Superstar prices would ruin artists’ integrity; superstar dealers “trample the morals of the market, treating an artwork overtly as a commodity, with status as well as investment overtones” (151). These dealers potentially further destabilize the art market, resulting in negative effects on everyone else.

That artists themselves would bear the brunt of the suffering as a result of lower prices was a feature, not a bug. True, these lower, more slowly rising prices for an artist’s work benefit collectors much more than artists. Prudent pricing would make artists more responsible. Velthuis also argues that “for most artists pricing prudently means that they cannot make a living form their work” (155). But for dealers, this moment of purification allowed them to re-establish control over art prices more broadly, and to do so within a moral framework.

There are parallels to the so-called Pain Caucus, so named because in the face of massive unemployment, these policy-makers and federal reserve chairpeople think that short-term deficits are the crises on which we should focus. There is a moral element here as well: that after the profligate borrowing and spending of the early ‘aughts, workers need to suffer some. Why it is workers who need to bear the brunt of this suffering, I leave to your own political imagination.

http://www.nytimes.com/2010/04/17/arts/design/17blacklisting.html?ref=design

 We usually grant a very special status to art and view its commodification as problematic. On the one hand, the market is supposed to feature the ocean of commensurability. On the other, the piece of art is viewed as the unique outcome of a singular mind. Besides, auctions bear a specific aura among the different forms of commodification. As a social event, there are meant to dramatize the adjustment between scarcity in supply and multiplicity in demand. The auction, it is assumed, has the magical power of fixing a legitimate price in the realm of uncertainty as opposed to the sell of mass production at a price set before any selling agreement is made. Hence, Charles Smith’s suggests a natural connection between auctions and art. He argues that uncertainty is so high about the value of singular art pieces that a public auction is necessary to give them a value.

There is something I really don’t like about this claim. It assumes that there is such thing as a transparent market where a company sets once for all the value of its widgets. In fact, what happens in art auctions is only the display of what secretly guides the marketing process of most things. The only difference is that according to the economic ideology, commodities are produced and sold according to a transparent, straightforward process. In the course of their design and marketing, coffee mugs or any other consumer product, just as art, encounter redefinitions about their value: they all have an awkward biography.

Such is, at least, the argument of Michel Callon. In the line of Bruno Latour re-consideration of material life, this French sociologist argues that every single product is individualized. There are not two customers who define the value of a product in the same way. The final sale of a product results from the process of adjustment between the properties of the object and the “world” of the customer. The purpose of selling in the auction is not to make up for the uncertainty about the object’s value but rather to meet the demands of a particular “world”, that of the art dealers who attend auctions, and the product. The auction is a redefinition, among many others, of the nature of the art piece, just as when you buy an apple you give it a new significance.

Thus, in my view, we would miss a point if we primarily saw the appraisers work as merely turning “singularity” into “commensurability”. The way I would see the appraiser’s work is a contribution to a process of integrating singularity into a good. It could be compared to the influence of the sales manager within a company over the existence of a technically innovative product. Why not shifting to this paradigm when talking about art rather than staying in the rather dry “art vs. market” dichotomy?

References
Charles Smith, Auctions: The Social Construction of Value
Michel Callon, “La qualité”, Sociologie du travail, 44 (2002), p. 255-287

In many ways, this is the inverse of someone like Damien Hirst,  Murakami, or Warhol, whose art is commentary on consumption culture by making it hyper-consumptive and hyper-marketable (and marketed). So if we are going to include art whose artistic value is that it is meant to be commodified, we should probably include its inverse.

Theoretically, I can see how this would work. IMHO, one of the main things that has to happen to art in order to achieve commoditization (I usually use that word interchangeably with commodification) is for it to be turned into something durable, alienable, singular, while still retaining its cultural value.

One piece of the 'formatting the market' puzzle

I have in mind how this works, in most cases it is simply that the object itself is both the art and the commodity. But these are really distinct things. In the case of a performance, the art is ephemeral and impossible to ‘sell’ (though we could of course sell tickets to the performance); so to make it salable, it has to be made into a video recording, and that could be bought and sold. Likewise street art – people chiseling Banksy murals off of concrete walls, for instance. It’s not that the art is not art when it’s performance, it just can’t be bought and sold in that form.

But someone like Bill Viola sells pieces for hundreds of thousands of dollars (that piece, Quintet of the Silent, came in at US$274,816). The description in the catalog read:

Video installation comprised of single-channel colour video on wall-mounted plasma display. 72.4 x 120.7 x 10.2 cm. (28 1/2 x 47 1/2 x 4 in).   This work is from an edition of five and is accompanied by a certificate of authenticity signed by the artist.

So theoretically, I would say yes and yes, that we can and should study art that cannot be monetized. Because it means that the ‘other’ art can be monetized, and I want to know how that works.

But (and there is always a but), how to do this? Practically and empirically, how would we incorporate tribal art or performance art or video art into the project? It seems that we might interview avant-garde art gallerists? Can we do this without bumping into the primary market/secondary market division? I’ve become more practical nowadays to say that we can only study it if its possible, but not to let perfect be the enemy of the good. How can we include this kind of art?

The aims of the project (and the course) is to understand how market intermediaries make markets possible. That is, what are the organizational, institutional, and cultural practices that make it possible for markets to look the way that they do? My initial aim is to see art specialists and art advisers/consultants as key agents in this regard. This is part of a larger aim to understand how appraisers of fine art, real estate, finance, all do their work. And how what appear as self-regulating, natural markets are a result of that work. For the most insider-y of readers, it is organizational sociology + cultural institutionalism + social studies of finance. These are the waters we ply.

The initial research proposal is available as .pdf or MS-Word document.

This week was our first ‘real’ class (as opposed to the intitial class, where I hemmed and hawed through most of it, trying to explain what I wanted and whether we would even have the class to begin with. Actually, scratch that. I say ‘um’, ‘like’, and ‘so’ terribly often in every class). In it, we talked about this proposal, what it contains, what it lacks. I am now revising it, but it seemed to me that there were a number of excellent suggestions. They focused on limits on the commodity itself, the key participants, and the differences between trying to predict prices and understanding how prices get ‘made’. Here are some of the more interesting things we’ve come up with:

First: What should be the limits or contours to the commodity we are studying?

We are torn, theoretically, between researching art that is close to ‘unique’ and art that is recognizable as art but leads us far afield. For instance, some art is endlessly reproducible: digital photographs, recorded music, even casts of sculpture, prints and posters. We are tentatively going to include photography but not music, include sculpture and ‘high end’ prints but not posters (Peter likes lithographs, but not posters; photographs but not postcards..what does Peter like?).

What we intend is to treat this as a puzzle – how do specialists and others turn the commodifiable (in the economic sense of largely reproducible) into either unique or quasi-unique commodities (in the sociological/anthropological sense of things that can be bought and sold)? We include photographs because we already know that there may be interesting work in making editions. Likewise sculpture.

We still have to ‘explain’ someone like Takashi Murakami, whose KaiKai Kiki project (to turn art into mass merchandise) seems to undermine the link between art as a cultural good and uniqueness. But this is a decision we seem to be OK with.

In the same vein, we intend to exclude collectibles from the project. That is, there are many things that are sold at auction at high-end art auction houses. But we do not want to study collectible guns or other kinds of craft art. There is something to take away from these things theoretically, for instance the ways ‘ordinary’ objects acquire provenance by way of their ownership by someone famous or ‘important’. And this is not a way to say that gorgeous 19th century furniture is not art. We may run into the difficulty here that Art Nouveau is painting and sculpture and jewelry and glass and architecture. But as a general guideline, we are studying art that conforms to broad categories and conventions of the field. Are there compelling reasons to include jewels and furniture?

Second: Who should be included?

Currently, I think we should include the intermediaries (specialists, advisors). Students think we need to talk to collectors as well. This is linked to the third main set of problems, that is, should we be trying to predict market prices for art or trying to understand the ontological make-up of art prices? If we want to understand why someone pays $104 Million for a Giacometti, we need to talk to collectors. But if we want to understand how markets work, maybe less so. In addition, collectors are challenging to find, where advisors, specialists, IRS appraisers, all work in organizations that are relatively stable.

On the other hand, Ana T. made a good case in class for either including the primary art market or at least including galleries as a venue for pricing re-sold art. I find Velthuis’ Talking Prices to be pretty convincing; but the front-room/back-room split that is evident in the avant-garde primary market is perhaps less so in galleries where re-sale makes up a significant percentage of sales. So perhaps auction specialists are too limiting.

Finally, we have some questions for specialists, some of which I have asked, others I haven’t. Sebastian wants to know what specialists have in mind when they value art. Is the specialist really thinking about the estimate as a price that commensurates across all kinds of art? What are the limits of this (I would initially suggest in my findings that they commensurate within categories, but not across them).

And what happened with that Giacometti? There the specialists were off by a factor of 10! What happens when estimates are very very wrong, either way too high or low? In other words, what can we learn from ‘failures’ to estimate the market prices?

Finally, Emily thinks we need to at least look at auction design, and the ways that the auction itself elicits the prices that people pay for fine art. This is ground covered pretty well by Charles Smith (in Auctions), and my own experience with actual auctions is that they are interesting for a bit but then quickly become a sublimely weird kind of boring. And the literature on auction design is both voluminous and dominated by experimental economists. Is this the best point of entry for us?

All in all, a productive class. I’m curious to hear what people think about what went right with the proposal and what is going wrong. Revisions to include some of these ideas are in the works. Comments are welcome welcome welcome!

Have a nice Friday, peoples!

I think the experiment is interesting, and I am deeply committed to understanding those brackish waters between the sweet rivers of culture and the salty sea of markets. But there are some flaws here that seem about to be brushed under the rug in favor of the ‘measuring the objective value of culture’ story line. First, a typical description on eBay looks something like this:

The final line reads:

Note: The significance of this object has been invented by the author; see SignificantObjects.com for details. (Winning bidder also receives a copy of Cintra Wilson’s story about this object. Opening price represents the free-market value of the object prior to its invented significance…

And to me, the implications of that last line is where this whole thing falls apart.

First, there is a small but real element of misdirection here. People come to the objects from two sources: 1) from eBay itself, and 2) from SigObjects, Design Observer, BoingBoing, or any number of other culturally-hip blogs/feeds/twitters.

For people in the first category, the item is listed under sporting goods > team sports > basketball > other. And the notice that the “significance has been invented by the author” is small and unusual enough to be unclear to some people coming to the object. So it may not be clear exactly what one is purchasing when one is bidding on the object. My guess is that this accounts for a handful of bids (and maybe not more).

For people in the second category, it is also mis-categorized. Because it should not be under ‘team sports’, it should be under Contemporary Art. This is where the project is something of a failure. Because for people coming to the object via the Significant Objects site or some other culturally in-the-know place, bidding on the object is participating in performance art, and purchasing the object itself is more akin to purchasing a piece of contemporary art.

It’s for the same reason that this is not a big plywood box of Cornflakes:

It would be unusual for us to subtract the cost of the materials Warhol used to construct this piece (silkscreen ink on plywood) from the hammer price of the piece ($482,500) in order to somehow acquire the ‘objective’ value of significance. Unusual because it implies a kind of hedonic pricing model: that the object’s overall price can be derived by combining prices of its individual attributes – cost of materials + time + signficance. And it is possible to do so, and to thus come up with an ‘objective’ value of significance. With these measurements, so far significant objects has created and measured significance that has increased market value by almost 2300%. But as Brayden once said a long time ago, in the art world hedonic value falls to something more like transcendent value.

There’s a longer comment about the validity of lots of alternative pricing models, which depend not so much on specific notions of efficient markets (sociologists’ favorite straw argument), but on the notion of objective value. In the meantime, I think the significant objects project is completely interesting, but well, not quite significant.

By contrast, finance has become enamored of quantification to an unexpected degree. Value at Risk (VaR), the now-ubiquitous way to measure market risk, volatility, and assess capital requirements for financial trading, is a quantified measure of commensurated risk. That is, the various conditions around different sorts of assets are transformed (and made comparable) via this quantified metric. Stocks, bonds, private equity, mortgages, consumer credit, currencies, all are transformed into risk-measurable assets.

But the problem with VaR has become somewhat evident in recent history, and there are some moves afoot to replace VaR with something…well, something resembling the ‘expertise’ and intuition-based measures found more often in the Art World than on a trading floor:

What should replace VaR? We should reintroduce the spirit behind the way we calculated risk before VaR took over on trading floors and in the offices of regulators in the early 1990s. That means using intuition and experience-honed common sense. It means accepting the principle that toxic assets should be considered riskier than liquid assets—and that fancy math and past performance can be deceiving predictors that often deliver a lethal dose of leverage. We need rules and risk committees that limit a bank’s “bad” leverage by requiring much more capital to cushion, say, a subprime collateralized debt obligation than to offset Treasuries. It’s time to give up analytics so that real risk can be revealed.

On one level, I’m astounded by the call to ‘give up analytics’ in order to reveal real risk. On another, it’s a reasonable shift away from quantification, and back towards a kind of ‘qualitative’ commensuration.

In art, the claim is more complicated – it is more visibly the case the confirmation of an artwork’s status by gallery owners, museums, critics, art historians, and the like create economic value, but it is also a field plagued by claims (particularly in contemporary art) that bullshit stuff gets turned into multi-million dollar stuff via elites. And really, who could blame you for that notion?

Andy Warhol's Corn Flakes: Tasty, yes - but $482,500 tasty?

Of course, it’s also the case that even the most elite/respected/assumedly able to ‘create’ value gallery owners (like Jeffrey Deitch) have gone bankrupt over their careers. If Larry Gagosian’s confirmation of an artist’s worth were truly the maker of economic value, that would not happen. In addition, this is not really performativity in the strict sense that there is not a claim about a theory that is made true in the implementation of that theory.

This is all by way of pointing to a fascinating website/project that has popped up recently, the Significant Objects project. Their goal is to see if they can create economic value by imbuing valueless objects with significance:

About the Significant Objects project
A talented, creative writer invents a story about an object. Invested with new significance by this fiction, the object should — according to our hypothesis — acquire not merely subjective but objective value. How to test our theory? Via eBay!

People buy thrift store and garage sale objects, and then pair that object with an author. The author writes a fictional story about the object, imbuing it with significance. The object is then sold on eBay, with the story as the description for the object. Results of the sale prices are then going to be posted on their site.

It’s interesting to see how this works, but what I like about it is the attempt to try to create and measure ‘cultural’ value’s effect on price. It’s not a perfect experiment by any means either, but I’m looking forward to seeing where it heads. What I don’t look forward to, frankly, is the endpoint when they say ‘see, this is all bullshit, and we’ve proven that you can make value out of anything!’ That point is inevitable, and I think, also wrong. The nuanced point that performativity folks often make – that you can’t make just anything true, that the world is not completely socially constructed, it worth keeping in mind here.

A work of art seems to be a hardier breed; it can be sold in the market and still emerge a work of art. but if it is true that in the essential commerce of art a gift is carried by the work from the artist to his audience, if I am right to say that where there is no gift there is no art, then it may be possible to destroy a work of art by converting it into a pure commodity. Such, at any rate, is my position. I do not maintain that art cannot be bought and sold; I do maintain that the gift portion of the work places a constraint upon our merchandising.

- Lewis Hyde, The Gift, pg. xviii

The crux of the issue is the difference between Adrian Gottlieb and Job Currin. The former artist is, arguably, technically superior to the latter, and yet Currin’s paintings routinely sell for a couple orders of magnitude more than Gottlieb’s. IMHO, the difference rests in Currin’s engagement with a perspective (sure, call this postmodern self-referential irony if you like), while Gottlieb’s interest is in making art that feels powerful in its representation of women’s form and leaves it at that. Why the first is fancy high art and the second is merely technical illustration is an excellent question.

Once you start to try to gauge the art world by making arguments over the content of the art itself, you may find yourself with very few solid foundations – this is the insight from Howard Becker’s Art World’s (among others). But there is something about the willingness to argue over art content and not just art conventions that feels meatier and healthier than the more distanced sociological approach (an approach I often take myself and find completely useful, to be honest).

In addition to the wonderful comparison in the post, read the comments, moderated by IA’s David Apatoff. They are for the most part thoughtful and extend the thinking of the original post – something comments don’t often do.

The sale was significant for a few reasons. First, it is the first time a major contemporary artist has bypassed the dealer infrastructure and gone for sale straight to auction. Usually, auctions are reserved for the ‘secondary’ or ‘re-sale’ art market, while dealers were the primary art market. But the 223 works that Hirst put up for sale is a pretty remarkable attempt to transform the conventional means for selling art. Second, the sale began the Monday after the weekend Lehman went bankrupt and Merrill Lynch was swallowed by Bank of America. And third, the sale was a white-glove affair – all lots sold – for $200.7 million, over the high estimate of $177.6 million.

There is more to say about this sale, but for now this has to stand in as a marker that it’s something to come back to. When Takashi Murakami goes straight-to-auction next, and then the primary/secondary art markets distinction collapses, and the art world goes through an institutional shift, we might be looking back at this as, you know, important. Or, not.

Burned Art and Murakami from Peter Levin and Jennifer Lena on Vimeo.

Our tech is still low, but hopefully getting better (it looks better when it’s on Vimeo and not embedded). And we are again deeply hoping for some comments, reactions, and thoughts. And our first video is still around as well, if you are interested in seeing where it began.

Well, they created a foundation for promotion of avant garde arts, and as part of this they burned a million quid of their own money. Here is the documentary, in 6 parts. The burning is in part 2:
part 1
part 2
part 3
part 4
part 5
part 6

By most measures at the time and since, this act was an artistic and social failure. Wikipedia has more. The question is, what made this sad and gross, and not art?

Second, here are some lovely physical representations of graphical social data. As sculpture.

Consumer Confidence, 2006-07, brass, wood

Of course, I would not necessarily trust the social science chops of an artist (when I ran the numbers, it looked more like:

Consumer Confidence, 2006-7, real data

With the sheer abundance of galleries, auction houses, and art fairs in Chine, the larger art world is recognizing the power of the Asian market. Standing in an auction house in New York or London watching paintings by Chinese artists sell for millions, one can grouse about this boom and hint that it will turn out to be a bubble. But strolling in a bustling gallery district in Beijing, with students and turists crowding the cafés and boutiques and filling the huge art showrooms, few would predict a downturn in the near future.

No, I’m sure sky-high prices for Chinese art in a time of global slowdown, acute financial uncertainty, and a search for uncorrelated non-real estate risk could not possibly signal a bubble. Unfathomable! I mean, nobody expects the Spanish Inquisition.

If you have thoughts, we’d love to hear them, but we hope you’ll be at least a little kind – this is one of those situations where your self-identity as brutally honest should not trump your self-identity as gracious.

And the links to the videos we reference: Fashion File: Making an Hermes Bag, and Contemporary Art Preview

Art and Markets 1: Selling Crafts and Art from Peter Levin on Vimeo.