ARTS, CAPITAL AND THE LONG DEFEAT Part 2 of 3The Myth of Scale

The social sector’s most unexamined virtue is the arts sector’s most destructive demand. Scale and transformation cannot coexist. And transformation is what the work exists to produce.

In the first piece in this series, I argued that the 2026 Budget delivered nothing for the arts, that the government’s pivot to philanthropy can’t fill the gap, and that even the most thoughtful investment models operate within a framework that assumes the organisation’s job is to persist. I ended with a question: what if the problem is not how much money is in the system, but what the money is structured to do?

This piece attempts an  answer. And the answer starts outside the arts entirely.

Borrowing from civil society

I read widely. Since starting REGENERATE I have reverted to the early days of my PhD research – chasing references and footnotes to see where they take me. This week  a provocation by Zack Petersen in the Stanford Social Innovation Review about what Paul Farmer called “the long defeat,” and a pair of essays by Jason Lewis on why the social sector needs a theory of scale. Neither is about the arts. They are about global health, international development, and the structural logic of how civil society funds itself.

I’ve been borrowing from these conversations deliberately. I believe arts and culture are part of civil society, not adjacent to it, but a core expression of it. When an arts organisation in regional Australia spends twenty years building relationships in its community, cultivating trust, taking risks because it has earned the right to do so, and creating the conditions for cultural life to exist in a place where it otherwise would not: that is civil society work. The questions being asked in policy, development and philanthropy about how we fund it, what we expect from it, and who bears the risk when it tries to change are exactly the questions the arts sector needs to be asking.

We just haven’t had the language, or the permission, to ask them.

The unexamined virtue

Jason Lewis makes an incisive observation: scale is the one concept in the social sector’s vocabulary that has escaped serious scrutiny. The sector has interrogated donor-centrism and found it wanting. Overhead ratios have been exposed as poor proxies for effectiveness. Trust-based philanthropy has mounted a serious challenge to conventional power dynamics. Theory of change introduced the expectation that organisations articulate, with some rigour, the logic by which their work produces outcomes. The sector has developed, slowly and unevenly, a capacity for self-examination.

Scale has escaped that scrutiny almost entirely. It moves through the conversation not as a claim that needs defending but as the assumed destination toward which all serious work is pointed. Lewis argues the sector needs a “theory of scale”: a rigorous account of what is actually being scaled, what the process costs, and what the thing being scaled loses in the process.

The concepts that a theory of scale would require - diminishing returns, carrying capacity, Dunbar’s number - are not obscure. They are taught in introductory economics and ecology courses. But they are never brought to the table when a consultant or funder makes promises about scaling impact. At what point does the addition of more sites, more geographies, more staff produce less rather than more of the outcome you are seeking? What is the maximum size a given organisation can reach without degrading the conditions that make it effective? Can you actually deepen relationships at scale, or are you scaling a semblance of relationship - more personalised communications, more segmented appeals - while the thing itself erodes?

These questions are never asked because the growth imperative makes them feel defeatist. But they are not a counsel of despair. They are a description of reality.

Why scale and transformation cannot coexist

Lewis’s most important move is to draw on the anthropologist Anna Tsing, whose work on global capitalism has earned a serious following well outside her own discipline. Tsing defines scalability as the ability to expand without changing the nature of the project - and argues that this is only possible if project elements do not form transformative relationships. Those relationships are the very conditions from which meaningful change emerges. This is not an argument that scaling is difficult or that it often fails in practice, though both of those things are true. It is a structural claim: scaling requires, as a precondition, the removal of the very conditions that made something worth replicating in the first place.

The organisation that developed an effective approach to community health in a specific neighbourhood did so because it was embedded in that neighbourhood-  because its staff knew the families, because its relationships had history and texture and obligation built into them over time. Those conditions are not incidental to the effectiveness of the work. They are constitutive of it. And they are precisely what a scaling operation must eliminate before the model can travel.

The masters of scale in our economy are not hard to identify. Amazon, McDonald’s, Walmart. Each has achieved the elimination of meaningful variation across contexts. You receive an identical product regardless of where you are, because every variable that might introduce difference has been engineered out. Nobody walks out of a McDonald’s transformed by the encounter. That is precisely the point - and precisely the problem when the same logic is applied to the social sector, or the arts.

Scale and transformation cannot coexist. And transformation is what the sector exists to produce.

The arts version of this problem

Now apply this to the arts. A theatre company that has spent twenty years building relationships in its community -that knows its audience, responds to its place, takes risks because it has earned the trust to do so - is doing something that cannot be standardised, replicated, or scaled without destroying the very thing that makes it work. The gallery with deep knowledge of its local artists. The festival embedded in its region’s cultural calendar. The music organisation that has earned the trust of First Nations communities over decades. These are not scalable propositions. They are relational achievements.

And the funding architecture’s relentless demand that they demonstrate growth, reach, scale, and efficiency is not just misguided. It is structurally incompatible with the nature of the work.

When we ask an arts organisation to “scale its impact,” we are asking it to do what Tsing describes: to disembed from the specific community, specific relationships, and specific histories of obligation and trust that made the work effective. When we require “audience growth targets” and “national reach” as conditions of continued funding, we are applying the logic of McDonald’s to work whose entire value depends on being the opposite of McDonald’s.

Karl Polanyi’s insight, as Lewis applies it, is useful here: the market economy required the deliberate disembedding of economic activity from the social relations in which it had always been embedded. The arts sector works in the opposite direction. Its effectiveness depends on embeddedness. When it disembeds in order to scale, it is not growing. It is converting itself into something that operates by market logic while retaining the language of mission.

The doer’s problem

Petersen’s SSIR provocation is the companion piece to Lewis’s structural argument. He describes a founder who has won every award and graced every stage, and is exhausted, not by the work but by the performance required to fund it. She gets cornered at a philanthropy gathering and sees the question coming: “So, what’s your vision for scale?” Rather than roll her eyes, she gives the donor what he wants. She says the magic words - scale, RCT, AI - and the money appears. Everyone knows it’s theatre. Everyone performs anyway. If you have ever sat in an arts funding pitch and watched someone describe their vision for national reach, audience growth, or scaling impact, you will recognise this scene immediately. It is the same performance, in a different room, with the same anxiety and exhaustion underneath.

Petersen’s most uncomfortable argument is that this is not only a donor problem. It is a doer problem. The founders and CEOs  in his world, in global health; in ours, in the arts,  keep selling the dream of scale because they are terrified that if they don’t, the money will go somewhere else. They put “sustainable” in every other paragraph when they know that someone, somewhere, will have to keep paying for this work as long as we expect it to exist. They promise cost-per-outcome numbers and growth trajectories they know are fiction. They “drink the Kool-Aid because the alternative feels like institutional death.”

The truth, as Petersen frames it through the legacy of Paul Farmer, is that most of this work is not going to “scale” in the way funders fantasise about. It is not going to pay for itself. It is not going to achieve sustainability through earned income diversification alone. What it can do is be done well, in specific places, for specific communities, by people who cannot look away from the obligation. Farmer called this the long defeat - a phrase borrowed from Tolkien. You fight not because you think you can win, but because it is the right thing to do. You do the work because no one else will, because once you’ve seen the problem you can’t un-see it.

I sat in a conversation with artists last week where this was palpable. People who have spent their careers building cultural life in their communities, who know their work matters, who can see the funding model is failing them - and who are exhausted not by the work itself but by the performance required to maintain the illusion that it can be made to scale.

What if we stopped performing?

The organisations the architecture cannot see

Lewis arrives at a conclusion that should reframe the entire conversation about arts funding: the organisations most faithfully cultivating the conditions of transformation -proximity, encounter, obligation, embeddedness - are precisely the ones the sector’s architecture is least equipped to support. They are too small, too rooted, too particular, too resistant to the standardisation the funding system has been trained to reward.

In the arts, these are the organisations that know their communities, that take artistic risks because they have earned trust over time, that do work which cannot be replicated in a different postcode without becoming something fundamentally different. They are the organisations that funders call “too small to scale” and consultants call “niche.” They are also, if Tsing and Lewis are right, the only organisations doing work that is structurally capable of producing transformation.

The funding architecture doesn’t need to make those organisations bigger. It needs to be rebuilt to value what they actually do. The question is what that looks like in practice. Who funds what, at what scale, on what terms? If the state owns the infrastructure of cultural life and philanthropy funds transformation without demanding scale, what does the sector need to do differently? That is the question the final piece in this series will address.

Next in this series: “What Would It Take?” — on the state, philanthropy, transition infrastructure, and giving up scale as a lever for transformation.

This article draws on Zack Petersen, “Scale Is a Myth! Embrace the Long Defeat!” Stanford Social Innovation Review, March 2026; Jason Lewis, “Scale: The Social Sector’s Unexamined Virtue” and “The Butterfly Effect: Scale and Transformation Cannot Coexist,” The Butterfly Effect, April 2026; and Anna Lowenhaupt Tsing, The Mushroom at the End of the World: On the Possibility of Life in Capitalist Ruins (Princeton University Press, 2015).