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Culture industry is a term coined by Theodor Adorno (1903-1969) and Max Horkheimer (1895-1973), who argued that popular culture is akin to a factory producing standardized cultural goods to manipulate the masses into passivity; the easy pleasures available through consumption of popular culture make people docile and content, no matter how difficult their economic circumstances. Adorno and Horkheimer saw this mass-produced culture as a danger to the more difficult high arts. Culture industries may cultivate false needs; that is, needs created and satisfied by capitalism. True needs, in contrast, are freedom, creativity, or genuine happiness. Herbert Marcuse was the first to demarcate true needs from false needs.[citation needed]

Adorno and Horkheimer were key members of the Frankfurt School. They were much influenced by the dialectical materialism and historical materialism of Karl Marx, as well the revisitation of the dialectical idealism of Hegel, in both of which where events are studied not in isolation but as part of the process of change. As a group later joined by Jurgen Habermas, they were responsible for the formulation of Critical Theory. In works such as Dialectic of Enlightenment and Negative Dialectics, Adorno and Horkheimer theorised that the phenomenon of mass culture has a political implication, namely that all the many forms of popular culture are a single culture industry whose purpose is to ensure the continued obedience of the masses to market interests. In The Dialectic of Enlightenment (1947), they postulated a modern form of bread and circuses — the method used by the rulers of Ancient Rome to maintain their power and control over the people. This new “iron system” filled leisure time with amusements to distract the consumers from the boredom of their increasingly automated work; they were never left alone long enough to recognise the reality of their exploitation and to consider resisting the economic and social system. This pessimistic view of prevailing culture as an anti-enlightenment opiate for the masses draws strongly on Marxism for its condemnation of what is characterised as being continuing capitalist oppression.

Although Western culture used to be divided into national markets and then into highbrow, middlebrow and lowbrow, the modern view of mass culture is that there is a single marketplace in which the best or most popular works succeed. This recognizes that the consolidation of media companies has centralized power in the hands of the few remaining multinational corporations now controlling production and distribution. The theory proposes that culture not only mirrors society, but also takes an important role in shaping society through the processes of standardization and commodification, creating objects rather than subjects. The culture industry claims to serve the consumers' needs for entertainment, but conceals the way that it standardizes these needs, manipulating the consumers to desire what it produces. The outcome is that mass production feeds a mass market that minimizes the identity and tastes of the individual consumers who are as interchangeable as the products they consume. The rationale of the theory is to promote the emancipation of the consumer from the tyranny of the producers by inducing the consumer to question beliefs and ideologies. Adorno claimed that enlightenment would bring pluralism and demystification. Unfortunately, society is said to have suffered another fall, corrupted by capitalist industry with exploitative motives.

Anything made by a person is a materialisation of their labour and an expression of their intentions. There will also be a use value the benefit to the consumer will be derived from its utility. The exchange value will reflect its utility and the conditions of the market the prices paid by the television broadcaster or at the box office. Yet, the modern soap operas with their interchangeable plots and formulaic narrative conventions reflect standardised production techniques and the falling value of a mass produced cultural product. Only rarely is a film released that makes a more positive impression on the general discourse and achieves a higher exchange value, e.g. Patton (1970) starring George C. Scott as the eponymous American general, was released at a time of considerable anti-war sentiment. The opening shot is of Patton in front of an American flag making an impassioned speech. This was a form of dialectic in which the audience could identify with the patriotism either sincerely (the thesis) or ironically (the antithesis) and so set the tone of the interpretation for the remainder of the film. However, the film is manipulating specific historical events, not only as entertainment, but also as a form of propaganda by demonstrating a link between success in strategic resource management situations and specified leadership qualities. Given that the subtext was instrumental and not "value free", ethical and philosophical considerations arise.

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