e-flux Conversations has been closed to new contributions and will remain online as an archive. Check out our new platform for short-form writing, e-flux Notes.

e-flux conversations

The Future Economy of Art

On its website the San Francisco Arts Quarterly has a long and important piece by Alain Servais entitled “Art in the Shadow of Art Market Industrialization.” In the piece, Servais (a bond trader and designer) explains how the growing wealth of the super-rich has transformed the art market over the last fifteen years, and he offers concrete suggestions for how galleries and artists can navigate this newly “industrialized” art world.

The art market was, until recently, a small industry with comparatively little money involved, living under the radar of “financialization.” Things have changed dramatically in a short amount of time. To illustrate this, we only need to look at the evolution of the auction of artworks in the European Union, the United States…As recently as 2000 the total was $41 million—an amount you would find in a single evening’s sale at Phillips Auction House today. This figure is now in the region of $850 million, or a factor of almost $21 million in 14 years. There is no reason to doubt that the increase in turnover is of the same proportion in galleries…

We would not care so much if this only concerned those few hundreds of individuals at the top of the market, but this drive for money rather than art—and I am not saying one has to exist without the other—is polluting, if not endangering, the whole ecosystem that supports the creation and distribution of art. As the time for artists to make their place in the sun shortens due to the demands of the market, they are pushed to emphasize what sells, which is often not the most demanding or most interesting art…

Starting with the belief that the art market is now an “industry,” the path to its future is lain through reinforcing its foundation, structure, and infrastructure. The first and essential step at this point is to define at an industry level what best practices are as in any sustainable business. These best practices would be cast into model contracts, which would replace the dangerous handshake way of currently doing business.

Read the full article here.

Amen. I don’t know how to go about putting the brakes on this economy. More federal regulation, the type used with the U.S. stock market, isn’t perfect, but regulation and transparency are needed. I’m curious to see what New York state authorities end up accomplishing by cracking down on galleries and collectors for sales tax offenses. Might put an end to the handshake model, even temporarily.

Though many of the negative phenomena described by Servais are indeed bad, the “model contracts” solution is not at all tantamount to “regulation.” I recently did a story in which I interviewed Servais alongside some other market commentators and experts, and the realities of regulation are much more elusive. For example, @Corinna, the NY tax crackdown is not new, it happens every few years, and it doesn’t seem to have changed a whole lot. Furthermore, what would a federal regulatory regime look like? One attorney I spoke with for my story on regulation was skeptical:

“Perhaps what [Roubini] is calling for is greater regulatory oversight of the art market itself — so, for example, an administrative agency that will be tasked with overseeing transfers of art — but with other Congressional priorities that may be a stretch right now,” he said. “It seems to me that the art market for the time being is going to continue to be either self-regulated or governed by laws that already exist, for example tort or contract laws that already play into the typical sale between an auction house and a purchaser and a dealer or a collector.”

Any discussion of “regulating the art market” needs to be very specific about what the issue is, because in many cases the problem, it seems, is under-enforcement of existing laws (i.e. taxes), which is systemic rather than art-specific.