It’s a little surprising to see the Financial Times publish this take on how auction prices are achieved. In the art market, more than any other market, price is only a measure of the buyer’s desire. That desire might bear some resemblance to art historical estimations of a work’s value but, then again, it might not.
More pernicious is this mechanistic thinking that puts the auction houses into the role of puppeteers. One common, and completely mistaken, complaint is that high prices are the result of “too much hype.”
If it were as simple as running a good marketing campaign, the art market would be “infinitely scalable” to its promotional budgets.
In art, as in any other market, supply and demand are the dynamic forces that determine prices. But the art world, which depends on taste rather than objective values, has an unusual approach to supply: when it runs short of one thing, it tries to educate the market to want something else.
By and large, the price of an artwork goes up with its art-historical value: how it revolutionised what we think of as art and how it influenced those artists who came afterwards.
Much of the art that is sold gets sold due to an accident of timing. Whether the sale is provoked by one of the three Ds or simply the changing priorities and values that come with the owner’s course through life, the decision to sell may be deliberate within a somewhat random confluence of imperatives.
The FT wants to believe that the supply constraint with art is less about this randomness and more about whether all the good works have gone into museums leaving “the market” to reassess what works might be available.
Given the supply shortage and the fact there were still plenty of Picassos from the second half of his life, even if they were largely variations on earlier work, the art market began to “reassess” them. They were accorded more art-historical weight through exhibitions and scholarly catalogues — helping to increase their prices. There may well be a genuine element of academic reappraisal in this too.
The most expensive art is rarely the best art. And much of its value can come more from who owned it than who painted it. The two works that achieved records for Picasso in the last five years were hardly his most historically significant. But each had been owned by a very, very important collector.
That added value. Along with a dozen other social and economic factors that cannot be boiled down to this schema.