“At particular times, a great deal of stupid people have a great deal of stupid money.” Walter Bagehot, Economist 1859.
This is the intro of Ben Lewis BBC documentary The Great Contemporary Art Bubble from 2009. Ben Lewis investigates the phenomenon of the booming prices at contemporary art auctions, indicating it as “one thing [that] went faster than anything else”. From 2003 till the beginning of the economic crisis in 2008 the average rise in value for contemporary art went up to 800% after artprice.com, the famous art price guide and reference book with a databank of over 27 million auction prices and indices. In 2004 Ronald Lauder purchased Gustav Klimt’s Portrait of Adele Bloch-Blauer I for $135 million (the highest paid price ever for a painting at that time). In 2007 Jeff Koon’s Hanging Heart was sold at Sotheby’s auction for almost $27 million (the highest price paid for a work by a living artist). On September 15th 2008, at the very same evening when Lehman Brothers went bankrupt, Damien Hirst had his own sale at Sotheby’s in London. He was the first living artist being solely presented by himself at auction and not, as usual, by his gallerists. The auction results broke a new record of $270 million for a living artist.
Several factors play a role if we try to understand why the potential of buying contemporary art is that high. Certainly the new rising markets outside Europe and the US are to be considered, most noteworthy China, as well as the interest of 3rd generation hedge funders which see contemporary art as a new form of investment besides real estates, stocks, gold etc: “Just as mortgages are bundled and sold as bonds, so works of art are bundled and sold as shares of a hedge fund. […] In these schemes, what is important is not the real value of the company, commodity, or artwork but the statistical probability of its price performance within a specified time frame relative to other portfolio holdings. […] the value of any particular work of art is determined by its risk quotient relative to other works of art held by the fund. […] As trading accelerates, derivates (fund shares) and underlying assets (artworks) are once again decoupled, creating a quasi-autonomous sphere of circulating signs in which value constantly fluctuates.” (Taylor, p. 12)
“Business art is the step that comes after Art.” Andy Warhol, 1975.
In finance capitalism, as declared by Marc C. Taylor in Refiguring The Spiritual (2012) who thinks that art has lost it’s way, “wealth is created by circulating signs backed by nothing but other signs”. In contrast to agricultural, industrial and consumer capitalism, where “people made money by buying and selling labor and material goods”, financial capitalism plays with the perception of real and virtual value. Identifying the structure in financial capitalism, one might recognize the changes in the art market as a mirror effect to the financial market: “When investment becomes more speculative, the rate of circulation accelerates, and the floating signifiers, which now constitute wealth, proliferate.” (Taylor, p. 1)
But the reason why people are spending insane sums of money for contemporary art doesn’t get close to my actual intention in writing about the contemporary art market per se. What I found more interesting is how the “art of now” shows us a mirror of today’s developments in society and culture displaying a shift in our values and beliefs. After all, those record prices we read in the newspapers play a more significant role then we probably might think. To be specific, I believe it determines (and not just influences) the “great art” of our age.
“Contemporary art”, as stated by Francis Outred (ancient Senior Director at Sotheby’s, now specialist in Post-War and Contemporary Art at Christie’s), is the lifestyle choice of our generation.”A 21st century commodity so to speak.
It is true that art has become more commercialized then ever before. But… is expensive art necessarily the best art?
To be continued on Stupid Money & Stupid Art (part 2)