Boom (ctd.)

July 22 2014

Image of Boom (ctd.)

Picture: Sotheby's

If you haven't already seen it, Godfrey Barker's Financial Times article on the craziness of contemporary art prices is well worth a click:

According to Art Market Research, prices are up by 121 per cent in four years and by 634 per cent since 2000. This market shows enduring powers; it has survived plunges such as a 49 per cent crash in the year from May 2009, and leaps such as its 94 per cent recovery in 2010-12.

This is not the first time the market for living artists has seen such inflation. It happened in Amsterdam from 1620 to 1650, during the Napoleonic Wars, and most of all in Victorian England, when a 32-year boom saw prices for 13 homegrown painters pass that of Michelangelo in 1868. To assume that contemporary art is a 21st-century bubble that must collapse is an error.

The art market has long served the private purposes of the wealthy, from helping them park large sums of money to achieving quick resales of leading pictures, often at twice the original price. Art also offers secrecy and tax rebates when it is displayed to the public. It can be carried in yachts and private jets from one jurisdiction to another. And it is an alternative to cash when settling debts. Interest is strongest in China, Japan, Russia and the Middle East.

But funny numbers imply, at some level, false prices. If Alice in Wonderland were involved she might say: “When I go down to the car saleroom I hope my BMW will be as cheap as possible. When I buy a Warhol, I hope it will be as dear as possible.”

Contemporary art is, beyond doubt, an irrational market and its prices, both top and middle, are not always the result of unfettered competition.

The game played by sellers, buyers, auctioneers, dealers and, increasingly, artists is to start with sky-high values and lift them gradually until “the greater fool” joins in, upon which everyone collects their profits. To attract new buyers, publicity is essential, so Christie’s and Sotheby’s bombard the world with news of the record prices their auctions set, and details of private sales also leak out – $137.5m for Willem de Kooning’s “Woman V”, $140m for Jackson Pollock’s “No. 5, 1948”. All sides aspire to lift prices – most notably, auction houses that consult with sellers and guarantee them a tempting outcome.

This financial sport purports to have no victims; even today’s fool, it is supposed, will be tomorrow’s winner.

Yet we should be uneasy. Something about contemporary art echoes pyramid schemes – clubs that make money by recruiting evermore members. The members believe that the artwork they buy is a solid investment, but it is essentially worthless; art is an empty vessel, its value, like that of a $70m shark, solely the confidence that buyers repose in it.

Notice to "Internet Explorer" Users

You are seeing this notice because you are using Internet Explorer 6.0 (or older version). IE6 is now a deprecated browser which this website no longer supports. To view the Art History News website, you can easily do so by downloading one of the following, freely available browsers:

Once you have upgraded your browser, you can return to this page using the new application, whereupon this notice will have been replaced by the full website and its content.