Since March 2012, having been funded by Arts Council England (ACE) in one way or another for most of its existence, Mute ceased to receive any regular subsidy from the British state. Losing regular funding meant no annually renewed support for basic functions, no subsidised production apparatus, no continuity – an 100 per cent cut. Announcement of this decision, as well as the de-funding of over 200 other organisations, came in March 2011's funding round, when ACE used its own funding cut by the Con-Dem coalition as an opportunity to restructure its so-called "portfolio".

ACE had never had a chance to do this before and so, while the process of newly awarding, increasing, reducing or totally cutting the country's subsidised arts organisations was accompanied by a lot of hand-wringing and tragic statements of regret, you could well imagine why senior ACE staff might also experience a certain excitement at the task. After all, this was the art administrative equivalent of a virtuosic moment, where the giving and taking of financial awards – what they call strategic investment, balancing the portfolio – constituted something like artistic composition.^[1]

Out of an aversion to what's known as the "salami slice" method (where all organisations receive a small cut and the whole cultural sector is handicapped), it chose what it described as the "brave" route of trimming down a list of 849 organisations to 695, increasing the funding of some in the process, as well as commencing funding relationships with entirely new organisations – also to achieve better "national spread". ACE chair, Dame Liz Forgan, asserted that these decisions showed ACE was "supporting excellence, exceptional talent and successful risk-taking [...] backing strong leadership and cultural entrepreneurialism; supporting resilient organisations that can thrive as well as survive".

Of the 206 organisations that were entirely cut, it gradually started to become apparent that many had developed to deal with "digital" and cultural diversity, and forms of "inter-disciplinarity" (including those with strong research agendas). Of course, Mute has never been able to prove if it was its critical agenda which provided its death-knell, since our historical inability to produce a sustainable business model always guaranteed ACE another, valid reason for disinvestment.^[2] But many, many voices noted the confident snuffing out of wayward and antagonistic energies, like those represented by and converging around Mute.^[3]

The decisions made on that day are relevant in a European context because, at senior policy-making levels, the UK has such influence internationally as a kind of vanguard space for the development of models of cultural economy. It successfully promoted such programmatic concepts as the creative city, the notion of "placemaking" (grandiose architectural commissions to give cities a clearer identity), nation-as-brand, culture-led urban regeneration – and social inclusion, which has seen art become part of the toolset of a coercive "social care" system. Its arts funding system, too, is well ahead of the curve – particularly in the ways in which its effects are monitored and measured.

As we consider UK public funders' responses to the financial crisis, it is essential to consider the changes already wrought on the cultural landscape during the apparently more generous "boom" period of New Labour. As I said in my public statement on the cuts in March 2011, the neutering effects these have had on art organisations should not be underestimated.^[4] In a largely invisible process, they were implemented primarily through principles of "good governance" – a de facto standard whose normativity is disguised by rhetorics of transformation, risk and innovation, and which orchestrates compliance via extremely specific diktats on institutions' audience development, revenue generation and growth. These now determine the lexicon of art organisations, which seem to have been systematically bled of critical energies to make way for pre-set ways and means of doing just about everything.

Each country has its versions of these, of course, but what is particularly striking in the UK is the degree to which this has allowed a convergence of culture and capital, with decision-making structures, development and innovation models taken root and branch from the corporate sector, and cultural institutions effectively "hollowed out" to provide service functions to other sections of society (government, corporations, etc.). While this is now being disrupted by aggressive Tory ministers who seek a more Americanised model of philanthropic giving, we should note the extreme neoliberalisation and financialisation already effected during New Labour's tenure and, indeed, the "art crazy nation" of our title that this has created.

Of the many different effects this has had on cultural discourses in the UK, one of the most striking is the emphasis on individual artistic identity, instead of broader social tendencies and forces. Also: the triangulation between liberal media, public policy and the patron and celebrity classes. The role of so-called "media sponsorship" (where a magazine or television channel supports a cultural event by guaranteeing it free, uncritical exposure) is also crucial to consider, as is the gradual impact of corporate sponsorship (which, by the way, is actively encouraged via funders' insistence on the so-called "diversification" of incomes). To give a flavour of the combined effects, at the more popular end, think of reality TV programmes like "School of Saatchi", where young artists are followed competing to get into a Saatchi exhibition, much like in The Apprentice. More subtly and significantly, consider the size, scope and degree of cross-integration achieved by the Cultural Olympiad, into which every arts organisation of note will be feeding commissions, resources, etc. Or, of course, the annual recurrence of the Frieze Art Fair, which swallows Central London as its own every October. In a variety of ways impossible to enumerate, each of these illustrates the specious hegemony that has left lively critical culture on the wane if not on its deathbed.

At this juncture, several years into a financial crisis, I believe critical journals such as Mute and Springerin have to deal with a difficult conjuncture whose effects, if not felt already, soon will be. One is clearly the way that public spending cuts – the austerity policies being implemented to varying degrees across Europe and America in response to the crisis and supposed "overspending" – have already, or will soon, hit the state-supported cultural and academic sectors within which such discursive forums have traditionally been maintained. Second is the way that any subsidised culture that does remain seems driven to sacrifice established traditions and institutions of critique in favour of an entirely instrumentalised vision of culture, where art is delivered to audiences, measured for impact, effectiveness, financial viability, etc.; where critical work is understood and supported solely as a kind of qualitative assessment activity in the service of that status quo (or is otherwise extinguished in a war of attrition whose central weapons are bogus definitions of "value" – achieving a sort of death-by-metrics). Of course, this erosion/devaluation of critique is compounded by the kinds of impoverished, style and individual centred, editorial forums which have mushroomed alongside the global art market. Last but not least is the way that, in our new-fangled "Big Societies", communicative, cultural activity is commanded to compensate all and sundry social crises, compromising critique and cultural autonomy even further.

In response to these dynamics, Mute and other small arts organisations have undertaken a variety of networking activities. These actually predate the financial crisis and cultural cuts, but are very relevant to how we might now move forward and build cultures of critique and independent editorial where these are clearly under assault. We think these can draw strength from the enormous amount of activity already existent in critical digital cultures, which, in the UK at least, have largely failed to impact more localised debates (this is something that was frequently noted in response to the funding cuts, since these cultures' "invisibility" and failure to make an impact locally may well have made them easier to cut).

One example is the Common Practice group, a network of nine London-based small arts organisations, which came together to fight their marginalisation and bad understanding by ACE, as well as to figure out how to collaborate on fundraising, promotion, etc. Interestingly, this kind of "self-organised" activity actually pleased the funder, and the network was awarded a grant to commission a consultancy position paper on their economies, and the obstacles they experienced in sustaining themselves. The irony of a threatened party being commissioned to author for its parent an analysis of its own precarious existence won't go unnoticed...

That paper, "Size Matters" by cultural consultant Sarah Thelwall, makes a few central points: 1) that this category of organisations generates "deferred value", which they can't recoup for themselves but instead tends to benefit larger organisations, who don't necessarily input equal resources on research/development, but have big marketing budgets and large exhibition venues; and 2) their lean budgets preclude them from investing in their areas of highest potential (which Thelwall argues lie in areas like archives, knowledge/expertise, and services these might lead to). It is not an abstract tract on value, rather a nuts and bolts analysis on how small organisations are in a sense structurally imprisoned within the art system – locked into a space where they generate value but can't reap the rewards or redistribute them to grow or make themselves stronger.

I mention the example of Common Practice not because it offers a revolutionary model or necessarily one for survival (this network would by definition have to be described as reformist, and all members bar Mute have continued to receive funding). Rather, because it prefigures the many ways in which Mute has, since losing core funding, developed working models based on networks and partnerships, and these may now prefigure the fate of others as well. Without wanting to advocate or offer apologias for further disinvestment in culture (and with the caveat that we do now work with another primary supporter, Leuphana university in Germany), I think it bears mentioning that it has also felt extremely liberating to be untethered from the specific system of measure of which Mute fell foul.

Some questions emerge at this moment, then... What role do discourses of value play in this whole story? ACE policy is peppered with demands for value generation, and "failing organisations" are frequently identified by their notional inability to provide "value for money". But what kind of value is this? (It's hard to believe, but in the UK there's even such a thing as the "pound per head" measure of culture – arrived at, literally, by dividing the amount spent on an organisation by the audience numbers it manages to attract). Further, what is the significant freedom that Mute has won? And what might be the qualitative differences between one scenario of capture (the state) and another (a university)? Finally, can any freedoms that have been won be shared, expanded or internationalised?

Collected in the Mute anthology Proud to be Flesh are many texts analysing the problems of horizontal organisations – the form to which, at this juncture and faced with these questions, one would most immediately be drawn. Through critical analyses of activist groups, the anti-capitalist movement, open source economies, and theories of the multitude, Mute questioned the way these open organisations and broad based alliances allow hidden power structures to arise – to say nothing of their neglect of the structural dynamics of class, and vulnerability to incursions of the right. Vis-à-vis information cultures, this chapter also discussed how free, "open" and commons centred discourses and development models have facilitated fatal degrees of value extraction by private interests – providing the ultimate "free inputs" for capitalism.

Nonetheless, the production of intelligent, concentrated critique is extremely demanding of resources and publishing generally is highly capitalised. In the face of dwindling resources, this strengthens the case for networking, collaborating, internationalising. Our challenge now is to figure out where it makes sense to do so, so that we build locally as well as globally relevant forums for critical debate, and are able to attack measures head-on.

• ^[1] ACE passed 14.9 per cent of the 29.6 per cent cut it itself received from the Department of Culture, Media and Sports (DCMS) down to arts organisations (it accommodated the remaining 15 per cent by making cuts internally and cutting one or two disproportionally expensive organisations, namely Arts & Business and Creative Partnerships).
• ^[2] An important point to make here is that the funding levels historically set for organisations were relatively random, representing as they did the legacies of individual departments, department leaders, etc. Mute, for its part, had moved from "Digital" to "Visual Arts", but had a relatively peripheral status in that "art form area", as did many other publishers. These, less than coherent allocations, were clearly part of what ACE were seeking to address with their "balancing" act. They meant, for example, that an organisation like Proboscis – in many ways comparable to Mute – could have an annual allocation twice its size (until the effects of the financial crisis started affecting allocations in the year 2010/11, Mute received approximately £73,000, whereas Proboscis received approximately £145,000). Similarly, organisations with undeniably better commercial prospects – such as the digital video agency Onedotzero – could receive triple that (over £200,000 annually). With this level of randomness, the "failure" of certain organisations to find a "business model", or indeed a viable mix of commercial and public-benefit activity, becomes problematic. Mute's National Portfolio proposal had therefore been to receive higher, not equal, levels of public funds, such that its mix of activity could be sustained coherently (it asked for £105,000, rather than its final, closing level of £68,000).
• ^[3] Another point to make regarding "critical agendas" is that Mute's editorial approach had always included more empirically based articles which, for example, discussed the specific economies of other cultural organisations. Most controversially, this affected London's Institute of Contemporary Arts, whose models of cultural-corporate collaboration Mute's authors critiqued on more than one occasion (see Anthony Davies and Simon Ford, "Culture Clubs", Mute vol I, no. 18, 2000; and JJ Charlesworth, "Crisis at the ICA", Mute vol 2, no. 15, 2010). Never restricting its editorial output to theory alone, Mute's readiness to publicly discuss these matters, while popular, arguably rendered it dangerously unpredictable for a funder supporting the sector as a whole.
• ^[4] Pauline van Mourik Broekman, "Mute's 100 per cent cut by ACE – a personal consideration of Mute's defunding", Mute, vol 3, no. 1, 2011.