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STUART PLATTNER
/
NATIONAL SCIENCE FOUNDATION
A
Most Ingenious Paradox
The
Market for
Contemporary
Fine Art
How quaint the ways of paradox!At common sense she gaily mocks!—Gilbert and Sullivan,
The
Pirates o/Penzance,
Act II
THIS ARTICLE IS about a market where producers donot make work primarily for sale, where buyers oftenhave no idea of the value of what they buy, and wheremiddlemen routinely claim reimbursement for sales ofthings they have never seen to buyers they have neverdealt with. Welcome to the market for contemporaryfine art.I will describe the quality of economic decisionmaking in the art market and explore the issues of per-sonal identity, economic rationality, and consumer risk.At the most abstract level, this is a standard economic-anthropology analysis of behavior that appears to beeconomically irrational but which makes sense whenthe full cultural context is understood. While the
specif-
ics are different, the basic economic processes are simi-lar to those in markets for any luxury or collectibleitems (cf. Rheims 1980; Savage 1969). The ethnographicmaterial presented here is from a study of artists, deal-
ers,
and collectors in St. Louis, Missouri, in 1992, whichis taken as a representative example of local art marketsbelow the dominating center in New York City.
Fine Art as Commodity
While most people may interpret the term
art mar-ket
as connoting the high end of New York's (or Paris'sor London's) elite galleries and auctions, in anthropo-logical style I will focus on local markets, where thebulk of the nation's artists, dealers, and collectors par-ticipate.
1
Serious, professional fine artists make what Icall "museum quality" art, which could in principle be
STUART PLATTNER
is
the program director
for
cultural anthropology,National Science Foundation, Arlington, VA 22230.
exhibited in the hegemonic center of New York City andin major museums, and be sold by elite galleries in artcenters in this country and abroad. New York is hege-monic because aesthetic/art market value is created
by
the attention of key critics, curators, dealers, and col-lectors. Art
not
shown in New York loses value for thatreasonalone,irrespective of the features of the work
itself.
The overwhelming majority of artists do not enjoymuch, if any, commercial success. These artists makeart because doing so affirms their identity asartists,notbecause they expect to earn a living from it. Althoughdedicated artists may dream of supporting themselvesfrom the sale of their art, most earn a living by teaching(if they are lucky) or by a range of occupations fromgraphic designer to waiter or taxi driver, or else subsistfrom the regular earnings of spouses.Fine art is a special sort of consumer good whoseexistence is supposed to "expand civilized conscious-
ness"
(Simpson 1981) and whose possession is sup-posed to demonstrate the owner's high cultural standing.This is because art, as a nonutilitarian good, occupies
a
higher cultural position than merely useful things.
2
When they enter the market as commodities, art objectsare "Veblen goods" that often signal the owner's highcultural status (Veblen 1934).
A
high price functions asan indicator of high elite value rather than as a result
of
scarce supply and high demand. Buyers of contempo-rary art range from connoisseurs whose knowledge andlove of contemporary art is so impressive that they canand often do become professional dealers, to peoplewho care as much for their art as for their furniture,
see-
ing both as decoration. While many art-world partici-pants like to claim that art is a unique commodity, thisanalysis will show that the strange elements of the mar-ket are understandable as the results of standard issues,identity and risk. The paradox of the introduction willbe clarified as the interplay of different goals and con-straints that are familiar in many situations in additionto the art world.
American Anthropologisf\QQ(2)A$2-4Q2.
Copyright
©
1998, American Anthropological Association.
 
THE MARKET
FOR
CONTEMPORARY FINE
ART /
STUART PLATTNER
483
A Model of Local Art Markets
This article focuses on the market for local or non-investment art as distinct from the market for blue-chip,or investment-quality, art. I will define local art marketsconceptually by two dimensions: the motives of produc-ers and the knowledge of consumers. This will lead tothe local-art-market model of identity producers, mak-ing art commodities because they love the work, andrisk-averse consumers, many of whom might valueoriginal art on their walls but who do not enter the mar-ket because of their ignorance of economic value in art.In the standard market situation, producers offer
things
for sale primarily because they want income, andbuyers have access to enough information to assess thevalue of the things they seek (see Table 1). The marketfor most manufactured commodities, such as new cars,is a good example. The producer is in it for the money,with no pretense of building culture. The buyer knowsthe reasons why a Mercedes costs more than a Mer-cury—better engineering, finer materials, and more ex-pensive manufacturing quality overall, as well as the pa-nache of the name. Consumer risk is normal becausemotives are congruent—producers want to make thingsthat consumers want to buy. If consumers do not buytheir
goods,
producers may blame the buyers' ignorance
and
short-sightedness rather than their own faulty prod-
ucts,
but there is little cultural or institutional supportfor a continued failure to make things that people do notwant to buy.Markets where producers are involved mainly formoney but where consumers do not know the value ofthe product—either because of structural features orbecause the rules of value are confused, contested, orunclear—are also familiar to us: for example, the mar-ket for a boatload offish, as described by James Wilson
(1980).
Here the buyer as well as the seller cannot knowthe value of the fish without unloading the boat, whichof course involves deterioration in the quality of theproduct. In these sorts of asymmetrical informationsituations the market will fail without institutional sup-port, because buyers will not buy and sellers will notsell at a price they both agree is fair. The solution is todevelop mechanisms to deal with the risk, such as per-sonalized, equilibrating long-term economic relation-ships (see Plattner 1985).Some producers make work primarily becausetheir identity and self-respect are defined by their work.These people may want to make money, but their in-volvement with their work derives from identity ratherthan money. They may be said to be addicted to theirwork—economists use the term
psychic income.
Someethnographic quotes from St. Louis artists will illustratethis point:
It's not a job at
all;
it's what I do, it's what
I
am. So basicallyI spend as much time as I can here [in the studio]; it comesbefore anything else. ...
My
strongest feeling is that
I
makemy art because I'm driven to, I have to. If I don't make it,you might as well lock me up in the crazy house. If nobodybuys it, nobody reviews it, that's OK, I don't need it. On theother hand, it's wonderful to be noticed, wonderful to havepeople want your work. [Artist who supports herselfthrough freelance media work]When I'm doing my artwork, I'm not saying it's like apsychiatrist, but it keeps me sane. [Artist with full-timefaculty job]An artist who is able to support himself from sellingpaintings summed it up this way:Given a choice between selling everything we do withoutexhibiting it and being able to show everything with nosales at all, we would go for the second option. [McGarrell
1986-.12]
3
This sort of personal identity relation to one's workis of course not limited to artists. Most people know pro-fessionals such as some academics who work very hardand single-mindedly without much attention to their in-come. For example, a young academic colleague toldhis mother of the publication of his first professional ar-
ticle.
Her question, "How much will they pay you forwriting that article?" showed her misunderstanding ofhis goal of advancing scholarly knowledge.
4
Likewise,friendly advice to artists whose work does not sell tomake more popularly acceptable work, perhaps pictures
Table
1
Types of markets
Producers' (sellers') main return from productionConsumers' rules of commodity value Monetary goals and market supplyIdentity/psychic goals and social supplyClear, uncontested rules, adequateinformation, physical attributesdominantConfused, contested rules, inadequateinformation, social attributes dominantDeveloped market, rich infrastructure,manufactured commodities (e.g.,automobiles)Underdeveloped market, poorinfrastructure, agrarian societies (e.g.,used cars, perishables)Professions (e.g., academics), investmentartLocal art markets
 
484 AMERICAN ANTHROPOLOGIST
VOL.
100, No.
2
JUNE
1998
of cats and dogs, ignores their major problem of estab-lishing and maintaining identities as fine artists. Iden-tity producers like academics and artists certainly valueincome, but they normally would not consider increas-ing their income by other work, such as selling real es-
tate,
instead of practicing anthropology or making art.They rationalize their lower income by affirming theiridentity as cultural producers advancing the public cul-tural heritage instead of economic producers advancingtheir private economy.Markets for the products of identity producers canbe distinguished by the clarity of the rules of value. Con-sumers of the work of investment-quality contemporaryartists, whose work is commonly sold at public auctionin elite auction houses such as Sotheby's or Christie's,have full information about price trends and prior sales.Certainly each piece of art is unique, and people com-monly lose money buying "blue-chip" art, but that is be-cause they misjudge the market in the same way thatthey could misjudge the market for pork-belly futures,not because the rules of value are opaque. Similarly, col-lege deans assure faculty that the reasons why profes-sors are paid differently from each other are in principleclear and established, if in practice they are complex,often confidential, and contested.The rules of aesthetic value
are
unclear for theoverwhelming majority of local art that has not enteredthe elite market. The average upper-middle-class con-sumer with enough disposable income and culturalcapital to value buying original art would be totally at aloss to explain why one watercolor painting is worth
$300,
another $3,000, and a third $30,000 while the size,shape, quality of materials, and other visual attributesmay not vary significantly. None of the pieces wouldhave the public-auction record to establish their invest-ment quality. How is a buyer to know why
this
large wa-tercolor of flowers in a vase on the dining room table isa bargain at $25,000 while
this
practically identicalwork on paper is overpriced at one-tenth the cost? I de-fine this market of identity producers and confused con-sumers as a local art market. It is composed of an enor-mous number of producers relative to their actual salesand a relatively tiny number of consumers daringenough to enter the market.
The Growth of Local U.S. Art Markets
The
U.S.
art institution of artists, exhibition spaces,art schools, and art dealers grew explosively in thepost-World War II period (until the market crashed in1990) as a consequence of the country's enormousgrowth in wealth and the influx of European influences.In this section I will outline the growth of the U.S. artworld, which resulted in the current plentiful supply ofartists. In later sections I will discuss collectors anddealers.New York art became dominant in the world mar-ket during this period.
5
At the same time, the conflictover value that had been growing in the art world sincethe end of the 19th century developed into our currentpostmodern state of affairs, where the dominance ofany single theory, genre, or form is questioned. Whilethe rules defining excellence in art were becoming moreconfused and contested, the number of people makingart was increasing dramatically. More and more peoplewere making art to sell to the fewer and fewer peoplewho felt confident that they knew what to buy.
U.S.
art moved from the fringes of "bohemian" lifetoward the center of middle-class values during thepost-World War II period. Sharon Zukin pointed outthat high prices for the few successful artists' work
"en-
abled them for the first time in history to make a livingoff a totally self-defined art" (1982:96). Zukin cited theartist Larry Rivers, who said, "One could go into art as acareer the same as law, medicine, or government" in theearly 1960s (1982:97).
6
The sales prospects for art seemedso rosy that the avant-garde dealer Samuel Kootz put
on
exhibitions of paintings at Macy's and Gimbel's depart-ment stores (Marquis 1991:235-236). Even Sears andKorvette's (a discount store in New York City) tried tosell art between 1966 and 1971 (Zukin 1982:99-100).Zukin argued that art had become a part of middle-class
life.
Artists "saw the same world that the middle classsaw: a 'continuous past' made by rapid social and tech-nological change, the passing of industrialism ... and
a
mass production of art objects and cultural standards"(1982:97).By the 1990 census, 213,000 adults in the UnitedStates identified themselves as "painters, sculptors,craft artists, and artist printmakers." Between
1970
and
1990,
the number of artists increased by 145 percentwhile the number of those in professional occupationsat large increased 89 percent and the number in all jobsincreased 55 percent. An increasing number of artistshad higher education. By 1989 there were 1,146 institu-tions in the United States offering bachelor's degrees invisual and performing arts, and
362
institutions offeringmaster's degrees.
7
Between
1970
and
1989,
these institu-tions graduated 733,099 students with bachelor's de-grees and 157,982 with master's degrees in the visualand performing arts. Of these I estimate that
42
percentof the bachelor's (307,900) and 33 percent of the mas-ter's (52,134) degrees were in the visual arts.
8
On an
an-
nual basis, this is an average of around 16,205 bache-lor's and 2,744 master's degrees in the visual arts alone.
9
The increase in educational opportunities was par-alleled by museum construction. More than 2,500 newmuseums opened between 1950 and 1980 (Marquis1991:275). Fifty-eight percent of 749 arts organizations
of 00

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