The Art Market Cools

From the UK's Prospect Magazine:

The bubble in contemporary art is about to pop. It has exhibited all the classic features of the South Sea bubble of 1720 or the tulip madness of the 1630s. It has been the bubble of bubbles—balancing precariously on top of other now-burst bubbles in credit, housing and commodities—and inflating more dramatically than all of them. While British house prices took six years to double at the start of this century, contemporary art managed it in just one, 2006-07. (Over the same period, old masters went up by just 7.6 per cent and British 17th to 19th century watercolours actually lost value.) Contemporary art in the emerging economies did even better. The value of its sales in China increased by 983 per cent in one year (2005-06). In Russia they rose 2,365 per cent in five years (2000-05), while its stock market increased by "only" about 300 per cent.

Ben Lewis and Jonathan Ford compare the contemporary art bubble to the 17th century Tulip Mania in Holland. ''It is impossible to comprehend the tulip mania without understanding just how different tulips were from every other flower known to horticulturists in the 17th century,'' wrote Mike Dash, author of Tulipomania. Amsterdam in the 1620s was flush with East India trading profits, and the tulip market was turning into a new area for speculators. After building into a frenzy for about ten years, and with tulip bulbs commanding prices that climbed absurdly high, the market crashed in February 1637.

There's been a bit of debate over the last few years about whether or not the tulip craze counts as a bubble, but the crash was real. (As I understand it, it was a bubble if the Dutch were delusional; if they acted rationally, it was just a crash.)

A typical observer may not know the difference. He or she sees only a small but influential group of fantastically wealthy people rapidly getting involved in a market they knew nothing about and had little interest in before the frenzy. Suddenly, the object of the market is eclipsed by the market itself. It no longer matters what's being traded.

But it's even worse than just trading fancy stuff. The trading becomes wrapped up in potential and future values of things.

"The market is a perfect storm of hocus-pocus, spin, and speculation, a combination slave market, trading floor, disco, theater, and brothel where an insular ever-growing caste enacts rituals in which the codes of consumption and peerage are manipulated in plain sight," wrote critic Jerry Saltz in 2007.

Is the art market making us stupid? asked Saltz. It was certainly making lesser critics less critical.

Those who had a financial interest could be relied upon to say something inane. Like Tobias Meyer, the head of Sotheby's contemporary art division, who famously said in 2007:

"The best art is the most expensive because the market is so smart."

This incredibly idiotic statement sounds dangerously close to the sort of thing we hear from the unreflective rich: The poor must deserve to be poor, otherwise they'd be rich.

One doesn't have to believe that art by Damien Hirst and Richard Prince is bad to believe that it shouldn't be so damn expensive. "Are we sometimes liking things because we know the market likes them or are we really liking them?" asks Saltz. Money changes perception. It's that simple.

The critic Robert Hughes told the UK Telegraph recently:

“One of the things that sustains the art market is an irrational faith in a continuous rise in prices. There was a 17th-century Italian painter called Guido Reni. Not a lot of people have heard of him but in the late 18th century many connoisseurs thought that Italy’s two supreme artists were Michelangelo and Reni. But by 1950 you could buy a 10ft painting by Reni for £300. People fall out of fashion quite rapidly. So this idea of the inviolability of the modern art market is a fantasy.”

In June, Tobias Meyer was quoted as saying that for the first time since 1914, “we are in a non-cyclical market.” Idiot.

The problem, Hughes says, is that “Instead of being the common property of humankind the way a book is, art becomes the particular property of somebody who can afford it."

The good news is that, a) the art market is starting to cool, and b) much of the most over-valued contemporary art -- the stuff that went straight from Damien Hirst's factory to the auction floor -- wasn't worthy of any museum anyway: it was created to sell, not to entertain, delight, enlighten, or educate.