First Drafts - The Prospect magazine blog

14 Responses

1. Terrence O'Keeffe says:

   November 25, 2008 at 9:05 pm

   Lewis and Ford hit all the right notes in their piece on just why the prices for a great deal of mediocre contemporary art zoomed up to unrealistic levels during the last twenty years or so (as I recollect, there was a similar rapid ascent of prices for all “collectibles”, including rare to medium-rare stamps and coins, as a hedge against inflation in the U.S. back in the early 1980s). The reasons are multiple and repetitive: new money chasing cultural self-certification; the slow pace at which older paintings that form the ultimate standard of value, whether by major or minor masters, come up for sale; illusions about how good some of the current stuff is, a stituation in which neophyte investors-collectors must rely on the self-interested judgments of dealers and gallery owners; etc.

   We’ve been through this before. When I was an art-hisory student in the 1960s I could have purchased a nice etching by Tiepolo or Canaletto for about two-to-six weeks’ worth of my meager pay in those days. Now a good clean copy (these were all multiples at the time of their creation, so condition matters) would go for half a year of my considerably enhanced salary. (When paintings were exhausted as objects of likely or possible acquisition, the prices for etchings, engravings, woodcuts, lithographs, and drawings skyrocketed.)

   With respect to inflated prices for contemporary work, a nice review of a similar situation in the not-too-distant past can be found in a book by Gerald Reitlinger published almost fifty years ago — “The Economics of Taste — 1760 to 1960″ in two volumes, one dedicated to painting and the other to objets d’art. Reitlinger covered the ups and downs of the auction prices of the most prominent Old Masters, including the cases of late “re-discovery” followed by quick enshrinement (e.g., Vermeer). But, in a chapter entitled “The Rewards of the Living Painter”, he also took a look at the high peaks followed by rapidly plummeting prices of paintings produced by a cohort of painters who were greatly esteemed in their heyday and soon thereafter dismissed as over-rated or actually untalented. In this case the painters were the pre-Raphelites (some of whose works made a post-1960 critical and economic recovery) and a few historicist (”allegorical”) painters, especially Alma-Tadema. Reitlinger’s auction list shows one particular work by the latter which sold for 5,000 pounds in the 1860s or 70s which last fetched 25 pounds when auctioned in the 1950s!

   The Alma-Tadema paintings are not exactly ugly or without some formal merit (as well as often displaying nude and semi-nude female figures from antiquity who exhibit a kind of refined, porcelain-like lubricity, always attractive to Victorian male purchasers — and why not?) While often immense in square yardage of canvas, they also tell nice little stories, but with regard to their narrative contents they are invariably sentimental in a way that critics have not been able to accept for a century and a half. The paint and canvas alone (not to mention several month’s finicky work) plus their art-historical interest should have kept their values above the rock-bottom price they sank to, but there’s no doubt that the auction prices of these and similar paintings illustrate a sort of one-sided bubble comparable to the prices of numerous contemporary artists (start high and get out before the collapse). To understand why this kind of thing happens over and over (like the usual disappointments following upon the elevation of individuals into “heroic” political leaders)one has to examine the psychology of followers more than the leaders themselves. Bascially the human mind is a poorly (conceptually, emotionally) organized mess that has the virtue of infinite value for comedy.
2. BenjaminL says:

   December 3, 2008 at 3:44 pm

   One might mention Sarah Thornton’s new book, Seven Days in the Art World, which gives a good ethnographic account of the inside of these institutions.

   http://sarah-thornton.com/

   Much like Donald MacKenzie does in the LRB for financial markets proper

   http://www.lrb.co.uk/contributors/mack01
3. Troy Camplin says:

   December 8, 2008 at 4:34 pm

   This only goes to show that postmodernism was never worth all that much in the first place. Let us hope that this is its final death-knell so we can finally move on to something that is of inherent worth and value.
4. The Epicurean Dealmaker says:

   December 9, 2008 at 10:36 pm

   I think the rich were drawn to contemporary art primarily due to its perceived quality of demonstrating or supporting social status rather than any perceived “investment value.” They had new money–lots of it–and lots of contemporary art was available to launder it into forms acceptable to the social arbiters that be.

   Most importantly, however, I think we can thank the collecting rich for engaging (unwittingly) in the broadest-based, most expensive piece of kitsch performance art we have witnessed in this century, as I proposed in July 2007:

   http://epicureandealmaker.blogspot.com/2007/07/lhooq.html

   In any event, the necessary economic condition for the continuance of the contemporary art bubble–the wealth of the ultra rich–is disappearing just as rapidly as their net worth.
5. kate kline may says:

   December 10, 2008 at 2:26 am

   This article is fine as far as it goes but doesn’t begin to cover the manipulations of the market by dealers and auction houses.
6. Daniel says:

   December 10, 2008 at 6:11 pm

   The events highlighted by this article highlight once more the key issue behind both the recent bubbles and the consequent and subsequent deflation and recession. The key issue is the inability of those who acquired relative wealth without historical levels of effort to differentiate between value, worth and price. The mistake people have made when acquiring property and goods is that they foolishly reckoned that price equated to worth or value. Now they see that the worth and value has faded away and with it the present value of their price of acquisition.
   Price does not equate with worth. For traded goods worth is best equated with the price at disposal less the costs of acquisition and holding the good.
   The billionaires may still be indecently wealth when they have taken the losses of goods and property and no doubt some will be chastened by the experience. However I doubt they will.
7. Daniel says:

   December 10, 2008 at 8:20 pm

   Just one observation on kate kline may’s comment. The property bubble here in Ireland was fueled by the media - the property supplements in the newspapers. Week after week these supplements - funded by real estate advertising - these papers told us how wonderful and how much of a bargain small terraced houses in Dublin which were priced at €1m were. We all knew they were worth perhaps 1/5th the price but every village has its fool. Now the buyers cannot sell them nor pay the mortgages. Now they know price does not equate to value!
8. Borgones says:

   December 10, 2008 at 11:56 pm

   Kate Kline May - would be interested to here more about the behaviour of the dealers and auction houses. There’s no doubt that they have been supporting prices, but how far has it gone? B
9. cardiac says:

   December 16, 2008 at 2:17 pm

   This is a solid piece of journalism. The parallels to what happened in finance in recent month are striking. In the financial world one expects the return to old-fashioned banking without creation of “toxic waste” in the form of exotic and obscure products. Banking in the shape of lending, though, is vital to our every day lifes and will be with us when all the dust has settled. Likewise the implosion of the art bubble will show how much is left from contemporary arts relevance to life. The outcome could be so shockingly small.
10. nickGogerty says:

    January 6, 2009 at 6:13 pm

    as a hedge fund manager. I predict a peak to trough loss of over 80% for Hirst. See here http://nickgogerty.typepad.com/designing_better_futures/2008/10/markets-are-social-phenomenon-damien-hirst-soon-80-off.html

    bubbles aren’t new. the kindelberger book is a great read. some useful predictions. http://nickgogerty.typepad.com/designing_better_futures/2008/10/fair-value-8500-prediction-redux.html?asset_id=6a00d83454b17a69e201053577f275970c
11. Anders Knutsson says:

    January 7, 2009 at 1:19 am

    I betchya that a decent Richter, Koons et al artwork will go back up as soon as the recession is over. Perhaps not as much, but bubble implies bursting. I see a U shaped recovery - not an L. And by the way, the last Alma-Tadema painting I saw was at the Metropolitan Museum of Art in New York. Not too shabby a place for a “burstie”…
12. kate kline may says:

    February 18, 2009 at 2:10 am

    check out Robert Highes in the archives of NY Review of books- his is the last word on art and money- ate
13. kate kline may says:

    February 18, 2009 at 2:15 am

    The essay ” Art and Money” by Robert Hughes covered the art market and its schemes and schemers in the New York Review of Books ten years or more ago ( you have to pay to look read the article in their archives.) His criticisms are the same as Holland Cotter’s in last week’s NYT- even more scathing. Those of us on the sidelines will watch with amusement as the buyers and sellers scramble for profits and prestige in this economy. I wish them well.- Kate Kline May
14. kate kline may says:

    February 19, 2009 at 5:06 am

    I think the best article ever done on the subject of the global art market was written by Robert Hughes for the New York Review of Books. Now you have to pay to read it (12/06/1984). Hughes eviscerates the dealers, investors, curators et al. The art scams and smoke and mirrors unregulated arts business continues today.
    ( For example, Larry Salander in New York and many others still undetected.)