Art historian and sociologist Olav Velthuis focuses on the economic complexities of the art market in relation to its crash in 2008.
Velthuis explains that the art market does not necessarily follow the rest of the economy, and that while art prices may fluctuate, it is often for reasons outside of the financial market. He cites symbolic value as a key element.
Velthuis starts from an illuminating anecdote: several weeks after the stock market record decline of 1987, Van Gogh's Irises sold at Sotheby's in New York for $59.3 million. At that point, it was the highest amount paid for a painting, ever. Velthuis highlights this disconnect between the financial sector and the art market to prove that there is no concrete evidence that the two are connected.
However, the market did eventually crash in 1990. Insiders were quick to blame the financial system. In a critique of the event issued by Whitney Bienniale curators Richard Armstrong, Richard Marshall, and Lisa Phillips, they argued that "capitalism has overtaken contemporary art, quantifying and reducing it to the status of a commodity" [1].
But Velthuis sees this critique as simply incorrect. He believes that buyers may have large, expendable incomes, but lack in “social and cultural capital” and can generate this through the purchase of art [1].
Works are valued based on the recognition of the artist, which means that everyone is competing for the works of a small group. And within this elite group, small differences in perceived talent are transformed into large differences of price.
Velthuis saves his most telling evidence for last: the waiting list. If art has become mere commodity, then why do dealers use waiting lists to sell to the 'right' buyers, not just the highest bidders? Again, Velthuis points to reasons of symbolic capital. Dealers reaffirm their reputation by demonstrating that they are interested in more than money. And this system can be useful to reinforce buyer relationships- for example, a dealer may allow a certain client to jump ahead in the list, ensuring reciprocity in the future.
Velthuis ends with an observation on the flexibility of this system. He recalls that wait lists virtually disappeared during the 90's crash, and that dealers had to discount their prices in order to sell. To Velthuis, the years following this incident were “if not exactly democratic, certainly the most egalitarian phase that the art world has known” [1].
While he brings us up to date on the inner-workings of the art market in relation to the larger financial system, Velthuis leaves the reader with questions as to what the future holds. While he proves that the system is flexible, and that it can become more 'egalitarian' at times, what is the best position for the art market to be in? Does society overall gain from financial crisis in that many artworks become more accessible? Or do we lose out as 'serious' collectors may be outbid by ambitious billionaires who don't care so much about the future of the works they purchase?
[1] http://findarticles.com/p/articles/mi_m0268/is_8_46/ai_n31487376/pg_2/?tag=content;col1