The new bohemia and why we must save it

London's vibrant cultural scene is also a multibillion-pound industry, but its survival is under threat as rising living costs break up the communities that power it, argues Elizabeth Currid.

Among global cities, Los Angeles remains the anomaly that fits none of the moulds and conceptions that capture London, Paris or New York. It has no city centre and, if an Angeleno is pressed to come up with one, it's likely that he will point towards the endless stretch of beach in Venice and Santa Monica or the film industry in Hollywood. Downtown - the conventional centre for most advanced world cities - consists of a rather small financial centre, an abandoned warehouse district and worn-down jewellery stores and theatres that have only recently seen a resurgence as a result of the city's efforts at cultural revitalisation. And in the warehouse district, which takes up a sizeable portion of downtown, the most salient features are the devastated homeless population and an absence of Starbucks coffee shops.

But in September last year, a little pocket of downtown LA was the place to be. For almost two hours I stood in the sweltering heat in a line over a quarter of a mile long, snaking around an abandoned warehouse. Along with about 50,000 visitors, I had come to see the exhibition of London guerrilla graffiti art star Banksy.

In those three days, anyone who cared even a little about art made their way downtown. Brad Pitt, Angelina Jolie and other Hollywood glitterati wandered through a large warehouse that featured not only Banksy's controversial political paintings but also a live elephant wandering about an installation of a Victorian parlour (a piece on the theme of world poverty). Throughout the exhibition flyers were distributed that made fun of the superficiality and hypocrisy of the art world. Pitt and Jolie purchased significant amounts of the work, and the show was sold out, with prices reaching six figures.

Five months later I stood in another Los Angeles line, this one outside the entrance to the Gagosian Gallery in Beverly Hills. Hummer limousines and women in diamonds sashayed around the opening of Damien Hirst's Superstition exhibition. Hirst most recently made waves by creating the most expensive work ever made by a living artist: a diamond-encrusted skull entitled For the Love of God , which is up for sale at £50 million. Superstition included thousands upon thousands of butterfly wings mounted to form compositions inspired by cathedral windows.

The stories of these two British artists in Los Angeles is a clear indication of the pervasiveness of London's art world and its importance for the larger global economy, both financially and aesthetically.

London's advantage in the cultural economy extends from highbrow to lowbrow, from the gallery to the street. London's cultural success relies on its ability to be a non-discriminatory centre of creativity. And metropolises such as London, New York and Paris, which embrace their graffiti stars along with their fine artists, are the leading global creative cities.

Despite all this, creativity counts for only so much in the general debate on urban economic development. Policymakers and economists often envisage major world cities as transforming from trading ports to industrial centres to high end service agglomerations that revolve around the sophisticated financial and professional service transactions that keep the global economy running. These days, the story goes, the work of great cities is that of orchestrating the high-level operations of managing the world economy. That bankers and lawyers also enjoy going to museums and the opera in their time off may make artistic industries pleasant amenities to have around, but not important economic drivers.

But then, economists and urban policymakers have long dismissed the economic impact of art and culture on world cities, chalking up cultural industries - art, fashion, music and film - as the icing on the cake, lacking any significance or substance as a determinant of city growth. For cities, "creativity" may be heralded as aesthetically valuable but is more often dismissed as frivolous and superficial.

Yet the numbers tell a different story. True, talented people want to live in places that have a thriving music scene or significant museums; in that way, aesthetics is a kind of icing. But these artistic industries power city economies in their own right; Banksy and Hirst matter.

Consider New York City, unarguably one of the world's leading cultural meccas. My research on its cultural industries for my book The Warhol Economy revealed that artistic industries are the fourth-largest employer, giving work to just slightly fewer people than the financial industries. Cultural industries have remained the third or fourth-largest employer for the metropolitan area over the past 60 years. As a whole, arts industries have a $21.2 billion (Pounds 10.4 billion) impact on the city and contribute $904 million in taxes, employing 160,000 people.

An analysis of London's cultural economy tells a similar story. According to the Arts Council England, cultural industries generate £25 billion- £29 billion a year in revenues, second only to the business sector. As the third-largest employer, they give work to more than half a million people and were responsible for one in four of the new jobs created between 1995 and 2000.

As the Arts Council notes, London possesses two opera houses, more than 150 galleries and museums, more than 200 theatres, 125 dance companies, 19 national museums and about 2,600 music companies. It is home not just to artists and creative types but also to the institutions that drum up the business responsible for the millions of pounds in revenue and thousands of jobs that creative industries contribute to the city's economy.

Simultaneously, London has solidified its position as the new centre of the global art world. The so-called Young British Artists, including Hirst, who made a name for themselves in shows at the Saatchi Gallery starting in the early Nineties, have come to dominate the international scene.

Moreover, in the past decade London has revitalised and expanded its major cultural institutions from the Royal Opera House and the British Museum to Tate Britain, while also opening the newer Tate Modern. In an effort to encourage more cultural awareness, Tony Blair's Government made entrance free to 24 national museums and galleries, with a resulting increase in visitors of more than 50 per cent. It poured money into cultural institutions that were previously, as the arts reporter Alan Riding put it, "virtually abandoned" by the Conservatives.

But it's not just fine art that drives London's creative scene. Designers, from Stella McCartney to Alexander McQueen, have taken the fashion world by storm. Their boutiques can be found in other cultural hubs, such as the Meatpacking District, one of New York City's trendiest neighbourhoods. Even old-guard fashion houses have gained new fame for more eclectic, street influenced designs - for example, Burberry under the creative direction of Christopher Bailey. London's music scene has always been ground-breaking, whether because of the Rolling Stones, the Sex Pistols or contemporary singers such as Lily Allen and Amy Winehouse.

While boasting both star power and glamour, London-based artists, designers and musicians have more substance than that. As well as appearing on YouTube, MTV or the runways of Fashion Week, these creative producers who influence the global shape of culture also play an integral part in the millions of pounds generated in revenue, thousands of jobs and thousands of institutions forming the juggernaut that is London's cultural economy.

Maybe policymakers dismiss creatives because they party too much. Maybe the lack of data on cultural industries makes them less measurable. Maybe fashion and art just seem silly. Why economists don't pay attention to the importance of the arts is beside the point: knowing that art and culture matter as much economically as they do for their symbolic and aesthetic capital means that policymakers need to start looking at how London can support its cultural economy.

Like its counterpart across the Atlantic, London is at a critical juncture. Prohibitive living costs are preventing new influxes of creative talent from flocking to the city while disrupting the very mechanisms that perpetuate its success. In my research on New York City, I found that the most important dynamics influencing cultural production were the informal social interactions swirling around the nightclubs, galleries, museums and restaurants that the collective cultural economy spent time in. What designers, artists and musicians found most significant in the establishment and advancement of their careers was their ability to interact with each other (not just within their respective industries), and the most important realm in which this occurred was their social lives. They explained that their everyday social patterns - from buying a coffee in the morning to going to hear a band in the evening - were often how they ran into people to do projects with, heard about jobs or met the gatekeepers who reviewed their work or gave them a show. The success of these exchanges was largely a function of the density and diversity of the neighbourhoods that teamed with galleries, nightlife, fashion houses, bars and residential space. Cultural producers found that their ability to live, work and play in a limited and dense geography with like-minded creative people was most influential in propelling their careers and the cultural economy. But artists and their ilk are facing dramatic increases in the cost of living in global cities such as London and New York. The rapid gentrification of artistic neighbourhoods increases rent, thus pushing out many of the creative people who reside there.

Former bohemian neighbourhoods such as Chelsea in NYC and Hoxton in London have been usurped by tourism and retail. As a result, the density of creative people living and working in the same place (the raison d'être of a successful creative economy) dissipates. As American fashion designer Diane von Furstenberg explained: "The desire for people to move here has been crazy, and the wild price of real estate has reflected that. That is something that unfortunately has happened all around New York and it reduces the opportunity for creativity to reside here."

If new influxes of creative people can't afford to live in dense neighbourhoods with each other, how will they engage in the spontaneous encounters that lead to new collaborations, idea exchanges and the perpetuation of London's cultural innovation? And if the minute an artistic community is established it is overrun by Starbucks, wealthy bankers and real estate moguls, how can creative people ever establish the networks and institutions essential to their livelihood?

If London is truly interested in preserving its long legacy as a great centre of creativity, then policymakers must initiate plans that protect and preserve the dynamics that have given the city a vibrant cultural economy. Anti gentrification efforts such as zoning against chain retailers or luxury flats in artistic neighbourhoods and rent caps for artists, designers and musicians are first steps. Subsidies for smaller galleries and artists' workspaces and fellowships to London-based design and art institutes will help promote new talent. London should work to preserve its cultural economy by protecting and cultivating the very places and people that generate creativity.

What makes creativity so successful in places such as London and New York is that it all happens in a dense, limited geography that allows for producers' social lives to translate into something economically meaningful for themselves and the cultural economy as a whole. Without that density, cultural producers are less able to distribute their creativity to a larger audience and new talent is less likely to be discovered.

And it's not just the artists who lose out. If bohemian London dies, so do its accompanying revenues, jobs and the aesthetics and cultural vitality that are so attractive to the bankers and professionals who like to live near them. If global cultural centres are truly invested in keeping their artistic edge, they need first to perpetuate and protect the social life so essential to creativity.

Elizabeth Currid is assistant professor at the University of Southern California's School of Policy, Planning and Development. Her book, The Warhol Economy: How Fashion, Art and Music Drive New York City , has just been published by Princeton University Press, £16.95.