Art and money have always been inseparable. As Andy Warhol declared almost four decades ago, “Business art is the step that comes after art.” During the past several decades, however, this relationship has been transformed by the appearance of a new form of capitalism: finance capitalism.
In previous forms of capitalism — agricultural, industrial and consumer — people made money by buying and selling labor and material goods; in finance capitalism, by contrast, wealth is created by circulating signs backed by nothing other than other signs. When investment becomes more speculative, the rate of circulation accelerates and the floating signifiers, which now constitute wealth, proliferate.
The structure and development of financial markets and the art market mirror each other. As art becomes a progressively abstract play of
non-referential signs, so increasingly abstract financial instruments become an autonomous sphere of circulation whose end is nothing other than itself. When the overall economy moves from industrial and consumer capitalism to finance capitalism, art undergoes parallel changes. There are three stages in this process: the commodification of art, the corporatization of art, and the financialization of art.
Virtual versus real
At the end of these interrelated trajectories, the real seems to have become virtual and the virtual appears to be real. But just when the circuit seems to be complete, the system implodes and the real returns.
When Warhol proclaimed art to be business and business to be art, he was acknowledging the overwhelming importance of postwar consumer culture. Not only had the center of the art world shifted from Europe to New York, but the US had become the world’s dominant economic and military power. The work of many of the most influential artists of the era both reflected and promoted American values and power at home and abroad. Warhol’s artistic appropriation of the images and icons of consumer culture put on display both the machinations of consumer capitalism and commodification of art that was so vigorously promoted by the burgeoning gallery system.
With increasing economic prosperity, art, whose collection and exhibition had long been limited to the church and aristocracy, became the social marker for individuals aspiring to rise above the middle class. But even Warhol could not have anticipated the explosion of the art market by the turn of the millennium.
According to reliable estimates, by 2006, the private art market had reached US$25 billion to US$30 billion. Christie’s International and Sotheby’s, the two leading auction houses, reported combined sales of US$12 billion, and more than two dozen galleries were doing US$100 million in sales annually.
This phenomenal growth in the art market was not limited to the US. Global capitalism created a global art market. From 2002 to 2006, this market more than doubled, from US$25.3 billion to US$54.9 billion. This astonishing growth was fueled by emerging markets in Russia, China, Indiaand the Middle East. The price of individual works escalated as quickly as the purported value of the financial securities with which they were being purchased. In 2006, Ronald Lauder, honorary chairman of the board of the Museum of Modern Art, purchased Gustav Klimt’s Portrait of Adele Bloch-Bauer I for US$135 million, which at the time was the highest price ever paid for a single painting. One year later, Jeff Koons’ Hanging Heart sold at auction for US$23.6 million, which was the highest price ever paid for a work by a living artist.