Manipulation and gamesmanship in the art market
I recently gave a speech in the form of a review of Tom Wolfe’s The Painted Word. I am scheduled to present another speech about what has happened in the world of art in the fifty years since.
Wolfe’s thesis was that what is said about an artist, or a work of art, affects its value more than any of its technical aspects: theme, composition, balance, symmetry color, brushwork, fidelity to real objects, and so on. The things that are written about the art include the novelty of its theme and production, the social trends embraced by art critics and connoisseurs, and the extent to which the artist’s life challenges society’s norms.
Wolfe does not address price manipulation. I expect that it also plays a major role.
Every investor is familiar with market manipulation. Sometimes it is transparent and well reported, as when the Hunt brothers attempted to corner the silver market in the late 1970s. More often it is covert and not widely reported, such as the government schemes to control the price of gold, which date back to Roosevelt and became more pronounced during the days of the London gold pool leading up to Nixon’s repudiation of the gold standard in 1971.
The fact that world governments and central banks have continued to manipulate gold, silver and platinum in the half-century since, in an attempt to make their fiat currencies a more attractive alternative, has become quite widely discussed. Cryptocurrencies are now manipulated as well.
Manipulation takes many forms. OPEC manipulates oil prices. The Trump administration, in coordination with Saudi Arabia and other players, is manipulating it today, to Russia’s disadvantage. Short sellers manipulate the price of artificial intelligence unicorn stocks. Real estate prices are manipulated by restrictive zoning and permitting processes.
Now, what about art? Many big players have a keen interest in the price of art works. Philanthropists want to appear generous, especially when claiming tax deductions for charitable contributions or bragging about their generosity. Art galleries, which take a percentage of art works they auction, are keenly interested in encouraging higher bids. Critics’ reputations ride on the success of painters they discover and lionize.
It looks to me like prices for artworks have to represent something other than intrinsic value. Jackson Pollock is an example. Here are the top average prices at auction for his works through a twelve-year period.
And here is what a duck-duck-go search (though I try to avoid Google, I’m sure it is theirs) brings up for Jackson Pollock images.
Many questions come to mind. How could one of these oeuvres be worth twenty times as much as another? How in the world can any of them be worth fourteen million dollars? It defies common sense. Why have Pollock’s works sold for many times more than anything by Picasso, Degas or Toulouse Lautrec over this period? Have our tastes become that degenerate?
Please consider, for purposes of comparison, this piece by a Dutch artist, whose name in purple in the lower right I cannot even make out, which has hung on my wall for fifty years. Considering the above-mentioned factors, theme, composition, balance, symmetry color, brushwork, fidelity to real objects, and so on, to me it is vastly superior in every respect to Pollock’s drippings from cans of oil.
My conclusion is that investing in art is a matter of game theory. You have to understand who is doing the manipulation, why they are doing it, and which direction they are nudging things. There are lots of people writing knowledgeably on these topics as they relate to precious metals and crypto. I’m not going to put a toe into the art world waters without knowing a whole lot more about who its players are. Unless I happen to like looking at the piece. As I do this one, and another piece I recently bought for Zoriana.
Graham, you might want to read Theories of Modern Art, by Herschel B. Chipp.
https://www.amazon.com/s?k=herschel+b+chipp+theories+of+modern+art&i=stripbooks&crid=1FT08RKPGUUYB&sprefix=herschel+b+chipp+theories+of+modern+art%2Cstripbooks%2C141&ref=nb_sb_noss
There are manifestoes, letters, etc. from the horse's mouth so to speak. Beginning in the late 19th century with Symbolism, Expressionism, Fauvism, Cubism, Dada, Surrealism, and more.
Basically, modern art is a rejection of ancient Greek culture, Christian religion and story-telling. A kind of anti-western spiritual development. It has parallels in architecture, poetry, literature, dance, and so forth. Concerning visual art, people considered traditional Western art mere illustration. Abstraction would lead us into a new world of Freudian, or Marxist, or Darwinian truth about human nature. Something like that anyway.
Having known a few artists - and kids with expensive art school degrees, one of whom went on to a career in HVAC, where he has made ten times as much as others in his class, who did not go the skilled trades route - most of the money goes to the gallery owners - they take a 50% cut of what they sell - at a minimum. Art school kids - 95% of whom have no talent whatsoever, according to their teachers and professors (and I've known a few of those, too) - tend to be sons and daughters of rich people, if they're successful - so they already know their market. The few who aren't end up doing unskilled labor in a life of debt slavery. And they tend to have addiction problems and die off pretty quickly, unless the can find something more lucrative than art.
And I know a relatively famous sculptor, Harry Weber:
"Harry Weber was born in St. Louis, Missouri in 1942 where he attended St. Louis Country Day School. He was educated at Princeton University where he studied art history.[1] Following his education, Weber served six years in the United States Navy. This included a year on river patrol boats in Vietnam where he compiled a compelling series of drawings chronicling his experiences there.During his service, he was awarded the Bronze Star Medal with V for valor, the Presidential Unit Commendation and the Navy and Marine Corps Combat Ribbon. ... " https://en.wikipedia.org/wiki/Harry_Weber_(sculptor) I've got one of two copies of his first piece - he has the other - which makes that pretty rare, and another early piece - my Aunt Jane was an early supporter of his. He's got a web page - https://harryweber.com/. I don't know how much these pieces are worth, never had them appraised, don't need to, I like them as art, not stacks of dollar bills.
My grandparents on my father's side did a tour of France on their honeymoon in 1914 and bought back a bunch of French art - mostly prints, a few paintings. And none appraised, I remember them from my childhood, so they're not for sale. I don't see art as an investment - actually I should sell some of it off, there's not enough wall space to hang it. My French art from 1914 is beautiful to look at, it wouldn't be worth much in today's market which specializes in ugly junk and - recently - AI slop. And I think that the rich use art for money laundering/tax avoidance more than anything else. And there's a ton of fraud and counterfeit stuff out there, a rich relative (second cousin, once removed) lost something like $5 million when two or three paintings he'd bought turned out to be fakes.
What's driving the current real estate bubble is private equity snapping up single family residential real estate and converting it into rental properties - the Klaus Schwab/WEF thing of "you will own nothing, rent everything, and be happy" - and they buy planning commissions and city governments - for a billionaire, a million dollars is chump change, and the return on the bribes is just huge... It will wind up being a choice between a revolution or slavery, governments have become far too corrupted and bought off.