Shane Ferro has post on Artinfo recapitulating the New York Times’s debate on the art market before migrating to an earlier exchange of views that started here on Art Market Monitor. She quotes Felix Salmon taking me to task for missing that “ prices are quantitatively completely bonkers.”
This question — whether paying wild sums for contemporary art signifies a healthy market or not — is where the real debate is.
I can see why the very large sums of money being paid for works of art is startling and unsettling. But I don’t actually think the nominal figure is indicative of whether the market is healthy. A person buying an airplane for their own use at $30 million is no more or less bonkers than buying a work of art for $30m. The plane may seem more substantial but if it costs a lot to maintain, isn’t used often and the same function could be served by . There is no way for economics to measure the value of that purchase to the person.
Warren Buffett calls his private plane the “indefensible” suggesting he doesn’t think it is either a rational economic purchase or a good value. Yet he owns the plane.
My feeling is that the art market draws such vitriol and exasperation from us outsiders not because it is bonkers to spend this kind of money on art but that it reveals there are seemingly so many persons in the world with the money to spend on something that has no real economic value.
In that sense, the art market is by its very nature “bonkers.” Having said that—and to answer both Felix and Shane Ferro’s question—a healthy market is one where prices go up and down both for individual artists and their works and for a range of artists.
Too few artists being valued and rapid price increases are the current issues that suggest an unhealthy market more than the absolute price level. Now, to be fair to Felix, that may be part of what is pointing at. Or not.