The Art Market
Introduction to Art and Economics

Art and Commodity

• Marx and commodity theory of art: use value vs. exchange value
• Classical Marxism: Art becomes another species of alienated labor through a near reduction to commodity status
• Art becomes part of commodity fetishism
• Romantic view of artists and art as free, autonomous creators who own their works as direct expressions of their minds or souls is overturned in materialist (political-economic) analysis
• Benjamin questioned commodity theory of art in describing problematic status of an art object's "aura" in era of mass reproduction
• Marxian theory has value but is too easily used in reductive ways that fail to account for complexity of social and historical factors in the functions of the artworld
• Art objects are not exchangeable one for the other like other commodities: art economics based on scarcity of unique objects. Can art works properly be treated as "commodities"?

Art and utility value (use value) vs. exchange value

• Art can be said to have a "satisfaction" (utility) value (Grampp).
• Is art analogous economically to most other consumer and capital goods? Why or why not?

Art and mystification of value

• Attitudes about "special category" for art outside commodity economy.
• Economic variations in funding of art around the world--state sponsorships, grants, public spaces, free art school tuition and conditions of the commercial art market, business of galleries and museums.

Art, Fungible Value, and Price

• Establishing the value of unique, "priceless" commodities like art works and antiques: desire, symbolic wealth, and scarcity.
• Intangible value and cash value: the fungibility of art works.
• Context and perception is all.
• Commodities show value, translate into cash value, only by circulation, exchange in the marketplace.
• Prices:
  • "To ask if something is worth the price is to ask if it is worth the other things that could be had for the same price." -Grampp, p. 21
  • Is this a correct view of art prices?

Art and symbolic or cultural capital (Bourdieu): social wealth symbolized in art and cultural acquisitions.

• The dynamics of symbolic capital
• Art business succeeds (like academe) by pretending not to be doing what it is doing.
• Necessity of disavowal and negation of the economic, appearing disinterested to accumulate symbolic capital.
• Logic of symbolic capital allows the development of art and the artworld as an autonomous field.

The "art value chain": cycles of market validation and valuation (the way it works). Always ask "what adds value, or allows for value accrual."

• Artist works to get established with artworld credentials (art school, insertion of work/medium/materials in artworld context, dealer and curator attention, media attention in artworld context, grants, first shows).
• Galleries validate work in shows for which they already have collectors, or they attempt to show work that think they can entice collectors to buy. Galleries with trend-setting or edgier reputations will often make a new scene for work not yet in the commercial marketplace, making a market in new work.
• Art marketing requires publicity and manipulating perceptions and context for art works. Media attention creates the buzz factor (reviews, photos in fashion magazines, etc.): the more media references accrued for an artist or work, the higher the perceived value.
  • The media cycle adds value through circulation and objectification in discourse: putting art in media discourse circulates the objects and constructs them as desirable, scarce, and signs of cultural or symbolic capital.
• The power of collections. Private collectors, curated corporate and institutional collections validate work in high-visibility purchases, which create prestige value by association with wealth (especially the "right" collectors, validated in the artworld).
  • Wealthy prestige collectors and collections: influence on museums, shows, price of works.
• Grants and awards, on sliding scale of prestige, add value to artists' work, bring wider validation and recognition.
• Museums validate artists' status and collectors' collections of work (shows of private collections, often with follow-on donations to museum by the collectors), further enhancing prestige, perceived market value, and ultimate cash value in follow on exchanges (private sales, auctions, or tax deduction value as gift to museum).
• Museum shows of artists' works in private collections, or shows of newly purchased work, validates the works by the same artist (or movement, technique, etc.) currently in the marketplace and increases the value by being in prestigious museum collections. Museum context is treated as highest validation, since it takes the work out of circulation (except for rare cases of deaccession from museum collections) and makes it "priceless."
  • Works on loan to a museum show or a traveling, curated multi-museum show increase in value from context and representation in an exhibition.
• Auction houses validate ultimate cash value in getting "highest possible price" for a work when enters private marketplace. Auction house context provides glamour, prestige, elite setting, competition for art commodities by the wealthy, and validation of work as serious commodity.
  • First appearance of artist's work at auction is like a IPO in the stock market, a publicly known and referenced price
    
    
• Artworld hierarchies of value and cash value. Scale from the legitimate but low value works in galleries from $500-1000 to the small fraction of works that hit the auction houses for huge amounts ($500,000 to millions). Most works at all auctions go for under $5000.
  
  

Art and fashion: two overlapping contexts, cross-referenced

• Fashion is structured on binary "fashionability vs. non-fashion" similar to "art/non-art" binary.
• Media circulates desirable images, and real fashion is scarce not common.
• Fashion as sign of wealth and cultural capital
• Desire for desirability and acquisition of desired art objects.

Art as an Investment

• How does art become an investment asset?
• Taking account of fungible value and transferring it to liquidity: how can art values be managed as an asset and then made liquid (exchanged for cash) like other investments?
• Tracking the investment value of art: art databases, auction records.
• Art investment vehicles:
  • Fernwood Art Investments: an art mutual fund
  • Investment banking services
  • Artists' retirement fund