How long is arm's length?

It's pronounced "Keynes"

John Maynard Keynes announced the creation of the Arts Council of Great Britain in a BBC radio broadcast on July 12, 1945:

In the early days of the war, when all sources of comfort to our spirits were at a low ebb, there came into existence, with the aid of the Pilgrim Trust, a body officially styled the “Council for the Encouragement of Music and the Arts”, but commonly known from its initial letters as C.E.M.A. It was the task of C.E.M.A. to carry music, drama and pictures to places which otherwise would be cut off from all contact with the masterpieces of happier days and times; to air raid shelters, to war-time hostels, to factories, to mining villages. E.N.S.A. was charged with the entertainment of the Services; the British Council kept contact with other countries overseas; the duty of C.E.M.A. was to maintain the opportunities of artistic performance for the hard-pressed and often exiled civilians. 

With experience our ambitions and our scope increased. I should explain that whilst C.E.M.A. was started by private aid, the time soon came when it was sponsored by a Treasury grant.  We were never given much money, but by care and good housekeeping we made it go a long way. At the start our aim was to replace what war had taken away; but we soon found that we were providing what had never existed even in peace time. That is why one of the last acts of the Coalition Government was to decide that C.E.M.A. with a new name and wider opportunities should be continued into time of peace. Henceforward we are to be a permanent body, independent in constitution, free from red tape, but financed by the Treasury and ultimately responsible to Parliament, which will have to be satisfied with what we are doing when from time to time it votes us money. If we behave foolishly any Member of Parliament will be able to question the Chancellor of the Exchequer and ask why. Our name is to be the Arts Council of Great Britain. I hope you will call us the Arts Council for short, and not try to turn our initials into a false, invented word. We have carefully selected initials which we believe are unpronounceable. 

Alas for Keynes, it is now Arts Council England. But the “arms’ length” model of a state-funded arts board with a substantial degree of independence served as the model for the Canada Council for the Arts in the 1950s and the US National Endowment for the Arts in the 1960s.

“Independent in constitution, free from red tape” would keep the legislature and the departments of the executive branch, for the most part, out of its business, unless it behaves “foolishly.” And so, arts councils rely on peer review panels to recommend what arts organizations or artists deserve funding, and for the most part do this independently, but with the knowledge that they might be called to account.

I’m currently reading Robert Skildelsky’s wonderful biography of Keynes and right now I’m living exactly 100 years ago, in the mid-twenties, when Keynes was first developing his ideas of a state that would do what it could to smooth business-cycle fluctuations through fiscal and monetary policy (what became known as Keynesian economics, but now a belief so widely held his name is rarely attached to it - it’s just “economic policy”). At the time, Britain had persistently high unemployment, and a faction determined to raise the value of the pound to the value it held in gold prior to the World War, an idea that Keynes thought (rightly) would be terribly damaging. Skildelsky describes the release of Keynes’s lecture “The End of Laissez-Faire”:

Keynes’s public goods are to be provided by the state. But when he talks about the state the private-public distinction breaks down because of the existence of intermediate institutions. He points to the growth of ‘semi-autonomous bodies within the State’ like ‘the universities, the Bank of England, the Port of London Authority, even perhaps the railway companies’, as well as to mixed forms of industrial organisation, such as joint-stock institutions, ‘which when they have reached a certain age and size [tend] to approximate to the status of public corporations rather than of individualistic private enterprise’. What is striking is not Keynes’s recognition that the growth of private power posed new questions for the relationship between the state and the economy - this recognition was widespread in the political thought of the time - but his way of resolving the issue. Old-fashioned liberals still aimed to break up concentrations of private power; social liberals wanted to subject it to ‘democracy’ - whether by decision-sharing, profit-sharing or wider share ownership. Socialists saw it as furnishing a justification for nationalisation. These were all efforts to secure accountability, whether to consumers, workers or electors. Keynes had no real interest in them. He was no pluralist. He welcomed ‘aggregation of production’ as tending to stabilise the economy; he accepted uncritically the view that captains of industry were constrained, by the size of their undertakings, to serve the public interest; and he assumed, without further argument, that an interconnected elite of business managers, bankers, civil servants, economists and scientists, all educated at Oxford and Cambridge and imbued with a public service ethic, would come to run these organs of state, whether private or public, and make them hum to the same tune. He wanted to decentralise and devolve only down to the level of Top People.

Keynes’s anti-market, anti-democratic bias was driven by a belief in scientific expertise and personal disinterestedness which now seems alarmingly naive. This runs through his work and is the important assumption of his political philosophy [emphasis Skildelsky’s].

This last paragraph is striking; Skildelsky rarely gives such a sweeping statement. And it gives me a new perspective on Keynes’s (successful!) advocacy, twenty years later, for state funding of the arts through an arm’s length body.

Keynes might have been anti-democratic, but is the concept of arm’s length anti-democratic? I’m not so sure. As Paul Krugman points out in a recent column, there has long been a tension in American politics about the independence of the Federal Reserve from executive interference (with a blow-up on the horizon should the economically illiterate Trump return to office), but, as an elector who strongly adheres to liberal democratic principles, I like an independent Fed. I don’t know much at all about scientific research - good high school students could run circles around me in chem and biology - but I’m glad there is an arm’s length NSF and NIH choosing how to grant funds to researchers. I don’t want the state to have a larger role in the functioning of these bodies. And recent trends suggest that increased state or federal government interference in the running of essentially arm’s length public universities will not necessarily be for the public good.

Should there be limits on arm’s length arts councils? Of course. There has to be some legislative oversight that the council is adhering to the mission for which it is funded, and that it demonstrates through its procedures a reliance on informed, disinterested expertise. But better arm’s length than a powerful culture ministry, even if, on paper, the former seems less ‘democratic’.