Ideoblog

Why artists should love capitalism

I have often written (most recently) about why artists in general, and particularly filmmakers, dislike capitalists. But it turns out that artists are major beneficiaries of capitalism, with all of its associated wealth disparity. That's the lesson of Goetzmann, Renneboog & Spaenjers, Art and Money. Here's the abstract:

This paper investigates the impact of equity markets and top incomes on art prices. Using a long-term art market index that incorporates information on repeated sales since the eighteenth century, we demonstrate that both same-year and lagged equity market returns have a significant impact on the price level in the art market. Over a shorter time frame, we also find empirical evidence that an increase in income inequality may lead to higher prices for art, in line with the results of a numerical simulation analysis. Finally, the results of Johansen cointegration tests strongly suggest the existence of a long-term relation between top incomes and art prices

Artists as capitalists

Today’s NYT discusses the U of C economic historian David Galenson’s work on ranking artists through “citation counts” in art texts. See also MR. But I’m actually more interested Galenson’s recent book introduction, The Back Story of Twentieth-Century Art. Here’s a piece of the abstract:

The single most important change [in the 20th century art market] involved the structure of the market for advanced art. Innovation had always been the hallmark of important art, but since the Renaissance nearly all artists were constrained in the degree to which they could innovate by the need to satisfy powerful individual patrons or institutions. The overthrow of the Salon monopoly of the art market in Paris and the rise of a competitive market for art in the late nineteenth century removed this constraint, and gave advanced artists an unprecedented freedom to innovate. Conspicuous innovation subsequently became necessary for important modern art. All artists recognized the increased demand for innovation, but it would be conceptual artists who could take advantage of it more quickly than their experimental counterparts. Early in the twentieth century Pablo Picasso became the prototype of the conceptual innovator who maximized the economic value of his inventiveness in the new market setting, and during the remainder of the century, a series of young conceptual artists followed him in producing more radical innovations, and engaging in more extreme new forms of behavior, than had ever existed before, making this an era of revolutionary artistic change.

Galenson says that scholars who think of the art market as dealers and collectors are missing artists' central role. It was Monet and other artists who overthrew the Salon in 1874 and organized an independent exhibition. Today we think of the promotional activities of artists like Picasso, Pollock, Warhol and Hirst. (I can't resist referring to my personal favorite in the annals of artist self-promotion, Clouzot’s Le Mystere Picasso). These efforts feed a broad market for art, led by museums with their blockbuster shows and wealthy collectors (including hundreds of galleries in Chelsea alone), that has broken the stranglehold by official gatekeepers like the Salon.

The existence of this market, in turn, has an important effect on the art. The market craves innovators who get cited the most and therefore have the highest market value. This, in turn, provides an incentive to innovate, as in any product market.

What’s missing in this paper (though maybe it’s in the book) is a convincing account of why this market developed. After all, it’s not like artists had no commercial interests before Monet broke free of the Salon. A visit to Rembrandt’s factory in Amsterdam should cure anyone of the idea that great artists only wanted art for art’s sake. But where did all those buyers come from?

In Galenson’s account, Monet and friends in fact did not actually single-handedly create this market in 1874. Rather, he says, the key event was a 1914 Paris auction. Ten years earlier a businessman named Andre Level had formed a private investment fund that bought works mainly of younger artists such as Matisse and Picasso. In the 1914 auction, the works were sold for more than four times the group’s investment. Galenson says

this sale was the first time an important group of works by the leading artists of the day had come to auction, and its public success helped to convince many people that contemporary innovative art could be a good investment. This laid the foundation for a new era of artistic freedom, that allowed artists to follow their own interests rather than those of patrons.

I suggest that this growth of the art investment market occurred in tandem with the growth of other investment markets, including stock markets. This created a broad group both inclined and rich enough to invest in art. In other words, the art market is part of the capital market in which the artists themselves are now an important moving force.

I’ve focused for awhile on a different type of artist – filmmakers. I’ve argued (in Wall Street & Vine) that the anti-capitalist flavor of many films owes to the resentment of the artists, including directors, screenwriters and actors, of the capitalists whose control of the budget decides what films get made and what they say. So I find it ironic to read in Galenson that the visual artists are themselves the capitalists.

As I've said (discussing another Galenson article) I haven’t systematically studied anti-capitalism in modern visual arts. Anecdotally, it’s perhaps worth nothing that the highest price artist of our time, Damien Hirst, does not seem to have a problem with capitalism, or the worldly in general. For example, his diamond skull is generally seen (e.g., here) as a subversion of the memento mori theme in older paintings: since we’re going to die, let’s focus on worldly things now.

If we do see any of this resentment in modern art, I suspect it’s directed at capitalist-artists, not non-artist capitalists. It’s all about the entrenched businesses looking over their shoulders at the competition. For example, Galenson has a great little vignette about Picasso, the great promoter, disparaging the art of his formidable new competitor, Jackson Pollock.

A modest proposal, revised

Dear readers:

With respect to my essay which appears below, I have been informed by my editor that in light of certain recent events involving a widely read publication, I should make the following disclaimer:  I do not really think that Irish children should be sold for food.  This was intended as a "satire" on the beliefs of people with whom I profoundly disagree.  I apologize in advance for any offense taken and will try to refrain from such "satire" in the future.-- J.S.

The art world's approach to retail

What businesses spend a fortune on their retail establishments and treat the people who dare to walk into them like dirt? If you lived in NY you would probably know the answer to this: art galleries.

We’ve spent several Saturday afternoons very slowly working our way through the 300-odd galleries in Chelsea, and couldn’t help but notice the decorative but icy "gallerinas" who sit somewhere around the entrance and (don’t) greet the customers. I had gathered that the function of the galleries was to build a buzz about the work, which then adds to the prices paid by the real customers – the ones who sneak in the back door (and get to use the bathrooms), or better yet, stay in their zillion dollar apartments and send their representatives, or let the works come to them. This NYT article confirms my suspicions.

Seems like it might be more efficient to set prices through a virtual prediction-type market for works displayed on the web and skip the investment in retail altogether. Maybe that’s the future.

Anyway, for now, I might put on a fanny pack, Bermuda shorts and a camera, walk into one of these galleries and try to buy something and see what happens.

Art and money

Obviously these two subjects have a lot to do with each other. David Galenson writes on this in Artists and the Market: From Leonardo and Titian to Andy Warhol and Damien Hirst.  Here's the abstract:

In an era in which there is open discussion of many previously forbidden subjects, including race, sex, religion, and drugs, why is it that the nexus between money and art remains perhaps the last taboo subject for many in the art world? The answer can be found five centuries in the past. As the prices artists charged their patrons increased during the Italian Renaissance, their new social status was accompanied by the convention that they should not publicly appear to be concerned with money. This Renaissance ideal persisted into the modern era, even though the growth of a competitive market for fine art in the late 19th century made prices a subject of public discussion for critics and other observers of the art world. Pablo Picasso might privately use shrewd business tactics to amass a great fortune, but he and other successful artists were careful not to make public statements about the market for their work. It was not until the 1960s that a prominent painter decisively broke with the Renaissance tradition: Andy Warhol not only painted images of paper money, but also freely expressed his interest in financial success. Two leading contemporary artists, Jeff Koons and Damien Hirst, have followed Warhol's model of the artist as avowed materialist, specifically citing the high prices of their work as evidence of their importance. In a survival of the Renaissance convention, however, even today many critics and art scholars continue to regard the relationship between art and money as a taboo topic, and to maintain - incorrectly - that prices and artistic importance are unrelated.

And the conclusion:

Long before Andy Warhol, Théodore Duret established the principle that prices provide evidence of artistic success. What is disappointing, however, is how poor the quality of the art world’s economic discourse remains even in the post-Warhol era. It continues to be fashionable among many critics and scholars to claim that art markets are irrational, and that prices have no value as indicators of artistic importance. These claims are both ignorant and foolish. Art scholars must overcome their distaste for economics, and become more sophisticated in examining how changes in art markets have influenced artists’ attitudes and behavior.

I've written on this general theme in my Wall Street and Vine, which examines the attitude of film artists toward capitalism. In contrast to the artists Galenson discusses, filmmakers, who depend very much on money to make their art, express their resentment at this dependence and at how it constrains them.  It might be interesting to more broadly compare filmmakers' attitudes with those of painters and other types of artists.

Art, technology and commerce

I’ve explored the relationship between filmmakers and commerce in this paper on how business is portrayed in film. I’ve often thought about extending the study to other types of artists.

My hypothesis is that there is a particular art/commerce tension in film because of filmmakers’ dependence on capital to practice their art, and their resentment over the resulting constraints on their freedom. It arguably follows that there would be less tension in other forms of art, though there may still be something about artists which makes them unsympathetic with those in commerce.

I was thinking about this during my visit yesterday to the Morgan Library. This wonderful exhibit of Irving Penn photographs brought me to the museum, but I found the companion exhibit from the permanent collection, featuring work by some of the people Penn photographed, more interesting.

What particularly caught my attention was an ad by Georgia O’Keefe for Cheney Silk, and a testimonial by John Steinbeck for Ballantine Ale. The museum description referred to another similar ad done by Ernest Hemingway. Here's the text of the Steinbeck ad, and here's the accompanying picture of the writer:

 

Of course writers and visual artists are plenty commercial today when it comes to promoting and selling their works. Some, particularly photographers, work for commercial publications. Other artists (e.g., Warhol) take artistic cues from commerce. But I can’t see, say, Philip Roth doing a beer ad or Lucian Freud doing an ad for Microsoft. Tyler Cowen has much more on the relationship of art and commerce.

There were also some exhibits reminding me of the possible effect of technology on writing. This page from a draft of Ulysses made me ask, what if James Joyce had used a word processor?

The Farnsworth Invention

I started this site to talk about how business is portrayed in film. I have gathered those early efforts and much additional thinking into a couple of papers – Wall Street and Vine, and Imagining Wall Street. Since I’m in NY this year, I can do Wall Street and Broadway as well. The leading contender in this category is The Farnsworth Invention, which I saw yesterday.

The supposed topic is the invention of television. But what it’s really about is the struggle between the creative artist and big business – precisely the theme of most films about business as I discuss in Wall Street and Vine. Consider this, from the play’s website:

Independent inventors like Philo T. Farnsworth were no longer able to compete with the well-financed laboratories owned by corporations practiced in the new art of mass marketing. Those who upheld the independent, nineteenth-century ideal found that the inventor’s life was an uphill battle. New corporate control yielded rewards not to individuals but to companies and CEOs, and before long corporations controlled half of the nation’s wealth. The game of wealth and fame was over, leaving a choice to make either a modest, dependable income at a corporate lab or nothing at all. But to independent inventors who didn’t see money as the end result, the loss was felt more deeply. A throwback to an earlier era, Farnsworth looked beyond the money he could gain to the greater glory that the inventor’s life had promised: to better the future choice of man by one’s own hands. The story of Farnsworth’s invention offers a glimpse into a major cultural shift, a time when perhaps the last independent inventor got lost in the machinery of a newborn corporate century.

To his credit, the play’s author, television (West Wing) and film writer Aaron Sorkin, strives to present both sides. Rather than burying the point of view, the play brings the alternative perspectives front and center out through its co-narrators, Farnsworth (Jimmi Simpson) and David Sarnoff (Hank Azaria).

As the play tells it, Sarnoff ripped off Farnsworth by having rival inventor Vladimir Zworykin spy on Farnsworth. But at least Sarnoff felt bad about it. And while Farnsworth is played as an admirable boy genius with a vision and heart of gold, Sarnoff has his own sympathetic story to tell.

Nevertheless, there's an obvious bias in the play that ultimately undermines its realism and potential. The fantasy of writers getting ripped off by the fat cats is an ancient theme in Hollywood (and it's playing out right now in the writers' strike). A Hollywood type like Sorkin is very sympathetic to the likes of Farnsworth meeting the same fate. But what the Sorkins don’t understand is that it takes the engines of capitalism to make these ideas fly, and capitalism has its heroes too.

Consider this: Even if Farnsworth had won the patent dispute that was the plot’s lynchpin, the invention would have ended up with the likes of Sarnoff, because television wasn’t going to end up being controlled by an alcoholic dreamer.

Maybe it’s easy to sympathize with Farnsworth not getting the credit he deserved. Easy, that is, until we think about it for awhile. The battle between Farnsworth and Zworykin for credit comes down to this: they both had the basic idea for electronic television; Farnsworth (actually his brother-in-law) came up with a workable cathode tube, but Farnsworth couldn’t make the images bright enough. Zworykin came up with the idea of capturing light, but he couldn’t make the cathode tube.

The play makes clear that the best result of all would be some system of intellectual property rights that facilitates collaboration. Alas, that’s not the system we have, which Farnsworth and Zworykin seem to regret even while they compete headlong for the prize. (For a possible approach to this problem, see Ayres & Parchomovsky, Tradable Patent Rights).

In other words, the battle between the heroic inventors boils down to the search for a winner of a zero sum game. You want real heroes, how about those who figured out how to get people to work together and trust each each other. Those who invented the financial instruments and markets that would combine the enormous resources necessary to fully exploit inventions like television. Those, like Sarnoff, who created the firms that could make and market them. There’s a real story there.

When Farnsworth first presents his idea, he is for all appearances a crazy hayseed with minimal formal education talking about how to instantaneously broadcast pictures. Banker William Crocker happened to be willing to give him $10,000 seed money because Farnsworth happened to play the violin (which proved to Crocker he was a genius). But we've figured out more reliable ways to fund crazy ideas like this, even if that means a lot of crazy ideas that don’t work (or at least that was the case until SOX).

There’s also a lot of talk in the play about the social responsibility of inventors and business people. What makes Farnsworth heroic is that, if he wins the invention, he’s going to make “good” use of it. Sarnoff, in the end, comes in second place in the hero department because he compromised his values, and let broadcasting slip into the gutter of commercialism and advertising. Advertisements on the news – for shame!

As the play lets slip, Sarnoff’s plans raised antitrust problems (although we got some public agencies and regulation to take care of that). More fundamentally, the idea that the airwaves should be controlled for “public” purposes by the likes of either Sarnoff or Farnsworth is rather unattractive.

It’s an entertaining evening. I didn’t fall asleep. There were some zippy lines. The actors, many in multiple roles, were talented. I just wish it had told a better and deeper story about business, that would also be a richer story about the limits and potential of people.

A classic photo in the NYT

This is off my usual beat, but today's front page of the NYT has a really remarkable photo. The picture shows the inside of an Iraqi kitchen.  It’s lighted and composed a like a Dutch master interior.  US soldiers dominate the left side of the picture. A bowl with food is in the middle, and an Iraqi woman and child stand on the right. Everybody’s looking tensely outside.  It’s impossible to tell exactly what the Iraqis are thinking.  But the composition tells us that these big armed Americans have forced the Iraqis to a corner of their own kitchen, and that all of the subjects are dominated by whatever is outside. 

One wonders whether this picture will simply get thrown on the heap of news photos or live on as a classic.

A trip to the Art Institute

Went to the Art Institute in Chicago yesterday.  The American Indian Art show was great. The individual pieces, e.g., above, were magnificent, and the show usefully laid out the extensive civilization that was here before the white man showed up.

This show  on 10 architects' visions for Chicago was at the other end of the scale, bordering on ridiculous, a parody of over-conceptualization. Possibly the purpose was to demonstrate how far we have devolved in this country from the time of the American Indians as displayed in the above show, located right next door. 

The only thing I found interesting in the architects' show was Jeanne Gang's ideas of what to do with the misbegotten US Cellular Field.  One idea was to relocate it to the Loop,  let people park in the downtown lots, emptied out at night and on weekends, and let them watch the games from the windows of the surrounding high-rises.

The Art of the Market

Here's a last microsecond gift idea for business person with an artistic side -- The Art of the Market -- a collection of beautiful, believe it or not, stock certificates.  Don't miss Playboy.  It's got some business history in it, but buy it for the art.