Understanding Art Markets

Inside the world of art and business

Iain Robertson

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781135091927
• Edition: 1
• Topic: Art
• Subtopic: Art & Business

The global art market has recently been valued at close to $50bn - a rise of over 60% since the global financial crisis. These figures are driven by demand from China and other emerging markets, as well as the growing phenomenon of the artist bypassing dealers as a market force in his/her own right.

This new textbook integrates, updates and enhances the popular aspects of two well-regarded texts - Understanding International Arts Markets and The Art Business. Topics covered include:

• Emerging markets in China,
• East Asian, South East Asian, Brazilian, Russian, Islamic and Indian art,
• Art valuation and investment,
• Museums and the cultural sector.

This revitalized new textbook will continue to be essential reading for students on courses such as arts management, arts marketing, arts business, cultural economics, the sociology of arts, and cultural policy.

1 Introduction

There is a charming poem by the eighteenth-century English poet, William Cowper, involving ‘a bee of most discerning taste’ and a pineapple, which recounts the unsuccessful attempt of the insect to prize the elixir from the impenetrable skin. Cowper likens the bee’s futile attempts to extract the sweet nectar from the fruit to man’s pursuit of trinkets and baubles – ‘pineapples in frames’ – which inflames our senses. He concludes with the admonition: the wise gather honey from the weed.

The art market specialises in selling desires to those whose senses need pricking. At the core of any meaningful analysis of this industry, aside from the interpretation of collector and dealer opinion and the application of data into an intelligible overview, is an understanding of taste. As people get rich they wish to adorn their houses with pineapples in frames. With shifts in global wealth, brought about by geo-political and economic transition, taste may change dramatically. This is where the West’s market model, which I have started at the beginning of the Italian Renaissance, might have to give way, particularly in respect of the goods that that market cherishes. So, new systems may have to be negotiated as different commodities are prized.

At the heart of this book is a big question. Is modernisation the same as Westernisation and does the adoption of Western technology and science also require acquiescence to Western political, economic and cultural systems? It is a debate that raged in Europe’s colonies between the two World Wars. By and large those who have submitted to Western values have won the day. The West’s most effective modernist ambassadors were local converts. The Sumatran writer, Sutan Takdir Alisjahbana (1908–1994), was of the opinion that in Indonesia everything that preceded national consciousness was un-Indonesian and therefore had no place in a modern state. His conviction was very similar to the Anglophile, Pandit Nehru (1889–1964), who became India’s first post-independence leader. The notion of a nation-state with its clearly defined art markets conforms to the regulation of the world and its culture according to modernist sub-divisionism, not unlike the ruled and gratuitous geographical borders devised by departing colonial administrations. Has this led to the strident nationalism built on a culturally racial narrative that permeates the politics of China, Russia and India today? Perhaps it has. Nationalism, combined with the aggressive capitalist strategies pursued by China in particular, is an incendiary cocktail. But it is my sense too that significant non-Western societies are electing to measure their culture according to traditional and historical precedents rather than the amorphous global average. It is perhaps too simple to say that there are three cultural forces at work in today’s world – consumerism, cultural nationalism and historicism – but it is a starting point for an analysis of the future direction of art and its markets. And I believe it to be essential to consider our subject within the greater socio-economic context.

The iconoclast, Martin Luther (1483–1546), looks out contemptuously at us in a 1529 pendant portrait of him and his wife, Katharina von Bora, by Lucas Cranach the Elder (1472–1553). Luther had married four years earlier, directly challenging the church’s position on clerical celibacy. He undermined the authority of the pre-modern Christian world and saw the remains of the Roman empire in the ruins of the fifteenth-century papacy. But the Catholic Church today not only persists, it actually grows its numbers. The great antique empires of the past also show signs of emerging from the cultural shadows. There were thinkers in the decades before the end of the European empires who believed that new post-colonial states could not be expected to flourish as a culture and society overnight without reconnecting to their deep past. Writers like the Indonesian, Sanusi Pane (1905–1968), and the Indian artist, Abanindranath Tagore (1871–1951), sought continuity in change. Pane expressed opinions that held truer in the pre-global societies of the 1930s than the independent states of Asia today. Yet his view that Western culture flourishes on materialism, intellectualism and individualism, and that this breeds healthy competition but also obsessive material concerns and great economic inequality, was a prescient thought. Undoubtedly other parts of the world do still aspire to the mystical, but regional contrasts are less marked than 80 years ago because of the perfidious effects of globalisation. The post-war global economy and polity has kept us perpetually occupied and entertained, but it has taken a great deal else of our humanity and culture in exchange. Cultural entertainment buildings in the form of museums, in truth, are strange places to experience great works of art. Gallery and museum visitors now consume art, one could say, in the same antiseptic fashion that they digest food and information. It is a conduct made worse by the ‘advance’ of excruciating rather than beneficial technology.

For all that I have said, this book is not intended to be an all-out assault on the modern world. And modern ideas can usefully be incorporated into existing forms; the Japanese have managed this wonderfully well. Elsewhere the balance is often but not always out of kilter. The Indonesian artist, Hendra Gunawan (1918–1983), for example, is closer in spirit to his culture’s past than his contemporary, Affandi (1907–1990), who prepared his work essentially for an international audience, presenting to the market a ready commodity of international art with local characteristics. The latter approach lends itself to the compartmentalisation of culture favoured by both the art world and its market. The same might also be said of the Rousseau-like works of the Bandung-based Indonesian artist, Kartono Yudhokusumo (1924–1957), except that he focussed on the craft of image-making before imposing a theoretical and political commentary. In China, the post-economic reforms, Stars Group and Political Pop practitioners fall into the Affandi camp, but their compatriots, Xu Bing (b.1955) and Gu Wenda (b.1955), who are endorsed by government, are closer in spirit to Gunawan. The Chinese Academician, Xu Beihong (1895–1953), was, on occasion, a slavish follower of realistic Western Academic oil painting, and his contemporary, Wu Guanzhong (1919–2010), attempted to fuse two grand traditions, Chinese landscape painting and Western realism. Both arrived at a corrupted aesthetic rather than a successful, syncretic art largely because, at the time, their cultural roots were starved of nutrition. Modernisation and Modernism in China were implemented by the Nationalist government of Chiang Kai-shek in the 1930s, under the pretext of enlightenment and something the Generalissimo called spiritual and social reconstruction, fearsome concepts that ended in the agonies of re-education in Mao’s Cultural Revolution. A shifting Chinese Weltanschauung brought about the change in its visual arts that persists today, and is only now being systematically questioned. The Indian experience was not so very different from that of China. The Progressive Group received the blessing of the Modernist, Nehru, while, until recently, Tagore’s Mughal-inspired Bengal School was marginalised.

A century earlier, in Europe, the Pre-Raphaelites in England and the Nabis and Barbizon artist groups in France clung to a pre-Modern notion of art, and invoked a common pattern of behaviour for the culturally disenfranchised – they retreated from contemporary life. Individuals like the Impressionist painters Pierre Bonnard (1867–1947) and Jean-Édouard Vuillard (1868–1940) and the American artist Edward Hopper (1882–1967) kept painting pictures that by the standards of the day were old-fashioned. Bonnard was a painter of a quiet, indecisive domesticity throughout Picasso’s ascendency as the principle architect of the new visual language of Cubism. Hopper was faced with the vast drip-works of Jackson Pollock (1912–1956) and yet his figures continued to gaze out to a world beyond the reaches of Modern art. The existence of numerous styles and approaches at any one time characterises the art world, a place of cultural ideology, and the art market, the dominion of transaction. When the Victorian Academic oil painter, Sir William Godward (1861–1922), who, incidentally, has become a great favourite of Chinese collectors, announced before he committed suicide that the world could not contain both him and Picasso, he was fighting an immediate rear-guard action against Modernism, and his view was widely shared. When Sir Alfred Munnings (1878–1959) joined Sir Winston Churchill in a desire to kick the Spaniard some 30 years later, he was considered reactionary. In the picture Does the Subject Matter? (1956) (Plate 1) Munnings pokes fun at the connoisseurs of what he considered to be the absurd. Ironically, the work has an eerie Post-Modern quality and a levity that endears it to us today. In the intervening years between the disgruntled murmurings of Godward and the fusty annoyance of Munnings, Modern art had secured the favour of collectors and institutions from the world’s wealthiest nation, the United States. It had, in short, been approved.

The art market exists, in its current form, rather like Bohemianism in mid-nineteenth-century Paris: in a certain state in a particular place at a moment in time. When the circumstances and reality change so does the market. The art market is a product of this world and it is subject to fundamental change in the future and to periodic, seismic shifts in taste along the way. In 1913 when the New York Armory show exhibited a body of work from Europe’s avant-garde community of artists, notably the painting, Nude Descending a Staircase (1912) by Marcel Duchamp (1887–1968), the audience was largely sceptical. And yet of the 75,000 visitors a risk-seeker speculated $323 on the Duchamp painting and Walter Arensberg acquired the work, Bathers by Paul Cézanne (1839–1906). Less than 20 years later Gertrude Whitney and Lillie Bliss, who had contributed to that seminal pre-war Armory, set up the two most important validating institutions of Modernism: the Whitney and the Museum of Modern Art. A commercial fair had thus set the tone for a type of art in the twentieth century. In future art had to shock, rather as the masterpiece, Demoiselles D’Avignon, had overcome the art dealer Daniel-Henry Kahnweiler when he encountered it in Picasso’s Montmartre studio in 1907. There was also a requirement that art be intellectually challenging. The Armory show convinced enough Americans that this was important art. The great Anglo-Dutch dealer, Joseph Duveen, devised a similar economic equation for the Old Masters market, which reaped him magnificent rewards; Europe has lots of art and America lots of money. He prided himself on selling a lesser work or douceur before enticing his client into the highest reaches of taste at a later date.

Source markets in developed and transitional regions like Europe and China are now protecting their patrimony through law, which is making it harder to sell antiquities and historic works on the global art market. The shift in wealth from the West to Asia has made Hong Kong, and its two international art fairs, central to the ambitions of international traders. The China market, which is protectionist, like that of Japan and India, seems to favour antiques over International Contemporary art, and this heightens the supply conundrum. But there is an inescapable logic that points to a flow in antiques and Old Master pictures from Europe to China and contemporary art from China to Europe and America, now that Asia has inherited the mantel of Zeitgeist.

Art buyers today are motivated by profit, hubris and vanity perhaps more than by self-knowledge, benevolence and intellectual curiosity. Art, in short, has perhaps lost for many its ability to transcend commerce, to rise above the daily humdrum. In that context it is wildly overvalued. Who can justify paying $250 million for an oil painting of two card players of which there are four other examples. This is the sum, reputedly, that the Al-Thani family of Qatar relinquished in 2012 to secure Cézanne’s The Card Players from a Greek shipping magnate for their new museum. We return to the gross inequality of wealth in the Western world that worried Sanusi Pane. It concerned Barclays Capital enough for the bank to write in a report on wealth in 2005 about the growth of something called plutonomy, an economics which favoured the super-rich. The art market, with art as its totem, has become an absolute reflection of society at large. As surely as there is a realignment of cultural values so will there be a reassessment of the value of its trophies and wares.

Today’s market for the global commodity of contemporary art performs so well because of this transition in consumer taste brought about as much by plutonomy as the careful packaging of desires that typifies the abilities of the finest traders. It is extraordinary the degree of sophistication in this market, capable of gift-wrapping the most varied and unsympathetic materials and ideology. At the Galerie Thaddaeus Ropac on the outskirts of Paris, a display of monumental paintings and sculptures by the German Neo-Expressionist, Anselm Kiefer (b.1945), were on sale in 2012 for millions of dollars each. The paintings, which refer to the function and iconographies of universal myths, are richly laden with paint and protruding objects such as an aeroplane wing and large metal scales. The show’s title, Die Ungeborenen (The Unborn) gave further indication of the painter’s philosophical concerns. All that aside, who is the audience for an exhibition of painterly gigantism on the fringes of Paris set in a former heating factory next to a motorway? There was another reason to visit the 50,600-foot space: a parallel show of the paraphernalia used by Kiefer’s teacher, Joseph Beuys (1921–1986), for his interpretation of the Shakespeare play, Titus Andronicus (1589–92), which he performed on 30 May 1969 and entitled Iphigenie. A white horse, which Beuys employed in his original performance, was nibbling hay in the corner of the space for this latest exhibition, which included other vestiges of his early piece of performance art. Both shows were art-world critical triumphs.

Kiefer creates significant quantities of art in a studio warehouse near Le Bourget airport in Paris. But where does it all end up? Where is his work displayed if not in museums or public spaces? Not in hotel vestibules because that would demean it, and Kiefer would undoubtedly veto such an eventuality because he is scathing of the commercialisation of art in general. Perhaps in freeport warehouses in Geneva, Singapore or Luxembourg, ready for onward sale when the market touches a peak; perhaps in a vast apartment in London, Berlin or New York. The artist is highly regarded in the United States. The sheer scale of his artistic ambition compares to the monumental canvases of the French nineteenth-century Academicians – works so large, like Le Radeau de la Méduse (1830) by the French Romantic artist, Théodore Géricault (1791–1824), that they can prohibit display anywhere else but a major museum such as the Louvre. Yet these vast contemporary works are often acquired by private collectors, while works by other artists represented on a similar scale are displayed and sold in leading galleries throughout the world. Matching the explosion in high-end retail, art galleries have responded by securing brand-name artists into their stable, on occasion sharing or poaching the star performers from a rival, rather in the way that leading football clubs compete for the top players.

We are at the crossroads of change in the art market: how we sell, where we sell, who we sell to, how we estimate value and what motivations drive that value are all questions to which we knew the answers after the rebirth of a global on-spec art market at the end of the nineteenth century. They remain the pertinent interrogations, but the pieces on the board have changed. And there is even a suggestion that the game itself has altered. But the underlying forces that help us find answers to these questions have remained broadly the same: Where is the world’s wealth concentrated and which corner of the planet is growing at the fastest pace? Which countries are politically stable? How large and anxious is the group of newly rich who seek to justify their place in society by acquiring art or else feel that art offers greater long-term financial benefit than other commodities?

The commodities that we encounter in this book, which I will call art for the sake of brevity, are tangible. Only the last chapter treats art as something other than a product of the consumer society. This fits with the early Modern presumption that everything can be measured and accorded an economic value. In the case of art, the buyer expects a physical object in exchange for money and he believes that the price he paid, albeit subject to the same fluctuations as any other commodity, is correct when the seller is either an established art dealer or broker or a long-standing auction house. The significant change today is that those veritable institutions that have sold art for, in some cases, centuries are now experiencing competition from recent arrivals and direct sales. The former is a result of a shift in global power and wealth, and the latter is a consequence of technology. The effect on the art market is revealed in a change in taste. The new economies and their satellites have different cultural affiliations to those of the West. They differ also from their immediate post-colonial brethren. The ineluctable conclusion is that the new economies will discard a number of our received cultural notions, such as the necessity for change and aesthetic renewal and the belief in cultural progress. An order rooted in the past, if not governed by the past, will inform the future taste and contemporary creation in emerging markets; and so it will the global art market.

A still-life entitled Turkey Pie (1627) by Pieter Claesz (1597–1660) (Plate 2) depicts the objects valued by a seventeenth-century European consumer. At the centre rests a nautilus shell set in a gilded mount, to its left a beaded, thick-stemmed Roemer, and at the corner of the painting a pewter vessel. Behind it lies a small Chinese dish and in the foreground a larger blue and white platter. The feast of oysters, fruit, bread and turkey pie are laid on a white cloth, which almost obscures an Oriental rug. The paper cone of salt and pepper (black gold) spilled onto a foreground pewter dish represents the precious minerals whose bulk value exceeded that of all the other commodities in the picture – and they appear as a form of cash. All these objects have a value today, but are certainly not as prominent as they once were. The one item that has perhaps held its value better than the rest is the least conspicuous: the Oriental rug. Rugs have an enduring charm and some, such as the so-called Lotto sixteenth-century design from Anatolia, appear, like the Claesz example, in Old Master paintings, twice in the case of Lorenzo Lotto (1480–1557). One particular example of an extremely rare survivor is the Arhan four-lobed star medallion rug that appears in Paris and Oenone by Nicholaes Eliasz (called Pickenoy, 1591–1654/6). There are, according to John Eskenazi, nine survivors of this type of rug and a few small fragments with four-lobed star medallion designs attributed to workshops in the town of Ushak from the second half of the fifteenth to the middle of the sixteenth century. This type of carpet also appears in a painting by Lotto, Husband and Wife (1524). In 2013, a private buyer paid $33.7 million for the seventeenth-century Persian sickle-leaf carpet, a price that is comparable to values in the Chinese ceramic, classic car and fine jewellery markets, but far behind the value of Modern, Impressionist and contemporary objects. Today’s market attaches an inordinately high value to paintings, drawings and sculpture and that is why this book focusses so particularly on this category, but it has not always been so and change is afoot.

The famous Holbein rug appears in Hans Holbein the Younger’s (1497–1543) Portrait of the Merchant Georg Gisze (Plate 3). It was, like the Lotto rug, employed as a prop in the work of other artists of the period. This particular painting has an added interest for us because of its collection of instruments of measurement. Aware that Martin Behaim constructed the first globe in 1492 and Peter Henlein the first pocket watch in 1510, at the very outset of the West’s efforts to apprehend, quantify and divide the world more accurately, we find a very early watch stand on the table inside the London skriverkamere (writing room) of the Hanseatic merchant. Holbein has also painted the Baltic trader in 1532 alongside instruments for the conduct of business: a seal, quills, a box of coins and a container for sprinkling fine sand onto newly written letters. We are presented, in short, with an exemplar of the modern commodity trader at whose helm sits the art dealer.

This book is arranged in three sections. Part 1, ‘Technical and structural mechanisms’, begins in Chapter 2 with an analysis of the system that creates value in the global art market. I...