What is the impact of the current concentration of wealth on the art trade? The current boom in contemporary art reflects income inequality. Like in other economic sectors, the top of the market approaches the luxury art market through branding and marketing, and for the galleries at that level, the consequence is to “grow or go”.
Although the role of TALKING GALLERIES is not to address the top end of the market –which have a different problematic than the larger number of galleries–, what emerges is the necessity of a resistanceresponse on the part of the mid and small sized galleries to the concentration at the top and to the power of the auction houses. Could this resistance strategy be best organised and encouraged? What does it mean in terms of new forms of organization and collaboration? Can it prefigure an ecosystem of resistance and how?
Steven Zevitas directed me to this video, which is so relevant to the discussion he kicked off the other day:
Steven Zevitas has written a very worthwhile piece,The Things We Think and Do Not Say, or Why the Art World is in Trouble, in which he explores the current relationship between money and art. He admits his piece is "a bit of a ramble - a sketch really," and and he "leave[s] it to others to expand on the dialogue." The piece is well worth a read, ramble or not, but I think too it's well worth the expansion Zevitas invites. At any rate, I'll take him up on his invitation.
Zevitas seems to think that money is not what is driving the art market's control of the art world, an art world that is at this time dominated by the spectacle of art fairs, "[b]ig art, big artists, big dealers, and big money." Instead of money, it's the individuals who constitute the art market:
money does not have motivation or intent, people do. I would argue that the cart is actually the insidious forces that have, over several decades, narrowed the gap between art and financial instruments, and in doing so have forced art to submit to criteria once reserved for commodities. Money is simply the scapegoat for a problem that is pervasive and systemic.
Who are these people? Artists, auction houses, art journalists, museums, art collectors, and art dealers, for each of whom Zevitas has prescribed corrective action. I don't disagree at all with his prescriptions; they're thoughtful and would considerably aid in the production and dissemination of good art. I just don't think that he's more persuasive than the money that I believe is indeed driving the art market "cart."
Nor do I disagree with Zevitas' observation that the enormous sums being spent on a very small segment of the total population of good artists is the result of speculators, people who are buying art not because they love what they are buying but because they are convinced that the odds are good that what they are buying will increase in value: " the only justification for paying such money for emerging artists is speculative."
What I disagree with is Zevitas' belief that it is the auction houses, art journalists, museums, et al. who are driving the money to a tiny fraction of art, that tiny fraction about whom all those players have arrived at a consensus. In fact, his observation that speculators, not art lovers, are behind the money in the current art market belies his belief that "money does not have motivation or intent."
Money may not literally have intent, but the people who have it certainly do, and the top half of the top 1% of the income earners in the U.S., "Wall Street and the top of corporate America," are doing quite well. As G. William Domhoff, an investment manager, writes, these people make the vast majority of their wealth from investments rather than from income. In short, these people have an incentive to find things to invest in that have the potential to grow in value. It is that demand for investment vehicles that is one significant factor in the creation and growth of new forms of investment. Thus, the sub-prime mortgage market was in part the result of the huge amounts of money investment and pension funds needed to invest in the years prior to 2008 and Wall Street's realization of the opportunity to create CDOs and the like as a result of the changes in regulatory and investment environments over the previous 20 years.
There simply isn't that much these days that promises a financial upside to investors. Real estate is slowly recovering from the 2008 collapse, interest rates on loans remain infinitesimal, and the stock market is already at all-time highs. Corporate America is not creating new jobs or even expanding production. So what is someone in the high-roller investment class to do when he wants to invest his money? He finds new investment opportunities. One such opportunity is to invest in lawsuits, as Jason Lyon observes in "Revolution in Progress: Third-Party Funding of American Litigation," 58 UCLA L. Rev. 571:
There is a growing phenomenon of for-profit investment in U.S. litigation. In a modern twist on the contingency fee, third-party lenders finance all or part of a plaintiff’s legal fees in exchange for a share of any judgment or settlement in the plaintiff’s favor. There are a number of international corporations, both public and private, that invest exclusively in this new “market.”
New "investment vehicles" can, of course, become the basis of financial bubbles; "[s]imply put, economic bubbles often occur when too much money is chasing too few assets, causing both good assets and bad assets to appreciate excessively beyond their fundamentals to an unsustainable level." Plainly, Zevitas believes the current market for art in the lower six figures (for artists such as "Joe Bradley, Jacob Kassay, Lucien Smith and Oscar Murillo" constitutes a bubble). I wouldn't disagree with him. I attended my first Miami Art Week last December (in the interests of full disclosure, on behalf of an artist I'm very fortunate to represent), and my principal reaction was that the entire scene was about exactly what everything else had been about back in the day I'd briefly lived in Miami: money and status. Even a critic such as Jason Andrew treated the event as one that confirmed preexisting beliefs; in his piece, "After the Miami Art Fairs: 9 Artists to Watch," he admitted that
"[m]any of the artists I have selected here I have been following for a number of years." I'm not sure I read any coverage that concerned artists that hadn't previously been covered, usually to exhaustion.
So I think Zevitas is right:
Going to an art fair or gallery and spending a lot of money on the latest "hot" artist is not collecting, it is trophy hunting. When the art world slows down, these individuals will be the first to jump ship, as their motivations for interacting with art in the first place will have evaporated with the value of their art portfolios.
But it's the speculators, not the art world folk, who are to blame. Is there hope to educate the speculators, to persuade them to buy art that genuinely is great and unrecognized and therefore genuinely undervalued? I'm not sure how that would be done. Perhaps the only thing to hope for is a bust in the art market bubble, a bust that would drive the speculators out. I'm not sure how that will come about. One way is the uncovering of frauds, one of the unfortunate manifestations of any financial bubble. But the art market bubble is not, as was the bubble in subprime mortgages, dependent on a market consisting of the 99%. Subprime mortgages, the investments made by wealthy institutions, crashed in value when the housing market crashed, a market dependent on the fortunes of a much wider population. When will the art bubble burst? Maybe when the Wall Street investment world crashes. They're riding high, now, however, and their end is not in sight.
Peter Friedman is a lawyer, artist representative, speaker & writer who's written for years on the impact of law on creative endeavors and law itself as a creative endeavor. From 2008-2012, he wrote Ruling Imagination: Law & Creativity, selections of which are republished here and the entire archive of which is available from the Internet Archive's Wayback Machine here and in pdf format here. In addition, he has written about copyright and fair use at What is Fair Use?