Issue 15 - Pdf Ctrl+P - CTRL+P: a journal of contemporary art

Governments have had little interest in regulating the trinkets and playthings
of the super-rich. Art works are a uniquely portable and confidential form of
wealth. Whereas all property purchases have to be publicly registered, buying
art is a private activity. And unlike old masters, which are often linked by
history to specific places, contemporary art knows no frontiers. 4
Take for example, in the midst of the financial market bubble, the art market inflation
was ridiculously exaggerated: the Chinese painter Zhang Xiaogang saw his work
appreciate 6,000 times, from $1,000 to $6 million between 1999-2008; while the American
artist Richard Prince’s work went up 60 to 80 times between 2003-2008. 5
In some ways, the art market behaves more like executive salaries than the stock
market. In appearance, both the arts and executive salaries seem to be based on merit
—but the ratio between merit and performance is actually very opaque.
The number is actually “a signaling mechanism,” explains Seth Godin, a marketing
expert, regarding the myth of big executive salaries. In order to solicit the best and the
brightest, firms compete with each other by engineering a salary structure that attempts
to bid higher than a competing firm. Moreover, these firms have a board of directors
consisting of executives from other companies, so the salaries of this elite group keep
paying each other higher and higher salaries that explode out of proportion compared to
salaries of other employees in the same company.
The similarities go further. As executive salaries have been disconnected from performance,
so has the value of art been disconnected with other known indicatorsof value.
In a sobering and sometimes sarcastic essay written by Donald Kuspit, an art historian
and philosopher, he points out how the irrational exuberance was less about the value of
art than it was about the value of money:
The intrinsic value of these paintings has, whatever it is…never [made] them
more valuable than the extrinsic value [at which they were acquired] by reason
of their exchange value, that is, the money that becomes their equivalent.
More crucially, recognized by money, they can no longer be recognized for
what they artistically are. Nor can they be questioned and put in historical
perspective... The price paid for a work of art becomes its absolute and
authoritative value, even if the value the price implies is not particularly
clear. It is presented without explanation—the price is the explanation. 6
Fueled by the illusive promise of exorbitant returns, the art market lost its justification
for art and became a market of markets. What Ben Lewis calls “specullecting” by
the likes of Charles Saatchi may be all too common as an integral part of the art world
now. In the late 1990s Saatchi bought the work of young artists, established a museum
in which to display it, lent it to public museums, and used his celebrity status to attract
media attention. He then sold part of his collection at auctions. The works then came to
be associated with the celebrity collector, diminishing the value of the art itself.
Anyone who thinks that all they need to do is to try to outsmart the art market may
have random success at best. There have been countless studies by economists showing
the low rate of return on art if one were to use it as investment. Analysis of historical
data from 1650 to 1960 shows that the real annual rate of return was 0.5% on paintings
as compared to 2.5% on government bonds. Another figure was slightly more optimistic,
but similar—2% real returns on paintings compared to 3.3% real interest rate of the
Bank of England. 7
This figure is dismal for investors, but what about the figure for working artists?
In his misguided defense of the art world (rather than the art market) in the IQ2US debate,
Jerry Saltz says “1% of 1% of 1% of 1% of artists actually make money. And even
they barely do and usually only for a very short time.” This adds another dimension to
our picture – do artists actually benefit from the art market? If not, then how could they
make a living in spite of the monstrous alliance between the art world and the financial
Ctrl+P September 2009