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How the Art Market Works

Posted by Josh Rothman  March 8, 2011 10:48 AM

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In September of 2008, the British artist Damien Hirst sold a collection of his own artwork at Sotheby’s. The two-day sale, entitled “Beautiful Inside My Head Forever,” consisted entirely of Hirst’s own artwork, and netted a staggering $201 million, helping to make him one of the world’s wealthiest artists. (His net worth today is estimated at nearly $380 million.) How in the world did art -- especially contemporary art -- get so expensive?

Damien Hirst's "For the Love of God" sold for £50 million to an anonymous consortium.

In his new book, Art of the Deal, Noah Horowitz, an art historian and professor at the Sotheby’s Art Institute, argues that it’s all happened in the last fifty years -- and that the art market has become a complex, globalized, money-making machine for the well-connected. The story, as Horowitz tells it, starts in the 1950s, when museums, flush with post-war prosperity, began to grow in size and power. Museums bought up all the old art, pushing up prices -- and pushing collectors towards the contemporary art market, where prices soon began to rise, too. At the same time, the global economy became more integrated, and businesspeople got better at putting together complex, international deals of all kinds. That expertise inevitably spread into the art world.

The result, Horowitz argues, is an art market that’s no different from any other international market: It’s often characterized by behind-the-scenes wheeling and dealing, designed to maximize profit. Investors in New York, say, might see an opportunity in contemporary Chinese art. They form an investment consortium, which hires a buyer to find artwork in China. After the collection is put together, the investors work to get the artworks exhibited in art museums around the world. Then, Horowitz writes, “the body of work, now a museum-quality ‘collection,’” is sold in turn to another dealer or auction house, and eventually at auction to other art buyers. All the players work together to transform little-known artworks into valuable assets; even the museums are caught up in the process, though often unknowingly. All this is possible because the art market brings two contradictory elements together: on the one hand, huge sums of money; on the other, objects that have no intrinsic, easy to determine monetary value. (Sound familiar?)

What does the new economic climate mean for the art market? It’s hard to say, of course, but one thing is certain: as things are right now, Horowitz writes, the system is eroding the idea that art “is more than just an empty stepping stone to social, political, and economic enrichment.” The art market depends, ultimately, on trust, both in the idea of art and in the basically artistic motives of the world’s art institutions. The more art dealers resemble speculators, and museum galleries showrooms, the more than trust is undermined.

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About brainiac Brainiac is the daily blog of the Globe's Sunday Ideas section, covering news and delights from the worlds of art, science, literature, history, design, and more. You can follow us on Twitter @GlobeIdeas.
Brainiac blogger Kevin Hartnett is a writer in Columbia, South Carolina. He can be reached here.

Leon Neyfakh is the staff writer for Ideas. Amanda Katz is the deputy Ideas editor. Stephen Heuser is the Ideas editor.

Guest blogger Simon Waxman is Managing Editor of Boston Review and has written for WBUR, Alternet, McSweeney's, Jacobin, and others.

Guest blogger Elizabeth Manus is a writer living in New York City. She has been a book review editor at the Boston Phoenix, and a columnist for The New York Observer and Metro.

Guest blogger Sarah Laskow is a freelance writer and editor in New York City. She edits Smithsonian's SmartNews blog and has contributed to Salon, Good, The American Prospect, Bloomberg News, and other publications.

Guest blogger Joshua Glenn is a Boston-based writer, publisher, and freelance semiotician. He was the original Brainiac blogger, and is currently editor of the blog HiLobrow, publisher of a series of Radium Age science fiction novels, and co-author/co-editor of several books, including the story collection "Significant Objects" and the kids' field guide to life "Unbored."

Guest blogger Ruth Graham is a freelance journalist in New Hampshire, and a frequent Ideas contributor. She is a former features editor for the New York Sun, and has written for publications including Slate and the Wall Street Journal.

Joshua Rothman is a graduate student and Teaching Fellow in the Harvard English department, and an Instructor in Public Policy at the Harvard Kennedy School of Government. He teaches novels and political writing.


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