I recommend a book called Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art for a more neutral take on the art world and why art prices are so high. It’s easy to just call it “money laundering” but I think that is a lazy answer.
Of the many reasons why the art world is the way it is, I think a few are particularly interesting.
One has to do with commodification: in the last few hundred years, nearly every type of thing has become commodified: photographs (via digital cameras and social media), furniture (IKEA, etc.), and now with AI, words and digital images. And yet – the art object really hasn’t become commodified. There is only one art object treated as the authentic Mona Lisa/Rothko No. 6/ etc. And so from a certain point of view, the art market is a recognition of this fact that certain classes of objects will become more valuable because they cannot be commodified. This makes them entirely worthwhile investments on their own terms and you don’t need a vast conspiracy to underpin that market.
Another interesting reason is how artists have somewhat merged with celebrities, which the Boom book covers. This started happening with Warhol but took off in the 80s. Artists are a kind of celebrity that instead of selling millions of books/concert tickets/music albums/etc., package all of their “fame value” into a smaller number of objects.
Art doesn't yield dividends or interest, the only way to make money with art is by selling it, this is not investment but speculation.
The point about commodification is interesting. There is some need for unique and expensive physical objects, but not as an investment, rather as a way of showing off and feeling wealth.
Valuable artworks are often used as collateral for loans and other financial instruments, so they can be used to make money.
There was a time when art, while hopefully pleasurable to own, was a non-performing asset financially. No longer. As the worlds of art and finance increasingly converge, leveraging art collections to unlock liquidity has become a healthily growing sector, according to its participants. There are two main groups of players: specialist lenders, who loan against art and other assets, and banks, who as part of their service will give loans to their clients, their art and other assets being the collateral.
Yes, you can't just sell it, you can also mortage it, to get money, which you can then invest in stock that pays dividends or bonds that yield interest.
Comments
I recommend a book called Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art for a more neutral take on the art world and why art prices are so high. It’s easy to just call it “money laundering” but I think that is a lazy answer.
Of the many reasons why the art world is the way it is, I think a few are particularly interesting.
One has to do with commodification: in the last few hundred years, nearly every type of thing has become commodified: photographs (via digital cameras and social media), furniture (IKEA, etc.), and now with AI, words and digital images. And yet – the art object really hasn’t become commodified. There is only one art object treated as the authentic Mona Lisa/Rothko No. 6/ etc. And so from a certain point of view, the art market is a recognition of this fact that certain classes of objects will become more valuable because they cannot be commodified. This makes them entirely worthwhile investments on their own terms and you don’t need a vast conspiracy to underpin that market.
Another interesting reason is how artists have somewhat merged with celebrities, which the Boom book covers. This started happening with Warhol but took off in the 80s. Artists are a kind of celebrity that instead of selling millions of books/concert tickets/music albums/etc., package all of their “fame value” into a smaller number of objects.
It started way before Warhol. Picasso and Dali were notorious self promoters.
Sure, self promotion goes back a long long time, to Dürer at least. I meant more in the modern sense of “celebrity.”
Art doesn't yield dividends or interest, the only way to make money with art is by selling it, this is not investment but speculation.
The point about commodification is interesting. There is some need for unique and expensive physical objects, but not as an investment, rather as a way of showing off and feeling wealth.
Valuable artworks are often used as collateral for loans and other financial instruments, so they can be used to make money.
There was a time when art, while hopefully pleasurable to own, was a non-performing asset financially. No longer. As the worlds of art and finance increasingly converge, leveraging art collections to unlock liquidity has become a healthily growing sector, according to its participants. There are two main groups of players: specialist lenders, who loan against art and other assets, and banks, who as part of their service will give loans to their clients, their art and other assets being the collateral.
https://www.theartnewspaper.com/2023/03/08/art-loans-spike-a...
Yes, you can't just sell it, you can also mortage it, to get money, which you can then invest in stock that pays dividends or bonds that yield interest.