The art market: just as absurd as the banking crisis

By Felix Salmon
October 5, 2011
Gerhard Richter, for one:

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You work hard, have a long and storied career, rise to the top of your profession, and become a multi-millionaire by doing so. How many people, in that situation, will say that the amount of money they’re being paid is “absurd”, “impossible to understand”, and “daft”? Well, Gerhard Richter, for one:

“It’s just as absurd as the banking crisis,” said the 79-year-old German, speaking to reporters on Tuesday at the press launch of a major retrospective of his work opening at London’s Tate Modern.

“It’s impossible to understand and it’s daft,” he added, speaking through an interpreter.

Asked how he thought the art market had changed in the last few years, he replied in English: “It became worse.”

Are there any bankers out there who feel this way? There must be, surely, somewhere — people pulling down seven- or eight-figure salaries, who think that it’s simply ridiculous to imagine that they’re really “earning” that kind of money, or adding that kind of value to the world. At least Gerhard Richter can point to his luminous paintings as an obvious example of how he’s making the world a better place. It’s hard to do anything similar when you’re structuring CDO-squareds.

One thing that bankers and painters have in common is that their services are Veblen-like: the more expensive they become, the more demand there is for what they do. Someone like Adam Lindemann who would evince no interest in an artwork priced at $500 can suddenly become very eager when it’s $500,000. And the phrase “reassuringly expensive” might have been designed to reflect the pricing strategies of banks looking to provide M&A advice to CEOs.

And in art, just like in banking, a healthy ego is often necessary if you want to become wealthy and successful. But occasionally, someone like Gerhard Richter is at least willing to come along and say that the whole market has gotten ridiculously out of hand. According to Artnet, 151 works by Gerhard Richter have sold at auction for more than $1 million, and ten have sold for over $10 million. In 2011 to date he’s already reached $92,412,177 in auction sales, and we haven’t even had the fall auctions yet.

Those sums didn’t go directly to Richter, of course — but they certainly helped to drive up the prices of his new works, which aren’t reflected in the Artnet database. And it is a bit silly: he puts the same amount of effort into creating a new work now as he did decades ago, but now is paid millions for each one. Couldn’t that money be put to better use buying less expensive art?

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Comments
4 comments so far

Isn’t it a wonderful thing when too much money is chasing to few goods, while at the same time the other 99% are struggling to get by, a month’s salary away from bankruptcy? http://www.nakedcapitalism.com/2011/10/o ne-third-of-americans-one-paycheck-away- from-homelessness.html
But anyway, let’s not begrudge the buyers of such wonderful art works the feeling that they’re buying something “really expensive” when the primary reason it’s so expensive is simply because they’re making too much money to still have places to “invest” it in. Because that would be ‘socialism.’

(If only these twits understood the way money worked… Though I suspect they also just really enjoy feeling like they’re richer than other people.)

Posted by Foppe | Report as abusive

Felix, consider retiring the word “banker”. These people are anti-bankers. Bankers lend money to borrowers based on credit and other underwriting. Bankers manage deposits and have fiduciary obligations to depositors and community obligations as well. Anti-bankers trade stuff. They bet. They are traders, not bankers.

I think the public image of the financial industry would be more realistic if we started referring to these people as they are: traders, speculators, not bankers.

Posted by jomiku | Report as abusive

The income earned by artists like Richter is an effect of the warped distribution of income and wealth, not a cause. As wealth accumulates in a smaller segment of society, they have more money to spend on luxuries, which drives the price of those luxuries up. The art world (at least the small segment at the top) is not a contributor to this distortion, it just benefits from it.

I would expect most of the people in the financial industries (I will avoid calling them bankers) who receive 7-,8-, and 9-digit incomes believe that they have earned it. They played according to the rules (well most of them did), and that’s all they need to justify their reward. The don’t care about anything else. The problem is the rules are either ineffective or not enforced, and lead to an economy where there is no correlation between value provided and compensation. Those who benefit from the lack or rules or regulation use their inordinate wealth to insure the rules are not changed or enforced more thoroughly, by lobbying not just politicians, but the illiterate and uninformed poor and middle class that they, too, should also oppose rules and enforcement.

Posted by KenG_CA | Report as abusive

Richter has been my favorite artist for years. Personally, I believe he is this era’s Picasso. He has invented numerous forms of art and transformed abstract expression. I think it is wonderful that an artist gets to realize the value of the great work they create, while they are alive. It is all too rare.

Is any painting worth millions of dollars? Like anything, it’s worth what the market will bear, and his work is not high priced because it is “reassuringly expensive”. It’s high priced, because he evokes expression like few others, and in some cases, like no one ever has. Why should there not be an artist that is a billionaire? He makes millions of people feel better and as a result the world is better for it.

Richter will get richer.

Posted by netvet | Report as abusive
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