, quality of place and, of course, the growth sectors of cultural and creative industries are en vogue among both academics and urban development practitioners – not least since Richard Florida (2002b) published his ground-breaking monograph The Rise of the Creative Class. In addition, the understanding of urban development and urban policy has changed: ‘“Urban engineering” is dead, long live “creative city-making”’ (Landry, 2000).

Meanwhile, an immense, yet extremely polarized body of publications, dealing with topics such as the creative city, the creative class and the creative industries, has been generated. Creativity, creative activities and creative industries are discussed either as a new and ‘extremely powerful vehicle of job creation and growth’ (Scott, 1996: 319) or as harbingers of the ongoing processes of neoliberalization, stabilizing and reinforcing the pattern of social divide, particularly in urban societies (e.g. Peck, 2005, 2011).

With this present contribution I do not seek to add to the game of either ‘Florida-hyping’ or ‘Florida-bashing’ (Bontje and Musterd, 2009). Rather, the paper seeks mainly to unravel the socio-economics behind what is labelled as a creative city. In essence it thus attempts to develop two key arguments. First, the polarized debate about the role of creativity for the economic development of cities does not grasp the inherent ambivalences of creative and cultural production. The creative economy can be portrayed as a reflexive production system characterized by multiple systemic uncertainties. These uncertainties imply the system to be under continuous scrutiny as well as permanently pressurized towards change. Second, cities constitute the suitable environment for this production system. However, this is not mainly due to favourable conditions for cultural production but, above all, because cities provide mechanisms to compensate uncertainties. Nevertheless, those same mechanisms at the same time also induce and reinforce uncertainties as decisions in the face of uncertainty are taken in the light of possible compensation.

The paper constitutes a summarizing comment that draws on some 15 years of study of the extant literature, empirical fieldwork and public sector consultancy within the field(s) of cultural and creative industries. The argument is organized as follows. The next section summarizes very briefly the polarized positions in the current debates on creativity and cities in urban studies based on the key arguments of Richard Florida. I then attempt to elaborate on the idea of the creative economy as a reflexive production system and the role of cities as resources, catalysts and compensation mechanisms for this system. This is followed by the presentation of some evidence drawn from my own empirical and consultancy work, and, in doing so, addressing three key ambivalences within the creative urban economy. This is set out in three subsections, based on different methodological approaches: Growth and precariousness; Culture and economy; and Creative economy and urban space.

Growth and precariousness builds mostly upon a study into the new media labour market of Hamburg (see Läpple and Thiel, 2004). It comprises a standardized online inquiry into the employment structures of 254 firms in the new media industry of Hamburg in 2002. The information produced was compared with unemployment data aggregated to new media-related occupational groups. In addition, semi-structured interviews with 28 new media workers from different professional backgrounds and organizational levels were carried out.

Culture and economy draws on the results of a comprehensive study of the advertising industry of Hamburg (see Thiel, 2005) which included a broad comparative analysis of employment data in West German metropolitan regions as well as 30 personal interviews carried out in 1999 and 2000 with managers of advertising agencies and supplier firms, advertising professionals and industry experts.

Finally, Creative economy and urban space is the last empirical vignette, which draws mostly on somewhat ‘anecdotal’ evidence. The information and arguments related to the built environment arose through my role as a board member for a consultancy report on creative spaces in Hamburg and as a speaker and, in particular, as a participant in subsequent discussions at a workshop with arts students in Leipzig in spring 2009. The section on conclusions reiterates the starting points and compares them with the paper’s conceptual and empirical findings.

Narratives of creative cities: between bearers of hope and uncomfortable places

Within the large body of literature that deals with the subject of creative cities, the work of Richard Florida (2002b) is particularly prominent, above all because it has been unique in its contribution to accentuating and popularizing the topic. The nucleus of Florida’s writings is the personality of the creative knowledge worker that constitutes the social foundation of a future economy based on the creation of ideas. This new type of worker is fundamentally different to workers in an industrial economy dominated by large manufacturing corporations. While the latter primarily had to adapt their behaviour to the demands of the organizational processes, the former’slifestyles and work patterns are explicitly and necessarily outside the range of previous mainstream habits. Because the generation of ideas has become the key to economic success, ‘formerly marginalized social groups and individuals’ have been systematically integrated ‘into the value creation process’ (Florida, 2002a: 57, emphasis added).

It is here that the culture of cities comes into play. It provides the individualized members of Florida’s ‘creative class’ with both the tolerance and the amenities they need in order to fulfil their bohemian lifestyles. Cities, in this sense, constitute a diverse and open environment for the creative knowledge workers; those cities that are most successful in providing this environment are expected to be the winners in the future economic development game.

Florida’s work has evoked not only unbridled euphoria but also carping criticisms. On the one hand, thousands of strategy reports have been produced in cities and regions throughout the world since the publication of his masterpiece in 2002. Most of these reports have been following one simple objective: to enhance the capacities of cities to attract the desired members of the creative class.¹ As a particular consequence, policy areas previously belittled as ‘soft’, such as school policy or cultural policy, have been moving into the core of local economic development. On the other hand, and above all in the academic world, critical voices have prevailed. Florida has been reproached for applying a problematic methodology, over-interpreting findings and, most importantly, endorsing a neoliberal urban policy (e.g. Peck, 2005).

We do not address this debate in a comprehensive manner here, restricting our concerns to how the debate addresses Florida’s arguments about the role of cities. Some scholars have criticized Florida’s focus on cities as places of cultural consumption (e.g. Pratt, 2004, 2008). According to Walter Siebel (2008: 274, author’s translation) Florida ‘banalizes […] urbanity as a consumable environment of a well-funded and demanding group of service professionals. The city is conceived of merely as a location and not as source of new things.’ Urban culture is, in effect, nothing more than a soft location factor satisfying the consumption patterns of the creative knowledge worker. Here, Florida’s student Elizabeth Currid (2007) provides an important additional argument about the additional supporting role of cities for cultural production (as discussed in more detail below). Building on her analysis of New York’s cultural economy, Currid maintains that the city’s places, networks and institutions constitute those genuinely non-economic factors that decisively underpin the successful functioning of a so-called ‘Warhol economy’. In her view cities provide the environment that is not only preferred by creative individuals but also, above all, enables economic exploitation of their activities. However, also with regard to this aspect of the creative city, Siebel remains less optimistic because he considers this urban creativity as ambivalent. While – of course – it helps generate innovations, it also destroys existing securities and thereby produces losers. The creative city, then, is also very much ‘an uncomfortable place’.

The changing relation between culture, economy and cities had already been an important topic of urban studies long before Richard Florida published his ideas. However, scholars – above all from the field of urban sociology – tended to stress precisely this uncomfortable side of urban culture. Many of them focused on the ‘cultural gentrification of cities’ (Pratt, 2008: 111). Drawing on Sharon Zukin’s work on the transformation of lofts by artists (1982) and her idea of a ‘symbolic economy’ (1995), many publications addressed the struggles between profit expectations of real-estate and use expectations of residents. In this context, culture was considered as a tool of ‘symbolic appropriation of space’ and ‘symbolic exclusion’ used by the ‘urban growth coalitions’ of stakeholders in real-estate businesses and local politics (Logan and Molotch, 1987). Similarly, the more recent – post-Florida – work in the field of urban sociology is still very much influenced by a new urban political economy thinking which concentrates on patterns of exclusion and culturally mediated forms of gentrification (Holm, 2010; Zukin, 2008). Culture (and the cultural creative economy) is seen as merely a vehicle of change in urban society and urban space. Simply stated, the city is conceived of as a victim of culture and creativity.

Some recent contributions reveal a more differentiated view of the urban cultural economy (e.g. Grodach, 2011; Indergaard, 2009; Peck, 2012). However, a large part of the related analysis does not address, and even runs the risk of endorsing, the weakest aspect of Richard Florida’s argument. In effect his model of the creative knowledge economy does not accommodate the complexity of culture and creative production in cities. The model is in essence composed of two elements only: creative individuals and the urban environment. There are no intermediate structures: no organizations (apart from those reflected in anecdotal catchwords such as ‘no-collar workplaces’, ‘soft control’ and ‘the caring company’); no labour markets (apart from the ‘horizontal’ one through which individuals cheerfully navigate); no infrastructures and institutions (apart from those providing the lifestyle amenities requested by the members of the creative class). In Andy Pratt’s (2008: 114) words: the creative class-approach to cities ‘individualizes what is a complex and hybrid phenomenon’.

A social economic analysis of creative cities would need to deal with the underlying production system of their cultural economies – as is the case in much of the literature on economic geography (e.g. Grabher, 2001, 2002; Power and Scott, 2004; Pratt, 2004, 2008; Scott, 1996, 1997; Storper and Scott, 2009). From that starting point the analysis will need to unpack the intricate entanglement of economy, society and the built environment of cities. The following sections attempt to offer an approach that could help rise to this challenge.

Understanding creative industries and the creative city

Even though the exact delineation and definition of categories such as the ‘culture industries’, ‘creative industries’, ‘the creative economy’, and so on, is far from being unequivocal, there is widespread agreement on considering them as growth sectors in our current economy. However, it is not this quantitative aspect that seems alone to be important. On top of that, the emergence of a ‘cultural economy’ implies a more fundamental transformation. The social spheres of culture and economy, previously regarded as strictly separated, have become mutually entangled in many ways. We can consider this entanglement, on one hand, in terms of content. Culture – or a cultural substance – has increasingly turned into both ‘input’ and ‘output’ in processes of economic value creation (Leriche and Daviet, 2010: 808). There are, then, two parallel processes at work: a ‘commodification of culture’ and a ‘culturalization of the economy’. On the other hand the intensified interplay between both spheres also concerns the form of economic activities. Arts and culture are considered to be paradigmatic counter-models to the Fordist and Taylorist patterns of mass production and pioneers of new work (e.g. Haak and Schmid, 1999).

The following sketch of a social economy of creative cities starts from this alleged pioneer function of arts and culture. Drawing on Lash and Urry (1994) I refer to this change of production systems as an increase in ‘reflexivity’; that is, the systems are increasingly subject to permanent scrutiny and therefore continuously prepared to change.

Culture and creative industries as a reflexive production system

In the 1980s there was a controversial debate already taking place about cultural and media industries as prototypes of how future economic activities would be organized. In particular, the famous studies by Storper and Christopherson (Storper and Christopherson, 1987), that translated the Third Italy ‘flexible specialization’ into Hollywood movie production, represent this position. However, Storper and Christopherson were severely criticized, in particular for idealizing the industry’s restructuring process and for neglecting the dominant tendencies of concentration and globalization (Aksoy and Robins, 1992). A few years later, Lash and Urry (1994) revisited this debate and placed it in the context of the fundamentally changing relation between economy and culture outlined above. They hold that culture industries are, on one hand, ‘post fordist avant la lettre’. Cultural production has always been characterized by the flexible and compartmentalized structure described by Storper and Christopherson. What is more, Lash and Urry not only emphasize flexibility and adaptability as key traits of cultural production, but also stress the importance of decentralized responsibility and a permanent questioning of given structures and practices. The heart of the cultural industry consists of ‘reflexive subjects’ necessarily able to ‘operate at some distance from’ predetermined ‘rules and resources’ (Lash and Urry, 1994: 122).

On the other hand, however, reflexivity in the realm of production collides with the simultaneous need for concentration, as economies of scale continue to prevail in training, finance and commercialization. They portray, therefore, the cultural industry as a bipolar system: on one side there are small, independently operating units that generate ideas and cultural substance; on the other side we find major players responsible for training future professionals, financing projects and entering markets.

In my view, the reflexivity of the production system of the cultural industries cannot be confined to the reflexivity of single subjects interacting with global media majors. It can be conceptualized on (at least) four different, but interdependent levels. The first level is that of actors; that is, it clearly refers to the reflexive subjects highlighted by Lash and Urry. The economist Richard Caves (2000) sketched out the microeconomics of the cultural industry. In the centre of his model there is a series of ‘properties’ of cultural and artistic production (and producers), two of which stand out:

The ‘art for the art’s sake-property’ describes not only the large degree of intrinsic motivation, but also the idiosyncratic character of cultural producers. The production of arts and culture does not follow any predefined purpose but is primarily done for its own sake.

The ‘nobody knows-property’ considers the impact of the first property on consumption and describes the structural uncertainty of market success.

One could argue that Caves radicalizes what Lash and Urry characterize as reflexivity. In this respect cultural production is independent to such an extent that it actually refuses to follow a narrow logic of economic exploitation. At the very least this means the link to this logic is not established on its own but, rather, must be socially produced.

Elizabeth Currid (2007) takes up precisely this necessity of social production of markets. From this starting point she explains the particular importance of ‘informal social life’ for the cultural economy. Her argument is, in essence, that manifold social mechanisms of communication and quality assurance (e.g. ‘gatekeeping’, ‘word-of-mouth’, ‘peer review’) help overcome the ‘nobody knows’ by establishing links between cultural production and consumption. In a sense, these mechanisms provide for extending the ‘value chain of meaning’ (Hartley, 2004) into the consumption sphere. The problem with Currid’s argument, however, is its inherent bias in favour of success. Even though she also mentions the negative side effects of a growing creative economy in terms of gentrification, particularly for artists (Currid, 2008), her main focus is definitely on winners in the creative economy. However, uncertainty and failure effectively remain important ingredients of a cultural economy – also aside from the negative side effects – and the informal social life cannot obliterate them completely.

The second level focuses on the production system as a whole. While basically adopting Lash and Urry’s bipolar structure, Chris Bilton (2007) outlines an idea of the creative industry as a hierarchically structured network. The network core consists of large and often globally operating conglomerations of the media industry. It is surrounded by a myriad of small players – both firms and individuals – which, primarily, supply the content and guarantee permanent innovation. In an ideal–typical manner both poles of this network rely on each other; at the same time, however, there is a permanent structural conflict between them. The centre, on the one hand, although it relies on the reflexivity of the periphery, is primarily interested in exploiting it economically. The periphery, in contrast, depends on the core’s economic potential, but needs its independence for the production of content.

DeFillippi (2009) points out how this basic conflict appears as ‘dilemmas of project based work’ on the level of actors and their substantive work in the cultural and media industries. It shapes individual loyalties, the autonomy of work and the openness of learning processes. That is, it generates a continuous tension to which organizations and individuals have to react.

The third level includes the civil society as context of the production system. The production of culture takes place not only in a professional milieu but also in a non-profit civil-societal background or in and through public institutions. The final report of the German parliamentary inquiry commission on ‘Culture in Germany’ (Deutscher Bundestag, 2007: 344) distinguishes between three sectors – the market, state and civil society – which constitute the basic pillars of the cultural and creative economy. Ann Markusen (2010) translates this comprehensive perspective to the regional scale. She employs the concept of the ‘regional arts ecology’ – an overall system of cultural production and consumption that depends to a large degree upon processes of mutual exchange between private sector production and its non-profit environment. The communication processes among those different elements of the ecology imply that all of them are continuously likely to change.

The fourth level comprises the interaction between the cultural and creative economy and the society’s system of values. Arts and culture – because of their systemic independence – have always been able to engage critically with society. Boltanski and Chiapello (2005) use the concept of ‘artistic critique’ in order to describe this role in capitalism. Artistic critique, then, has mainly stressed the need for more individual self-determination. Boltanski and Chiapello argue that capitalism is only able to survive provided that it incorporates at least some elements of fundamental critique, because it must also offer people opportunities for ‘liberation’. Seen from this viewpoint, the pioneer function of the cultural economy for new patterns of work and production can be regarded as an outcome of the fight against the alienated work practices in Taylorist mass production. However, the increasing consolidation of arts and culture into the value systems of a market economy runs the risk of ‘losing … critical distance’ (Sayer, 1994). And, also this new interleaving of different roles in society brings about permanent pressure to change the production system of the cultural and creative industries.

The city as resource, catalyst and compensation of a ‘reflexive’ economy

It should have become clear that the creative or cultural economy can be considered a ‘challenging’ economy, albeit not to the extent that it challenges individual creative workers in terms of their intellectual capacities. Rather, we should regard it as a production system characterized by a wide variety of imponderables. The creative economy is a profoundly dynamic system, driven by tensions, frictions and uncertainties that exist both externally and through the interactions with its social environment and internally.

The existing literature that addresses the relation of this system with cities emphasizes two dimensions of this nexus in particular. First, urban environments afford favourable conditions for culturally based and creative economic activities. They offer different ‘resources’ (e.g. Merkel, 2008; Rantisi, 2004) – for example, content, actors, institutions, networks, places, milieus and scenes – which both feed cultural production and help engender the consumption of cultural goods (Currid, 2007). Phrased differently, the agglomeration economies or the positive externalities provided by urban (i.e. massive, dense and diverse) structures drive the cultural economy. Currid (2007: 4) even maintains that what is considered an ‘externality’ for other economic activities, constitutes ‘…actually the central force, the raison d’être, for art and culture’.

Second, cities reinforce this success by translating it into different closely interconnected urban (labour, land and, particularly, real-estate) markets. Thus the creative economy changes into an important ‘vehicle for urban development’ (Lange, 2008). It produces job opportunities, purchase and tax power, and valorizes urban space (e.g. Indergaard, 2009). This perspective of the urban environment as resource and catalyst of success nurtures both the optimistic and the pessimistic accounts of creative cities. While the former emphasize the positive impact of valorization, the latter – as mentioned above –focus strongly on its negative side effects and are concerned with unequal impacts.

There is, however, one problematic aspect in both positions: they tend to take success for granted. The tensions, frictions and uncertainties inherent in the creative economy suggest a different line of reasoning. The idea of a purely linear relation between urban environment and economic success seems misleading. One of the key features of the production system of the cultural industry is that it is prone to errors. Almost by default it embraces failure; it has to deal with structural conflicts and with critique; and it needs to connect different and essentially incompatible worlds. The key questions, then, are: To what extent, and how, are urban structures interrelated with this essentially unstable field?

I would argue that one of the key assets of cities is their capacity to compensate for the instabilities of the creative economy and, thus, to support living in an environment that requires both struggling for survival and being permanently ready to change. According to the classic prophets of urbanity (particularly Jacobs, 1969, 2011), big cities essentially feature a positive feedback between size and diversity which, on one hand, helps facilitate subsistence through, for example, the support of ‘smallness’ and market niches (Jacobs, 2011: 191), the existence of cheap housing in aged buildings (Jacobs, 2011: 244ff), and the presence of ‘like-minded supportive communities’ (Currid, 2008: 458). On the other hand, diversity allows for change. It also tends to forgive errors because, in the light of alternative options, decisions can be changed. This ‘contingency’ (Läpple, 1998) of the urban economy, the improved ‘chances for matching’ (Duranton and Puga, 2004: 2092), are based on what Jane Jacobs (1969: 85ff) describes as ‘valuable inefficiencies and impracticalities of cities’. Instead of adapting efficiently to current necessities, the urban socio-economy enhances adaptability to potential but unknown future requirements. In a sense, cities are considered to encourage ‘resistance against the economistic temptation to streamline’ (Grabher and Stark, 1997: 540) and, thus, add to the robustness of the socio-economic systems they host.

However, both compensatory functions – the endowment with niches for subsistence, and the provision of alternative options – at the same time implicate catalytic impulses, because risky individual decisions are taken more easily in the light of both feasible survival and future reversibility. The reflexive cultural economy and its urban context, it seems, are mutually entangled in a complex, unstable and non-linear fashion (Comunian, 2011).

In what follows I seek to unpack this complex entanglement. Three brief empirical glimpses will illustrate different modes of how the reflexive cultural production system interacts with the urban context.

By way of illustration: ambivalence and diversity in the creative city

Growth and precariousness: boom and crisis of ‘New Media’ and the notorious struggle for survival

‘Content is king’ was one of the core programmatic slogans during the boom of the Internet economy that Western economies experienced around the turn of the last century. While hardware, infrastructures and software packages were regarded as ubiquitous, the more so because it seemed to be readily possible for anybody to handle them, economic success was said to depend – according to a lot of prophets of the new economy – on whether and how it could be managed to fill the new technologies with substance (Egan and Saxenian, 1999: 18). In addition there seemed to be no way to rationalize the production of content. This ‘hyping’ of content could also be observed in the affected urban labour markets. In Hamburg, Germany, for instance, it generated a noticeable movement of the workforce away from the city’s classic media industries. The growth of new media could, therefore, build on the diversity of content-related qualifications that existed in the diverse workforce pools of big cities.

The extraordinary appeal of the expanding industry was not merely a function of the aura of the new that surrounded the young Internet based firms. The availability of a fairly large quantity of venture capital (Läpple and Thiel, 2004) also underpinned the industry’s force of attraction. ‘Entire final classes of arts and graphics schools are directly bought up by new firms that have not earned yet a single penny on their own’ (author’s interview, 2000): the comment is paradigmatic of the experiences ‘old’ media firms were encountering during the new media boom years.

As a result of the crisis that hit the young industry from 2001 onwards, it was not merely the momentum regarding the attraction of a talented labour force that became completely lost. The role of content as the decisive factor of competitiveness also changed, virtually to the opposite status. In a study we were doing on the Internet based labour market in Hamburg at that time (Thiel, 2004), we were able to show that in mid-2002 unemployment in content-based and artistic occupations in new media was significantly above average. While these groups accounted for 16.5% of all employees in the sector, their share in unemployment was 76.2%; that is, the ‘free of cost’ philosophy of the Internet not only made the profitable commercialization of online content extremely difficult, it also generated a serious competitor for classic mass media and other cultural industries (Egan and Saxenian, 1999; French et al., 2004; Lash and Wittel, 2002). Under these conditions the seemingly impossible rationalization of content proved to be a ‘cost disease’ (Baumol and Bowen, 1966). It even reinforced the difficulties of commercialization.

The story of boom and crisis of the new media obviously belongs to the past: Google and others have since found ways to earn money through online content, purposefully connecting it with other value chains and using it as a generator of advertising revenue. Nevertheless, the example illustrates to a remarkable extent the consequences of Richard Caves’ ‘nobody knows’ as well as the systemic conflicts inherent in a creative economy. Cultural and artistic content does have the problem of difficult commercialization. Provided it does not succeed in adjusting to market-economy value systems – in the form of design or advertising – the only channels able to secure subsistence are public subsidies, hope for a rare market success of an idea, or a precarious existence that is fed through several sources of revenue. In the words of Robert Kloostermann (2010: 860):

‘For every Damien Hirst (art), Tom Ford (fashion), Penelope Cruz (film), Bruce Springsteen (music), and Rem Koolhaas (architecture) there are many others toiling in anonymity. Behind the front of the famous and successful artists there lurks a whole army of workers and sweatshop firms struggling to survive.’

This duality of superstars, on the one hand, and precariousness, on the other, has meanwhile been examined widely and thoroughly, with regard specifically to Germany including the creative labour market of Berlin in particular (Geppert and Mundelius, 2007; Manske and Merkel, 2008; Merkel, 2008) but also elsewhere internationally (e.g. Christopherson, 2002; Gill, 2002; Hesmondhalgh and Baker, 2008; McRobbie, 2004). The parliamentary report on ‘Culture in Germany’, although focusing chiefly on the growth potential of the cultural and creative economy, emphasizes at the same time the difficult economic situation of cultural professions (Deutscher Bundestag, 2007). According to the data used in the report, there is an increasing proportion of freelance occupations, and more than half of all cultural workers had monthly earnings of less than €1500. Interestingly, however, some studies (e.g. Gottschall and Schnell, 2000) do more than simply highlight ‘specific risks’ in cultural professions: such risks are also frequently accompanied by ‘specific strategies of risk mitigation’. In addition, the subjective views pronounced by individual professionals stress primarily that the self-determination they can achieve in their work can compensate, at least in part, for the insecurities that exist (Manske and Merkel, 2008).

In a field study of designers in Prenzlauer Berg, one of the areas in Berlin where the cultural and creative milieus concentrate, Merkel (2008: 118) identifies that the subsistence of these designers strongly relies upon specific ‘network resources’ that she classifies as ‘communality’ (Grabher, 2004). Interpersonal ties are strong, and they are not used primarily as vehicles for progressing in individual careers. As such they differ from what one can draw from much of the literature on the creative economy (e.g. Currid, 2007, 2008). Relations are, rather, long-term and based on frequent interactions, because the designers’ economic environment requires a network that functions primarily as a safeguard for subsistence.

Boom and crisis of new media, therefore, illustrate emphatically the many ways in which the creative economy interacts with its urban context. In the period of rapid expansion, the diverse urban labour markets constituted the pools based on which growth could occur at all. The size of these labour markets guaranteed the availability of a sufficient quantity of labour, albeit to the detriment of other sectors. The diversity provided the ‘creative friction’ (Stark, 2009: 18) necessary for entrepreneurship. For the content-related activities selectively affected by the crisis and the mass of the ‘toiling’ creative workforce, the city also provides important resources – mostly, however, those needed in order simply to secure survival.

Culture and commerce: coping with the two sides of advertising

Advertising, until the beginning of the 21st century, was one of the most dynamic subsectors of the cultural and media industries. Promoted through the privatization of broadcasting, and more recently also through the rise of the Internet, it constituted one of the few opportunities to decouple the economic commercialization of cultural content from the commercial limitations of cultural production already noted. Lash and Urry (1994: 138f) refer to the advertising field as a virtually ‘paradigmatic’ culture industry because it combines, unlike any other economic activity, a cultural and an economic facet within one business. However, it seems premature to consider this dual character as a harmonious merger of formerly separate social spheres (Thiel, 2005). Rather, today’s advertising business depends on the capacity to build bridges between these two worlds without abolishing the differences between them. Advertising is, in effect, both a business service, whose performance is measured against the success of communication strategies for client firms, and a kind of popular art, whose reputation depends on its recognition in an artistic milieu. This milieu in advertising is essentially institutionalized. Creative merits are still chiefly measured through the cumulated success of agencies in creativity contests. This success also counts as ‘currency’ for creative professionals in the labour market.

The process of change which content, organizational structures and geography of the advertising industry have been experiencing since the beginning of the 1980s implied, to a large extent, a strengthening of this ‘popular arts world’ (Thiel, 2005: 15ff). It also underpinned the artistic identity of the workforce. Only in this way was it possible to open those segments of the labour market to the field of arts and humanities. Here, the skills needed – for example, for the development of witty advertising – could be found. However, this opening was only possible provided that artists turned into professionals willing to give up – at least partly – their aspiration of ‘art for art’s sake’ in favour of the communication requirements of clients. One could even consider this achievement as the actual creative act, as Bilton’s example (2007: 78) of a producer of commercial film music reveals: what the producer considers as their real challenge is both to fulfil the client’s expectations and to surprise the client.

The pioneer agencies of more entertaining and creative advertising – in Germany, chiefly the Hamburg based agencies Springer & Jacoby, Scholz & Friends and Jung von Matt – saw themselves as schools that produced this new type of creative advertising professional. They could achieve this by ensuring that the professionals could maintain their artistic identity and – in spite of or perhaps even because of that – simultaneously turn themselves into real service professionals. However, there was by no means a guarantee that this integration would lead to individual success stories. In every single case, developing a hybrid professional identity implies a process involving difficult trade-offs and careful consideration. It is extremely uncertain whether, ultimately, a positively accepted career can be achieved. One of the key characteristics of the labour market and the agency landscape in advertising is, therefore, their inherent instability (Thiel, 2008). Regular moves of professionals between agencies are as common as start-ups, mergers, acquisitions, and also closures. This volatility is even reinforced, given the global dimension of the business. The lion’s share of advertising turnover is made in globally operating mega-holdings that regularly intervene in the labour market and the agency landscape by buying out personnel and whole agencies. That is, advertising can be regarded as a paradigm of the hierarchically structured networks described by Bilton.

Personal networks provide the glue that keeps this instable system together. Grabher classifies these networks in advertising by using the concept of ‘sociality’ (2004); that is, they are both intensive and ephemeral and characterized by ‘weak ties’ (Granovetter, 1973). During the course of their careers, all employees ‘invest in contacts’ (Granovetter, 1992) – that is, in social capital which serves to compensate for, but at the same time, fosters instability. Every change increases the number of contacts, thus in turn enhancing the likelihood of further changes.

The case of advertising, on the one hand, is a paradigm for how creative activities thrive through agglomeration. In particular the dense and diverse urban environments supported, again, ‘creative friction’ – that is, the bridging between different worlds – that was essential for the development of a new, more entertaining style of advertising. On the other hand, the flipside of this bridging is a fragile balance between different identities for every single worker. Here, urban diversity provides in particular alternative options which, in turn, enhance individual adaptability. Professionals and firms can more easily withdraw wrong decisions, as new matching opportunities exist. At the same time, however, these opportunities naturally enhance the likelihood of wrong decisions being made, because such decisions arise in the knowledge of possible reversibility.

Creative industries and urban space: diversity and paradoxes

The hype of creativity and the creative industries has also brought about a reassessment of material urban space. Creative individuals, then, are not simply inspired by the ‘look and feel’ of urban environments (Helbrecht, 1998); such individuals also appear likely to appropriate and transform these environments. On the one hand this observation is feeding the hope that arts and culture could drive the regeneration of less favoured urban areas; and, on the other hand, this assumed momentum fuels the worries regarding gentrification stressed in the literature on urban studies mentioned above.

In a debate with arts students and representatives of local cultural initiatives in the old cotton mill in Leipzig that I was visiting one day in spring 2009, the latter group reported on their attempts to provide a minimum level of social stability in disadvantaged areas of the city through diverse forms of local cultural work. The success of converting the old mill into an internationally renowned arts centre had encouraged several initiatives. The collaboration with the city administration worked well. Cultural institutions were even proactively included in urban development projects. Nevertheless, the cultural actors were worried about the future because their work was based almost exclusively on unpaid voluntary work and self-exploitation, and no economically viable and sustainable perspective seemed to be in sight.

When contributing, as a board member, to the report ‘Creative Milieus and Public Spaces’ (Studio UC Klaus Overmeyer, 2010) commissioned by the Hamburg city council I experienced a completely different circumstances. In addition there were, of course, worries about the future, albeit with diametrically-opposed characteristics. In the economically dynamic environment of Hamburg, those spaces attractive for reappropriation through cultural use – which abound in Leipzig – are scarce. There are some sites that could be attractive – for example, in the harbour area – given their historical setting and location close to the city centre. However, institutional and mental barriers that partly refer to the economic importance of the port and partly to the result of decades of underdevelopment and stigmatization hinder these areas being opened up. As a result, the city administration has to cope with conflicting interests, while developing strategies for the protection of already attractive spaces and for opening of hitherto closed neighbourhoods. In the framework of the International Building Exhibition on the Elbe Island – one of the disadvantaged areas in close proximity to the port – there are attempts to stimulate the influx of creative milieus both through massive marketing efforts and through the installation of innovative projects (IBA Hamburg GmbH, 2008).

Two cities, two entirely different circumstances: both place their hopes on creative actors expected to halt the downward trend of deprived urban areas. In Leipzig a dynamic trend is gaining momentum; however, it is highly uncertain whether the city’s economic environment allows sustainable structures to develop. In Hamburg the existing momentum cannot be directed to where it is needed from an urban development perspective, despite the substantial overheating it has been creating on real-estate and housing markets in the 19th century neighbourhoods around the city centre during the last several years.

The paradoxes inherent in the interplay between urban space and the cultural and creative economy can also be deduced from the findings of the aforementioned studies in Berlin. There are two closely interconnected reasons why the German capital attracts multiple creative pioneers. First, there is the hype of a ‘poor but sexy’ city² about Berlin. It is ‘in’ to be there, particularly for young people with an identity as a ‘creative’. Second, unlike most of the other big European cities, the cost of living in Berlin is fairly low, although it has been increasing significantly during the last decade. In other words, the city – and particularly its housing market – facilitates subsisting with irregular income. However, the actual problem is thus somewhat reinforced rather than resolved, because job opportunities do not increase at the same rate as the number of pioneers willing to generate income. In addition, the increasing demand raises the price of housing. Berlin lacks in particular a critical mass of private sector clients, a result of the city’s severe deindustrialization process after unification and a strict public sector austerity programme (Krätke, 1999, 2004).

The intricate interaction between built urban environment and the creative economy is highly diverse and it does not follow a standardized trajectory in which arts and culture induce the valorization of real-estate. This is due to the existing variety of cultural and creative activities (e.g. Grodach, 2011); and it also depends to a large extent upon actual local conditions of how the creative economy shapes and is shaped by real-estate: for example, the strength of the local economy, the attractiveness of urban space, the individual strategies of different market players, and the existence of competing sectors (cf. Indergaard, 2009). In other words, there is no automatism, either of an appreciated regeneration or of the detested gentrification through the creative economy. The outcome of regeneration strategies that involve artists and other creative individuals in urban development is clearly characterized by the same uncertainties as the production system itself.

Conclusions

This paper started with two key arguments: first, that the debate on creative cities calls for a thorough account of the underlying production systems; and, second, that neither the optimistic nor the pessimistic versions of the interpretations of the creative city are accurate, because both take for granted that the creative industries are flourishing. The success of these industries builds on the favourable externalities offered by the urban environments that surround them. In contrast to this assumption, I argue that the creative economy, for a variety of reasons, is inherently vulnerable. In such a perspective, the externalities provided by the urban environment also, and importantly, help limit the problems that arise from this vulnerability, in addition to providing the resources for cultural production and consumption. As the three empirical illustrations have revealed, cultural and creative industries are production systems that are permanently forced to adapt. The urban environment in which they are embedded underpins their adaptability but, simultaneously, also fosters the need for adaptation.

In a sense, then, the urban cultural economy seems be to very close to a ‘complex adaptive system’, as Roberta Comunian (2011: 116ff) portrayed it. Among its typical characteristics are permanent uncertainties, and it is therefore unstable and ‘far from equilibrium’. It comprises ‘non-linear interactions’ and positive feedbacks – for example, between different urban markets. Furthermore, its evolution appears to be based on ‘emergent system dynamics’ and is ‘non-deterministic’ (Comunian, 2011). However, although this approach is probably closer to reality than an economistic view of atomized individuals and Richard Florida’s stylized idea of creative knowledge workers and their lifestyle requirements, the latter point in particular about the emergent nature of the creative economy, runs the risk of overlooking its inherently social nature. The heart of cultural production and consumption in cities consists of ‘knowledgeable actors’ (Giddens, 1984) who make deliberate choices about their activities, their relations and their values according to the opportunities they have. These individuals are able to learn from success and failures and to anticipate difficulties and risks. They observe their environment and try to adapt to the circumstances to which they are exposed. In other words, they interact reflexively with the relational, institutional, cultural and material conditions in which they are embedded. Both these conditions and the modes of interaction are complex, of course. However, resorting completely to complexity theory would ignore the inherent reflexivity that characterizes the relation between the creative economy and cities. Not only are cultural industries reflexive production systems that permanently face uncertainty and the necessity of change, but also the compensatory capacity of urban structures is based on reflexivity: ‘multiply operative legitimating principles’, as Stark (1996: 1022) states it with regard to organizations. It seems worthwhile to take a closer look at these different types of reflexivity in future research work, in order to develop a fuller understanding of the nexus between cities and those production systems that are based on culture and creativity.

Footnotes

Notes

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