There are two phenomenon at play here, the academy and big money. When all art becomes subjective then determining which art is best becomes essentially political.
The source of the problem is in the academy itself. The university has become a place of indoctrination rather than bonafide critical thinking. Hiring and tenure at the university have become almost entirely political. Dissident scholars and artists are either denied access to tenure or not hired at all. But to be fair, there are precious few dissident scholars trying to get in because undergraduate indoctrination has been so successful that meaningful dissent is practically unknown. There are more dissident artists but, without their corresponding colleagues in art history and philosophy, there is nobody in a position of authority to advocate for outsider art.
Many in the fine art field voice their dissatisfaction with the arbitrary nature of exorbitant pricing for contemporary Bluechip art. But few in the field are inclined to ask the underlying reasons for the arbitrary values of contemporary Bluechips. The academy has itself created a value vacuum. As Jonathan T. D. Neil observes in his piece for the Summer 2014 issue of Art Review entitled, On Derivatives and Value in Art, “So ‘liberated’ from categories of talent, taste, skill, history, innovation or critique, the work of art ‘floats free’ in an unregulated sea of differential value whose prices can inflate, bubble and pop according to their own autonomous dynamics.” It is the academics who “liberated” art from these constructive, if delimiting, categories. But nature abhors a vacuum and so a value is set by the market.
Since the Bluechip market is overwhelmingly made up of people in the finance industry then it is not surprising that, in lieu of any other authoritative mechanism for establishing value, these financiers would in turn resort to the instruments they know best and attribute value in the same manner they do for other speculative financial instruments, namely the derivative. Until the academy regains its sense and derives some more concrete mechanism for establishing aesthetic and intrinsic value then the market is going to use its own mechanisms and most of what we read in the press regarding art is going to sound more like a report on oil futures than a discussion of the aesthetic merits of the work.
We need not wait on the academy, however, to address some of the problems that have created such a distortion in the evaluation of contemporary aesthetic production. As Neil states when comparing the contemporary art Bluechip to a futures contract, “left unregulated and fed back into the financial system, they can generate greater uncertainty and augment risk to a perilous degree.” So as much as I am loath to suggest it, some constructive regulation is in order. The key is in getting the incentives right.
Art is a relatively unique commodity in that it is not fungible, unlike a barrel of oil or a pork belly, it has no intrinsic financial value and one work is not of equivalent value to another. Contemporary art is not unlike the tulip market: its financial value is inherently arbitrary. This problem is compounded by the phenomenon of the monopoly inherent in the art market. Only Jeff Koons’ shop can create a Koons. So regulating art as one would any other monopoly is inherently problematic.
But regulating dealers is more practical. Perhaps eliminating dealer exclusivity on works by artists whose art brings six figures and up might be a place to start. Dealer exclusivity on Bluechip artists can be viewed as a restraint of trade.
Perhaps the least onerous types of regulations would be those that were designed to create more transparency. Transparency on transactions would be a mechanism for reducing market manipulation. If there were reporting requirements for all transactions in excess of $20,000 then a centralized database could be set up to reflect real time market values for art. This database should include the price for the work but also the transparent identity of individual buyers and sellers including of individual members of consortiums who go in together on a sale or purchase. In this way the activities of market manipulators could more easily be tracked and monitored. This would also allow the market a better sense of which collectors are sitting on large stockpiles of works by a single artist. 800 Warhols in the possession of a single owner are a looming threat to anyone who intends to invest in a Warhol that comes to market.
A handful of speculators are dominating the market for works by a select group of artists and they simply shill up the price on any new work that appears lest the asset value of their stockpiles be substantially diminished by a single bad day at the auction house. Since they borrow against their art assets to create liquidity for other investments, then their incentives to ensure the stability of value of their leveraged art are immense. Perhaps regulating the percentage of value by which art may be leveraged might be a constructive step. If collectors could only leverage up to 20% of an art asset’s value then this would reduce incentives to shill up prices to maintain the art portfolio values. If collectors require more liquidity then they can transparently sell their art for a fair market value.
At the high end of the market, transactions are not always done in cash and this is a significant problem. Gagosian and others make tremendous commissions on brokering art swaps. This practice is fraught with corruption, is inherently clandestine, is widely used to hide assets, conceal transactions and lends itself to international money laundering, bribery and a host of other illicit activities. It is also a way of avoiding capital gains and sales taxes that can amount to hundreds of thousands and even millions of dollars on a single transaction. Wealthy collectors view art swaps as a loophole in the current financial regulatory schemes and this loophole must be closed. Prohibiting art swaps on works valued in excess of $20,000 would be a significant step toward bringing much needed transparency to the market.
The other problem is the monopoly of auction houses. Sotheby’s and Christies dominate the worldwide auction market in a manner that is obviously a restraint of trade. They have both been convicted of price fixing, trading in stolen and looted works, forgeries, false provenance and optimistic attributions yet nobody seems to want to tackle these giants and break up their stranglehold on the auction business. Indeed, the two auction houses seem more inclined than ever to stray into the role of commercial galleries in contemporary art so as to engage in pump and dump schemes that only further exacerbate market manipulation. Nobody seems to have an interest in breaking the stranglehold of this duopoly. Artists, collectors, speculators and dealers all profit from these one stop shops’ ability to inflate market prices. Smaller auction houses mean smaller turnouts of bidders and lower prices for works. Speculative greed from all players in the market is producing selective blindness to the corruption.
Government has tended to view auction houses as if they were a “natural” monopoly like a stock exchange or a commodities trading floor. But unlike other commodities trading, there is virtually no regulatory oversight to protect consumers and traders against pump and dump, self dealing, insider trading and various other conflicts of interest. And there isn’t likely to be anytime soon. The only people with a stake in the auction houses are the economic elite and they are not complaining about auction house ethics because the fuzzy practices, as often as not, serve their interests. There is no political pressure to more stringently regulate the auction houses because this is a rich guy’s problem which the rich don’t seem to mind and the rest of society doesn’t care.
The more intransigent problem is at the university level since they are the source of the subjectivity and politicization that facilitates the irrational nature of the contemporary art market itself. The problem of hyper-politicization of epistemology did not emerge over night. It took the better part of a century for us to reach the status quo and this will not change over night either. One might acknowledge that epistemology always had an element of politics in it, but to simply acknowledge this fact and then use it as an excuse to unapologetically reduce all epistemology to raw politic has produced an untenable situation in the academy. Politics got us into this situation and some politics will ultimately be required to get us out.
People who are dissatisfied with the status quo in the arts and humanities must reenter the fields and not be content to simply throw stones from the sidelines. If you don’t agree with Derrida and his ilk, then pursue advanced degrees in philosophy and author tomes to refute him. If you are interested in art but are appalled by what you see, then pursue a PhD in art history and write articulate critique of the current canon. Form coalitions with like-minded intellectuals to establish publishing houses and academic periodicals. This will not be easy but they don’t call it a “Culture War” for nothing.
Realize that there are more than two sides to the Culture War and develop more holistic, interdisciplinary and inclusive methodological approaches to art criticism that address the legitimate concerns raised by Modernism and Postmodernism. (Yes, there were legitimate concerns!) It is not sufficient to just turn back the clock to the 19th century and act as if none of the phenomenon of the last century ever occurred. It is time for dissident scholars to be more than merely conservative.
They must be innovative and conceive new arguments for the role of art in a new society. These arguments must be inclusive and multicultural without succumbing to the knee-jerk self advocacy of the past few decades. Start enthusiastically advocating for the best of art produced by women and minorities and you will earn the credibility required to legitimately critique the work that is merely mediocre and politically correct. Multicultural doesn’t inherently mean “anything goes.” Come up with better defenses for legitimate intellectual and moral justice and better intellect and better justice will be the result. Pursue this arduous course and we will all be blessed with better art as well.