With art prices ever-soaring, the question of whether the art market is currently experiencing a bubble — and, perhaps more urgently, when exactly that bubble might burst — is an issue on the minds of gallerists, auctioneers, and collectors alike. Yesterday at the Blouin Creative Leadership Summit, a group convened at the “Art & Economics” panel to discuss the practical sustainability of the art market’s current climb, as well as its uncertain future.
Moderator Sarah Hanson, editor-in-chief of Art + Auction magazine, opened the discussion by framing the recent boom — from $21.3 billion in global art sales in 2003 to $60.8 billion in 2013 — within some broader conceptual trends. “The past decade has seen a qualitative shift in the art market, one marked by the entrance of the formerly sleeping dragon of China and by soaring prices for a select few artists who have become, essentially, branded commodities,” she said. “In contrast to ages past, these prices are being increasingly realized for contemporary, living artists.”
Though China’s role remained relatively untouched, the panel offered opinions on the celebrity status of certain artists — specifically, Jeff Koons and his infamous “Balloon Dog” sale at a benchmark $58.4 million. Amy Whitaker, art business faculty at the Sotheby’s Institute, asserted that Koons is “a wonderful, extremely interesting performance artist” and that “the Christie’s sale is a sort of pinnacle of the performative part of how the price tag and the participation in collecting is related to the work itself.”
She also noted, however, that even to discuss the current art market in this way is to take its structure for granted. “The question I would ask is why we don’t invest in artists, we invest in collectibles,” she said. “That is actually fundamentally different from the way we invest in the stock market. You don’t invest in Nike shoes, you invest in Nike the operating company.”
Meanwhile, Donald Thompson, professor emeritus of marketing at the Schulich School of Business at York University, laid out the ways in which mid-level dealers — that is, “the dealers that nurture young artists” — are being squeezed out on both sides by “über-dealers,” who take up the majority of positions at major art fairs, and Internet commerce platforms, which snatch up business on the lower end, leaving artists “orphaned” in their wake.
Thompson and Whitaker’s concern for the role of the artists touches on the seeming incongruity at the art market’s center: “Art, by definition, always has something about it that can’t be captured by the market,” Whitaker observed — what Roman Kräussl, associate professor at the Luxembourg School of Finance, dubbed “pure philosophy.” His advice, at the end of the day: “Buy what you like. Never buy art solely for investment purposes.”
And still, the fact of art as a bought and sold commodity persists — and with it, the concern over this ever-looming “bubble” effect. “We can only say it was a bubble after it’s burst,” observed Kräussl. Still, he ventured a guess, based on his analysis for the Blouin Art Sales Index: “I think, right now, we are in mania mode.”
So, how long will it last? William Goetzmann, professor of finance and management studies at Yale University, brought up the issue of income inequality, pointing out that so long as the gap continues to widen, the art market’s superrich participants may well be able to continue up-bidding indefinitely.
“I don’t know if that means I’m an optimist or a pessimist,” he said.
“I think that means you’re an economist,” offered Hanson.
