Art Market Report, 2007

One of the most persistent art-market trends during the last decade has been the pooling of ever-greater amounts of wealth at the top end. This phenomenon has been paralleled by the comparative stagnation of the middle market. (“Middle market” is a concept that is relative to the price points that prevail in a given collecting area; for example, a mid-level watercolor by Egon Schiele still costs considerably more than a top-tier watercolor by “outsider” artist Henry Darger.) At the same time, an investment mentality has created a feeding frenzy at the bottom of the market, as collectors compete for works by “hot” emerging talents, only to quickly drop the artists when they do not pan out. For those who remember a time when the art world was a slower-paced, smaller place, this new market feels unhealthy and aberrant. Yet while the current art market has its weak spots, the insular, narrowly circumscribed art world of yore was surely no less flawed. For better and for worse, globalization and its concomitant reshuffling of wealth are transforming the art scene.


At a time when monetary and aesthetic values have seemingly become inseparable, the emblematic event of 2006 may well have been Ronald Lauder’s purchase of Gustav Klimt’s Portrait of Adele Bloch-Bauer I for a reported $135,000,000. The Klimt was, for a few months, the world’s most expensive painting, until its price was topped, in November of the same year, by the sales of a Jackson Pollock and a Willem de Kooning for $140,000,000 and $137,500,000 respectively. Yet the Klimt purchase generated far more media furor than the Pollock and de Kooning purchases, for a number of reasons. First of all, the Klimt’s price represented a greater jump from that of the pervious record holder, Picasso’s Boy with a Pipe, sold for $104,200,000 in 2004. And the Klimt, which had been restituted to the sitter’s heirs after a seven-year legal battle with the Republic of Austria, was a media star long before it was sold. Nonetheless, both in the U.S., and more surprisingly, even in Austria, there was a feeling among some critics that, while a nine-figure sum might be appropriate for a painting by Picasso, Pollock or de Kooning, this was an unseemly amount to pay for a work by Gustav Klimt. Lauder was accused of practicing checkbook art history, using his personal wealth to confer unwarranted importance on an allegedly minor artist.


However, at a time when collectors with unprecedented financial resources are spending unprecedented sums to acquire “trophy” objects, the price paid for Adele Bloch-Bauer I makes perfect sense. In fact, before too long, it may come to seem a bargain. The pertinent comparison is not one between the relative art-historical importance of Klimt and Picasso (or Pollock, or de Kooning), but rather between the relative importance of this Klimt and the three other nine-figure paintings. Adele Bloch-Bauer I is one of the iconic paintings of the early twentieth century. Almost all the comparable masterpieces by Picasso and others of the period are in museum collections and will never come out. But for the extraordinary circumstances of Holocaust-related restitution, Bloch-Bauer I would have remained permanently in the collection of the Österreichische Galerie in Vienna, where it had hung since 1941. Adele Bloch-Bauer I is probably the ultimate trophy painting in a trophy-obsessed world, and its like will probably not come to market again soon, if ever.


Amazement at the one-hundred-and-thirty-five-million-dollar Klimt stems from ignorance of current market dynamics, but the disgruntlement expressed by some journalists reflects a deeper dismay at the shifting balance of power in the art world. Increasingly today, art-world priorities are established not by critics, art historians and curators, but by collectors. Lauder’s purchase, after all, was not made in a vacuum; for some years now, broad-based collector interest has pushed Klimt and his compatriot Egon Schiele to the top of the modern-art market. But American universities and museums for the most part still stick resolutely to the art-historical narrative established during the Cold War period, concentrating chiefly on modernism in France and the U.S. Artistic events in countries that were, at any point in the twentieth century, enemies of the U.S. (e.g., Austria, Germany, Italy, Russia) are relegated to the sidelines in the academic discourse. It has been left to collectors to evolve a more objective approach to the development of modernism, one that acknowledges major contributions across the European continent. The positive results of this trend are exemplified by Lauder’s Neue Galerie New York, a museum that augments the efforts of the Museum of Modern Art (an institution also generously supported by Lauder) by showcasing Austrian and German art in a manner that MoMA neither could nor would.


But not all the results of a collector-driven market are positive. For the past century or so, the art world has been supported by four principal pillars: artists, collectors, dealers and the art-historical establishment (critics, academics and curators). From a wider historical perspective, the latter two entities are relative newcomers. The development of art history as an academic discipline, and of public museums, dates back only to the nineteenth century. Only in the twentieth century did dealers evolve from passive shopkeepers to proactive impresarios, promoting the often difficult efforts of the pioneering modernists with missionary zeal. Public resistance to modernism, coupled with the pressures of international capitalism, gave new importance to dealers and museums, both of which played key roles by superintending the distribution of new art and ratifying its seriousness. At varying points in the course of the past hundred years, the weight of the art world has shifted from one of the four pillars to another. Artists made the modernist revolution; dealers recognized and supported it before academia did; in the postwar period, critics became so dominant that Tom Wolfe lampooned their influence in his 1975 book The Painted Word. Over the long term, however, art-historical value is determined by consensus among all four art-world pillars. When any one of the four entities assumes disproportionate power, there is a danger that this entity’s personal preferences will cloud everyone’s short-term judgment.


Put bluntly, the danger of a collector-driven art world is that money will trump knowledge. Great collectors should ideally become nearly as knowledgeable as the curators and dealers who help them build their collections. But not all of today’s collectors have the passion or the time necessary to develop this depth of knowledge. Collecting, once the pursuit of a relatively small number of driven individuals, has become far more common among far more people. This expansion of the art market, made possible by the broader dissemination of concentrated pockets of wealth and by the globalization of art and related information, has drawn in players who do not have the focused commitment of the traditional collector. The exponential growth of the market, and the genuine gains realized by those who got in early, inevitably fuel the tendency, justifiable or not, to view art as an asset class comparable to stocks or real estate. Art has also become the greatest common denominator in the new global social order. Today’s rich are an international elite whose members can measure their cachet by the level of VIP services given them at Art Basel and Art Basel Miami Beach. Anointed by the glamour that today attends the public display of great wealth, the art world has acquired the patina of trendiness that was formerly exclusive to the entertainment and fashion industries. The contemporary focus on trendiness and investment potential, each of which operates on a relatively short timeline, obscures the fact that lasting value in art accrues over the course of generations.


The corollary to a collector-driven art world is that the canon of ostensibly great artists is being largely determined by market forces. The huge prices that have been achieved lately at the top of the market are the result not only of new concentrations of wealth, but of the fact that many people are pursuing the same handful of artists and artworks. This is why the drop-off from the peak can be so steep, becalming the middle market and consigning lesser works and lesser artists to also-ran status. This is a market with a voracious appetite for alleged masterpieces, and little patience for historical or developmental nuances. It encourages superficiality: rather than collecting a single artist or group of artists in depth, collectors now often prefer to amass scattered masterworks: here a Matisse, there a Picasso, and then perhaps a Schiele. In an overheated environment, the art-historical establishment often finds itself chasing rather than guiding the market. The press must keep up with the latest trends, and coverage of social events and record prices often takes precedence over quiet critical reflection. Museums need the support of trustees, but the most powerful collectors no longer need the imprimatur of an existing museum.


If it sometimes seems that the art-historical establishment is missing in action, this is in part because, while the market has been aggressively constructing a new canon, academia has been busy deconstructing the old one. For several decades now, scholars have generally agreed that the white, male, Eurocentric canon that traditionally dominated Western art evolved from historical biases that are no longer morally or intellectually justifiable. Although this change in orientation has literally opened up a whole new world of aesthetic possibilities, it has discouraged academics from making qualitative judgments. Scholarship in areas that are useful to the marketplace, such as provenance and authenticity, has flourished, but overall connoisseurship has declined. Similarly, market pressures push dealers to become generalists, showcasing a hodge-podge of high-ticket items instead of specializing as they formerly did. Auctioneers, operating within a timeframe that seldom extends much beyond the next sale date, focus most of their energies on the highest priced lots. Novice collectors, justifiably wary and insecure, engage consultants who often know far less than the dealers and auctioneers. At every level of the art world, deeper knowledge and principled guidance seem to be in short supply.


There are no quick solutions to these problems, because they reflect an imbalance that can only be corrected over time. Such imbalances do, eventually, tend to self-correct. Current trends will fade, and inevitably many of today’s “hot” contemporary artists will recede into obscurity. Areas that were bypassed in the recent rush to the top may well come to seem far more interesting than they do now (not to mention more affordable). New standards and approaches will evolve for dealing with a more egalitarian, globalized art scene. In the meantime, our advice for collectors and would-be collectors is unchanging: Buy art because you love it. Educate yourself. Seek advice and guidance from experts, but don’t cede all decision-making to an advisor. Go to exhibitions at museums and galleries, go to art fairs, go to auctions, read, do your own legwork. Maybe the art you buy will prove to be a sound investment, but even if it doesn’t, at least you’ll have fun.