Left to right: Estate of Pablo Picasso/Artists Rights Society, New York, via Christie’s; Sotheby’S/European Pressphoto Agency What explains the quick return to confidence in the art market?
This month, a painting by Picasso, “Nude, Green Leaves and Bust,” became the most expensive painting ever sold at an auction when it exceeded expectations to fetch $106.5 million at Christie’s. In February, a sculpture by Giacometti, “Walking Man I,” sold for $104.3 million at Sotheby’s, setting the previous world record auction price.
What accounts for these auction prices? Are investments in trophy art any different from investments made in an office park or a sports team?
- Denis Dutton, professor of philosophy of art
- Eileen Kinsella, editor of ARTnewsletter
- Donald Kuspit, art historian
- Kathryn Graddy, economist
Beauty Should Be Expensive
Denis Dutton is a professor of philosophy at the University of Canterbury, New Zealand. He is the author of “The Art Instinct: Beauty, Pleasure, and Human Evolution” and the editor of Arts & Letters Daily.
Generally speaking, art is a poor long-term investment. Though the popular media concentrates on a tiny class of aesthetic objects that have risen spectacularly in price — like Van Goghs or Picassos, for example — most works of art tend to decline in value from their first point of sale.
Why is it acceptable to pay $100 million for an ugly building, but a scandal to pay the same amount for an object of enduring beauty?
The fundamental aesthetic expressivity of works of art is delivered to audiences in very different forms. Literary works are words strung together in order to be cheaply reproduced and sold in large numbers. Although there is a market in first editions and, rarer still, original manuscripts, anyone can fully enjoy the aesthetic experience of “Pride and Prejudice” by reading a dog-eared paperback.
While music, drama and dance offer audiences the frisson of live performance, they are also endlessly replicable — and pleasurable — in recordings and films.
Paintings and sculptures remain the locus of yet another kind of value. A painting is in principle the singular physical product of an individual artist’s hand and mind. Its complex textures and color gradations will likely make it impossible to trust the accuracy of any reproduction. As we see it today, “Nude, Green Leaves and Bust” is, down to exquisite detail, exactly what it is because of Picasso’s skill and expressive power.
Art That’s Recession-Proof
Eileen Kinsella is the editor of ARTnewsletter. She is a regular contributor to ARTnews.
In the summer of 2008 when the financial crisis was reaching its height, collectors, auction house experts and dealers were nervously wondering how and when the art market would be affected. A few months later, they had their answer when high-ticket items — like a $25 million Van Gogh — were left unsold on the auction block, volume dropped sharply, and buyers retrenched.
‘A small number of international buyers are willing to spend lots of money on a very small number of objects.’
The overall total for the spring 2009 auctions of postwar and contemporary and Impressionist and modern art was $421.2 million, a sharp drop from the $803.3 million total of fall 2008 and an even sharper drop from the $1.6 billion of 2008 spring sales. It was the lowest total in seven years, and a clear sign that the economy was weighing heavily on the art market.
However, not everyone saw this as a bad thing. Longtime collectors had become frustrated with the intense — often frothy — competition for both established blue-chip masterpieces by Picasso, Matisse and Rothko, as well as for contemporary art such as work by Jeff Koons and Richard Prince.
One collector complained that he had gotten tired of “paddle elbow,” a joking reference to tennis elbow about intense competition in the auction room. Another said he couldn’t wait for the market to correct itself because he was going to go shopping.
The New Equities
Donald Kuspit is the distinguished professor of art history and philosophy at the State University of New York at Stony Brook. His most recent books are “The End of Art” and “A Critical History of Twentieth Century Art.”
The huge sum of money conferred on a Picasso painting and a Giacometti sculpture accords them great significance — not because they’re major works of modern art, but because they’re very good investments.
The brand name is the high-priced, desirable, one-of-a-kind commodity, not the work.
Long before the economy almost collapsed a year ago, art-savvy people argued that works of art are the new equities: one can make more money in the art market than in the stock market. The value of Picasso and Giacometti kept increasing while the value of General Motors and General Electric decreased. Stock prices go up and down, but the stock of certain artists keeps going up.
Why? Is it because their works are unique, making them prized possessions, or because they were avant-garde innovators, not to say geniuses? The answer has less to do with the artists’ achievement and more to do with the fact that people are buying the brand name and getting the work along with it.
The name is the high-priced, desirable, one-of-a-kind commodity, not the work, which has a certain incidental relationship to it. This has to do with the celebrity culture: artists have been absorbed into its spectacle. Their creativity has been appropriated by it, making every celebrity seem like a great artist in the making, and every artist a celebrity in the making, aspiring to make spectacular art.
A Sound Investment: Cultural Assets
Kathryn Graddy is an associate professor of economics at Brandeis University.
The art market is alive and well. Should we be surprised? Frankly, there are not a lot of other attractive assets out there. Yields on Treasury bonds are at all time lows, the current risk-reward profile of the stock market appears to be less than ideal, and gold prices are at dizzying heights.
Frankly, there are not a lot of other attractive assets out there.
The recent record-breaking prices fetched at auction for blue-chip artworks reflect this sentiment. Giacometti’s “Walking Man” and Picasso’s “Nude, Green Leaves and Bust” are both well-recognized and lasting creations. Even if many art critics complain that Picasso’s Nude is not one of his best, the painting is still a well-known piece by a famous and innovative artist.
The buyer of this work has invested in an asset that could act as a store of value both in the presence of inflation and general economic uncertainty. This buyer will also receive dividends in the form of enjoyment and recognition — among friends if not the public.
Where is the money coming from? At the time of these art sales, stock prices had risen sharply from a year ago. Many savvy investors have had an exceedingly good year, and the correlation between equity returns and the art market is well documented.
While many people may be in economic distress, the very top echelon of wealthy individuals are doing just fine, and it is this very top fraction of the distribution that drives this end of the art market.
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