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Art Market Watch

SPEED! MONEY AND THE GLOBAL ART MARKET

by Piroschka Dossi
 
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Speed is a synonym for velocity and the slang term for amphetamine, a drug creating an ecstatic illusion of rapidity and efficacy. Money, which plays an increasingly important role in the dynamics of the global art market, has a similar effect. Money dynamizes and accelerates the art market -- not just temporarily but structurally. What are the effects on competition? And how do these affect art itself?

Structural Acceleration
Chris Dercon, the director of Tate Modern, put this development in a nutshell. “Today an artist has seven years to make his career.” What has changed since the days of the early avant-garde, when the career of an artist was a matter of oeuvre, not a matter of time? What distinguishes the global contemporary art market from its predecessor, the avant-garde art market that led to success for the great artistic innovators of the 20th century? On the face of it, the contemporary art market appears as a seamless continuation of the avant-garde art market. The market participants are still the same: artists produce, dealers sell, collectors buy, critics judge and museums validate -- just to name the mayor players. Artistic innovation and esthetic competition still seem to be the engine of market dynamics. But on closer inspection it becomes apparent that the driving forces of the art market have shifted almost inconceivably over the course of the last four decades. Essentially this has to do with the increasing influence of a cultural invention that is not only at the root of the capitalistic market system but also the art market as well: money.

The Role of Money
Money functions as a medium of exchange, a unit of account, a store of value. Above all it is the liquid medium that allows capital invested in the present to generate a monetary profit in the future. It is what the economist Robert Heilbroner, thereby following Karl Marx, described as “the continuous transformation of capital-as-money into capital-as-commodities, followed by a retransformation of capital-as-commodities into capital-as-more-money.” Its capacity to call envisioned possibilities into existence through money lends capitalism its extraordinary dynamic, which find its expression in the typical cycles of upswing and downturn, acceleration and deceleration. These economic cycles can also be observed in the art market. But the change the art market has experienced over the past decades is not merely cyclical. It is structural and dynamic, and has transformed both the art market and art itself.

The Redefinition of Art
The global art market of the 21st century is not just a continuation of the avant-garde art market of the 20th century. Money has gained a new importance in the positioning and the evaluation of art, to such an extent that one may speak of a new chapter in the history of the art market. The seed for this development was planted in 1904, when André Level formed the first art investment fund, La Peau de l’Ours, which was liquidated in 1914, quadrupling the initial investment of the original partners. A half a century later, this idea had gained momentum and introduced a new “spirit” into the world of art -- the spirit of money. The turning point occured in the mid–1960s, when a class of nouveau riche emerged on the horizon of economic change. Peter Wilson, the farsighted chairman of Sotheby’s auction house, spotted them as potential art buyers. The question was how to win over this group of people, who had the financial means to acquire art but no appreciation for it? His answer was straightforward: by positioning art as both a status symbol and a profitable investment. In 1967, Wilson devised the Times-Sotheby’s Index, which though it is forgotten today, was an early attempt to chart the cost of fine art just like any other commodity. With this index, the rising prices of art became visible and its future profitability plausible. A mere six years later, in 1973, the transformation of the art market into an investment market was completed with the Robert Scull auction of Pop and other contemporary artworks, for a then-unprecedented total of $2.2 million.

Eternal Factors of Acceleration
The popularization of art as investment broke a taboo which artists had always eagerly defended. In his famous mantra “Art is Art. Everything else is everything else,” Ad Reinhart, the great purist among the artists of the 20th century, expressed the necessity for art’s autonomy. Yet the boundaries between art and everything else blurred inexorably and art ceased to be art alone. Art became accessible to a group of buyers which exceeded by far the limited number of those art collectors whose passion, curiosity and pursuit for art had allowed the avant-garde art market to evolve and flourish. Finally the gates towards market expansion had been pushed open. In the following decades, global financial changes took place, such as the collapse of the Soviet regime, the globalization of the capitalistic market system, and the deregulation of financial markets, which led to a dramatic increase in income among the superwealthy, with the consequence that the art market was flooded with ever-rising levels of liquidity. This development in turn led to the expansion of the art market and the phenomenon of skyrocketing prices. The digital revolution allowed the transfer of information in real-time and created a new thrust of acceleration in art trading. These political economic and technical factors made the art market more dynamic than ever before, leading to more and to faster production, circulation and consumption of art.

New Collectors
As a result, the art market experienced a fundamental transformation from a closed cycle of art lovers to a globally expanding industry. A new type of collector entered the stage, often from the financial sector, and with an eye on the profitability of art. Today the global market caters to the preferences of the increasing number of these so-called high-net-worth-individuals from Europe, the U.S., the B.R.I.C. countries and the Arab world, all of whom are pursuing an increasingly globalized lifestyle that includes professionally positioned art “brands.” Especially contemporary art -- formerly a hobby of a few collectors and therefore not prohibitively expensive -- has become a status symbol and a speculative investment promising gains both in terms of social distinction and monetary profit. The worldwide turnover at art auctions, now estimated at $30 billion, has tripled since the turn of the millennium, with the market share of contemporary art rising steadily. Despite the economic downturn, in 2010 art prices approached the level had reached in 2007, their historical peak.

Art and money used to be incompatible notions. Today they are mentioned in the same breath: “Art & Finance” is a new business sector, art funds move larger sums of money, curators gather with fund managers at Art & Finance conferences and, perhaps most dramatic of all, the criteria for evaluating art shift from artistic standards towards quantitative economic parameters.

Quantitative Rating Systems
Half a century after the introduction of the Times-Sotheby’s Art Index, such rankings and indexes have become widely accepted instruments for the evaluation of artistic success. As they are used as indicators of artistic quality, the assessment of quality has become a question of quantity. Simply put, it has been reduced to three questions referring to the presence and the prices of an artist: 1. With whom? 2. How often? 3. How expensive? These questions examine aspects of the career of an artist which are not necessarily related to the quality of his work: his social intelligence, the door through which he happened to enter the art system -- which decides over initial advantages which in turn may develop into uncatchable competitive advantages -- and the preferences of curators and collectors as well as their purchasing power. As self-fulfilling prophecies, art indexes and art rankings tend to accelerate existing trends -- and they reinforce the tendency of the art market to concentrate demand on a few star artists.

Concentration on Winners
More growth, more supply, more demand. More of everything for everybody? Does the rising tide lift all boats? It does not, and for a reason the art market shares with sports, entertainment and a growing number of other markets. The art market is a so-called winner-take-all market. Its main feature is an enormous price differential with marginal differences in performance and quality. Even though barely perceptible or even non-existent, these differences spell the difference between success and failure. This structure leads to an increasing gap between a tiny top price segment and a huge low price segment. It also explains the seeming paradox why the market for contemporary art -- despite its expansion and its growing potential for the funding, distribution and production of art -- continues to create poverty.

The art market expands and the idea of art as investment draws further consumers -- collectors -- and hence further producers -- artists -- into the market. As the liquidity flooding the art market is also on the prowl for profit, it furthers the concentration on that small percent of artists whose work is perceived to promise price increases. Consequently, the race for economic success rivals with artistic competition, which focuses on qualities which ultimately matter in art, such as depth, expression and the production of meaning.

Global Art
Is there such a thing as global art? As in literature in contemporary art a global language has become an entry requirement to the global art market. Thanks to its size and its concentration processes this market promises disproportional rewards to the winners. The pull of economic opportunity and the pressure for artistic conformism lie close together. In a market trading status symbols which have to be globally comprehensible, recognizable, discussable and culturally convertible too much particularity and too much complexity compromise success.

In the 20th century the bourgeoisie considered contemporary art up to Joseph Beuys to be “scandalous” and only a very small group of collectors happened to understand and buy it. In the 21st century, however, contemporary art looks different than a Beuys trademark “fat corner,” contradicting all esthetic conventions. Sotheby’s star auctioneer Tobias Meyer describes the new esthetics of successful art in three words: nice, creative, friendly. A considerable number of even high-priced contemporary artworks lack more and more the qualities which lent avant-garde art its unique importance: controversy, depth and innovation.

For centuries innovation had been the engine of artistic evolution. It established the unique role of the artist and his products in Western society. But innovation seems to fade into the background since what many collectors look for is expressiveness and recognition, as Christie’s managing director Dirk Boll explains. Also for artists, innovation no longer seems to be at the top of the list. Many of them, whether from Europe, the U.S., Brazil, Russia, India, China or any other country on the art map, refer to Marcel Duchamp and his 100-year-old invention of the readymade, a then revolutionary concept which he himself refused to repeat, and play it through in endless variations.

Art is considered good when it is successful. And it is considered successful when it becomes expensive. The price has become a signal for quality thereby bypassing the artwork itself. This logic is illustrated by the story of Jeff Koons Hanging Heart, whose owner bought it for $1.9 million and sold it a few years later for $23.6 million – without ever having set eyes on it.

The Value of Art
The consequence is a structural acceleration of the global art market, which transforms artistic achievements into products measured and selected against the yardstick of their marketability. The competition for artistic expression and esthetic production of meaning has progressively shifted to a race for economic success and media attention which generates few highly rewarded artists as winners.

Consciousness shapes culture and culture shapes the market. In turn the market influences culture and culture influences our consciousness. A structurally accelerated art market changes not only how art is produced, marketed, valuated and selected, but also how it is perceived. The phenomenon of an ever-expanding art world and an ever-quickening succession of artists, exhibitions, biennials, fairs and fashions leads to what Jean-Jacques Rousseau described in 1761 in his novel Julie, or the New Heloise, “I drift from one fancy to the next. . . . and there is not one day on which I can know what I will love on the next.“ Drugs can be dangerous. Speed not only creates an ecstatic high, it also leads to an accelerated burnout. Similarly the acceleration of the art market and its transformation into an increasingly money-driven business may lead to a burnout of those resources upon which the art market thrives: on art as art, and on the vision, creativity, expressiveness and bravado of the artists who create it. In the light of this development it is paramount to keep in mind that “Art is Art. And everything else is everything else.” To perceive the intrinsic value of art happens to require a resource which has become the rarest and the greatest luxury in a market driven by speed: leisure, contemplation, time. At this point one realizes: time is not money.


PIROSCHKA DOSSI is a critic and curator. This text, which first appeared in Artnet.de, is a revised and shortened version of a talk delivered at the conference “Money Cultures” at the Zürcher Hochschule der Künste, Feb. 24, 2012.