The commodification of the contemporary art market

By Felix Salmon
March 7, 2012
post about the commodification of Gerhard Richter came from Marion Maneker, who accused me of "serious lapses in logic and intellectual judgment", not to mention "sloppy thinking and a poor grasp of the art market", without ever really coming out and saying what I was meant to have got wrong.

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One of the odder reactions to my post about the commodification of Gerhard Richter came from Marion Maneker, who accused me of “serious lapses in logic and intellectual judgment”, not to mention “sloppy thinking and a poor grasp of the art market”, without ever really coming out and saying what I was meant to have got wrong. Instead, he confined himself to dropping this cryptic comment:

Valuable art is valuable because it has become a currency, not a commodity. No one suggests that gold is a “better” metal because it is accepted as currency. It simply fills that role.

This, of course, makes no sense at all. Currencies are things that you use to pay for other things; commodities are things that you buy. If art is going to be one or the other, it’s going to be a commodity, not a currency. But on Twitter, Maneker doubled down.

Anything used as a medium of exch = currency. One uses a Richter Abstrakt to “buy” all sorts of things that mere money cannot @felixsalmon
Mar 06 via Twitter for Mac Favorite Retweet Reply

Being unfamiliar with the use of art “as a medium of exchange”, I asked for an example. And Maneker responded with an extremely bizarre blog post entitled “Art as a Currency“.

In his new post, Maneker makes the rather banal point that if you buy a painting (for old-fashioned cash), then you don’t just get an object to put above the fireplace, you also get cultural cachet. Or, as he puts it, “access to an emerging social class of global capital”. So far, so good. But then we get this:

Richter has emerged as an artist whose work can be used as social currency to join that class. Because it is a widely used currency, Citibank is providing a legitimate service to its clients when it advises them on the value of that currency. In that sense, commenting on Richter’s Abstrakt paintings is no different to giving guidance on the Swiss Franc. I may buy Swiss Francs as an investment or I might be moving to Switzerland for a few years or just a few months. Each of those scenarios will require different decisions on my part but I am still informed by an report on the Swiss Franc.

But here’s the thing: as Maneker himself says, a currency is a medium of exchange. And in trade, or exchange, you have to give something up in order to get something else. If I want a ham sandwich, I have to pay $4. If I want a mid-market Richter, I have to pay $4 million. The Richter, or the sandwich, goes one way; the currency goes the other.

When Maneker is talking about “social currency”, however, there’s no exchange at all. If I use my Richter to join a class of Richter collectors, that costs me nothing. I pay for my Richter with dollars, and my new-found social fabulousness comes for free. Or, if you’d rather, I pay a couple of million dollars for the prestige associated with owning a Richter, and the painting on the wall comes free. Either way, the painting itself is not the currency — it’s not something I need to give up in order to buy something else. Quit the opposite.

Maneker does concede that commodities (like cigarettes) can be “used as currencies” (in, say, prison). But even then, you have to give up your holding of your commodity — your cigarettes — if you want to get something else in exchange. If I just want to impress my friends with the size of my Richter, however, I don’t need to give it to anybody.

The Swiss franc has intrinsic value: it is used, in Switzerland, to buy stuff. More to the point, there is a vibrant foreign-exchange market where billions of Swiss francs are traded for dollars, and vice versa, every day. The value of a Swiss franc can be pinpointed with extreme accuracy: right now, for instance, it’s $1.0911. And every Swiss franc in the world is worth exactly that much. The jargon term is that the Swiss franc is fungible. So when Maneker says that “Richter’s paintings are not fungible”, he’s actually giving a reason why they’re not a currency.

Commodities, by contrast, are different. They’re fungible — but only up to a point. Different weights of oil, different types of wheat, different grades of beef, sell for different amounts of money. And in the art world, you’ll notice that nearly all the most successful artists (financially speaking) now make art in series. Richter’s a prime example: his website even goes so far as to list them all in alphabetical order. (The “Photo Paintings” are subdivided into “Apples, Astronomy, Baader-Meinhof, Buildings, Candles, Cars, Children”, and so on, while the “Abstracts” are broken down by date, with a separate category for the Colour Charts. The Mirror paintings come under “Other”.)

Looking at art through an economic lens, where people rationally respond to incentives, this makes perfect sense: if you have works in series, they become increasingly fungible and interchangeable. That’s one reason why editioned works can be worth so much: there’s more of a market to mark them to. And it’s worth noting that Richter’s biggest series, the Abstrakt paintings, has also provided the majority of his most expensive works.

Maneker asks “whether the Abstrakt paintings are a commodity” — to answer it in the negative — shortly after starting a sentence with the phrase “If I buy an Abstrakt”. But the phrase answers the question: a world where you can talk about “buying an Abstrakt” is a world where “an Abstrakt” is something which has become commoditized. (Incidentally, I think the Abstrakt paintings are gorgeous; Maneker’s entirely wrong when he says I don’t like them. I love comfy armchairs as much as the next guy, and there’s nothing wrong with them at all.)

When I say that Richter has become a commodity, I’m not expressing “bigotry toward the very rich”, or “passing judgment” on them, as Maneker thinks — I’m just describing the way that the upper echelons of the art market work. It’s a place where artist-brands are instantly recognizable, and where the cognoscenti are largely incapable of looking at a work without mentally attaching a price tag to it. There are so many Warhols and Richters floating around the market that any Warhol or Richter can be valued pretty accurately at this point.

If a certain class of person walks into an apartment and sees a huge Richter, they’re going to know pretty much immediately how much that Richter is worth. If they see a medium-sized Old Master, by contrast, the financial value of the piece — not to mention its authorship — is much less obvious. As such, Old Masters are much less good at displaying the wealth of their owner than Warhols and Richters are. Which has to explain at least some of the reason why Warhols and Richters are so incredibly expensive.


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