JJ Charlesworth on Why the Art Market Is a Bubble That’s Not Going to Burst
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Analysis
JJ Charlesworth on Why the Art Market Is a Bubble That’s Not Going to Burst
Why the art market is a bubble that's not going to burst.
Kazimir Malevich,<br>Suprematism, 18th Construction (1915) at Di Donna Galleries' "Paths to Abstraction" Courtesy Di Donna Galleries
JJ Charlesworth
Jul 6, 2015
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After a reportedly lively and lucrative Art Basel last month, London’s auction sales showed that the secondary market for twentieth century art is firing on most, but not all, cylinders: while Sotheby’s Impressionist and Modern art sale netted £178.6 million or $282 million—the second highest total for any auction held in London—Christie’s less inspiring sale still managed to pull in £71.5 million, or $112.9 million.
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And yet these were modest by comparison with the staggering Christie’s sale in New York in May where record prices were paid—$179.4 million or £114.23 million for Pablo Picasso’s Les Femmes d’Alger and $141.3 million or £89.97 million for Alberto Giacometti’s l’Homme au Doigt.
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The art market’s apparently unstoppable upward spiral has become an almost normal phenomenon, and many commentators have all but given up speculating on whether or when it might come crashing down. It’s easy to get tangled in the impenetrable intrigue of the secondary market—with its buy-ins, third party guarantees, buyers premiums, and the rest of the bizarre lore and shadiness of the business—while the old notion of the art market “bubble” seems no longer to offer a reliable dose of periodic schadenfreude for those who like to see the very rich lose their shirts.
But in reality there’s little reason to believe that the art market will see the same crashes it has experienced over the last thirty years, and last week’s London auctions hold some of the clues to why.
Sotheby’s headquarters in New York.<br>Photo: Courtesy of Sotheby’s.
First off, we’re seeing the steady establishment of high modernist art into the accepted canon of what’s desirable at auction, particularly with previously “difficult” abstract art such as Kazimir Malevich’s Suprematism, 18th Construction at Sotheby’s London.
Those kinds of sales show that the first half of the 20th century is now increasingly seen as culturally and intellectually serious and lasting in its reputation as important art—the big touring Malevich retrospective at the Tate, Stedelijk, and Bonn’s Bundeskunsthalle last year didn’t hurt in cementing Malevich’s reputation, after all. Modernism is now completely uncontroversial, and collectors are keen on the strength of its brand.
But as illustrated by the contrast between the mega-sale of Picasso’s Les Femmes d’Alger in New York and the stuttering sale of a late Picasso portrait in London, even in an established name in an established field, buyers discriminate between the merely rare and the truly, seriously, excruciatingly rare.
Of course, when you’re billionaire hedge fund manager Steve Cohen, having the most sought-after Alberto Giacometti for your collection is worth the $141.3 million. But while such prices are all about an artist’s reputation, about the quality of the work and so on, in reality reputation means nothing without scarcity, and scarcity does one important thing in the art market, against which everything else is incidental. Scarcity guarantees the “store of value” effect, and “store of value,” in a world of increasing global prosperity is what the increasingly global super-rich are really after.
You might be about to download some of the greatest movies in the history of the world for the price of a beer, but great art is different. Scarcity counts.
Kazimir Malevich Suprematism, 18th Construction (1915).<br>Photo: Courtesy of Sotheby’s
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