Art Bubble – Price and Value
Wade Guyton, “Untitled”, Epson UltraChrome Inkjet on Linen, 85 1/4″ X 69″, 2006
I came across an excellent article by Shane Ferro at Blouin Artinfo entitled “In the Debate About the Art Bubble, the Dealer Is the Missing Piece”. The article reviews many of the public lamentations about the sale prices from the most recent Art Basel Miami Beach, contributing to what is being termed an art bubble, and focusses on two important aspects to the current art market. The first is the primary reason why recent sales are booming, particularly within the primary art market. The second aspect engages Felix Salmon’s suggestion that the most salient question is whether or not the current market is stable or unhealthy.
Many of the people writing about the sale prices from ABMB are conflating the price of an artwork with its perceived [historical] value. Sale prices, quite distinct from the perceived cultural or aesthetic value, are most determined by a small group of top-tier dealers. Sale prices, not the perceived value, create the “art market”. Ferro writes that market prices have almost nothing to do with critical reception, or “hype” about the artwork, which is an interesting observation and does seem to have some merit with regard to the top-tier market. (I don’t think the same can be said of artworks sold within the second tier galleries, or up and coming artists’ work.)
Ferro summarily concludes that “[h]igh prices for contemporary artists are entirely dependent on the ability of the best dealers to continue to convince their wealthy clients that higher prices are worth paying” But what exactly does the “convincing” entail? Ferro all too briefly writes that sales prices have a lot to do with capitalism, but then choses not to discuss specific persuasions, monetary or tax benefits, or perceived profits the dealer is convincing the buyers with. The article does mention “cultural cache” as being part of what a buyer pays for when purchasing top-tier work, but I don’t think that can account for the majority of a purchase price. I’m sure the article had a word limit and did not allow for a discussion of this substantial subject, but some investigation into that would be valuable. Although, as Sarah Thornton wrote ““tightknit cabals of dealers and speculative collectors count on the fact that you will report record prices without being able to reveal the collusion behind how they were achieved”. See “Top Ten Reasons NOT to Write About the Art Market.”
Ferro also references Felix Salmon’s blog post “The Contemporary Art Bubble”, which calls the recent sale prices evidence of an unhealthy market bubble. Felix writes “what is uniquely troubling about today’s contemporary art market are two things: absolute values and relative values.” By “values” he means to say prices. The relative value of contemporary sale prices is well argued, but his contention that the artworks ‘absolute value’ (sale price) is scarily high is, as far as I can tell, simply conjecture on his part. As others have pointed out, a piece’s recent sale price is not a reflection of its value but rather of the buyers themselves. “An auction is an event about the buyers, not the art.” Salmon quotes Marion Maneker of Art Market Monitor. How much money do the buyers have? An incredibly large amount apparently. Fiscal policies sustaining high income inequalities should sustain the supply of buyers’ money. Global demand (the amount of buyers) around the world continues to increase. The world can change but as it is today it seems unlikely the market will go down because of some inherent instability of its own.
To say that the sale prices are “qualitatively…bonkers” is unpersuasive, but a familiar refrain. Many people have been saying that since the 80’s. Of course, there may be some isolated examples that might support that perception. (Salmon’s example of the high prices for Christopher Wool’s work being unsustainable given that the supply of them in the market is high seems rational.) But on the whole the sale prices don’t seem so egregiously varied from the past couple of years. In support of his claim that the current market is out of whack, Salmon cites one well-respected gallery’s owner statements, which Salmon presents as evidence of overconfidence. “Spectacular busts are born of overconfidence”, he says. The thing about claiming the art market is unhealthy is that eventually, one day, that claim will be proven to be correct. As Salmon quotes Herb Stein, “if something can’t go on forever, it won’t.” Sage wisdom, I guess, but it does little to specifically tell us the current state of the market.