The International Herald Tribune’s Take on the October Auctions

You might know that Souren Melikian is a scholar of Iranian cultural history. However, he doesn’t tell the readers of the IHT as he castigates the auctioneers for not having translated the Persian on an Alighieri Boetti work in one of the Italian sales. Better to preserve his omniscience.

But there is a serious side to Melikian’s pretzel logic. Melikian seems to believe works of art have a definitive value. If art prices do not conform to the values he has assigned them, it must be the result of a nefarious influence. In Dr. Melikian’s universe, the culprits are the auction houses:

The auction market just delivered an unexpected message. Money remains available for art, lots of it, but the buyers are now calling the shots, not the sellers. Particularly not the auction houses, which have been playing a risky game for years in encouraging an artificial inflationary drive. [ . . . ] In just 10 days, auction houses thus received splendid news – money for art miraculously remains abundant – and a severe warning. Stop the old game of relentlessly hiking estimates in the hope that bullish buyers will meekly go along. Count yourselves lucky that buyers are still there, occasionally even bullish. But meek, they are no more, nor will they be for quite some time.

Why art dealers are not included in this matrix of inflation–let alone the over-eager buyers all-too-willing to race around art fairs as soon as raise their paddles–Dr. Melikian does not explain. But his understanding of economics needs to rise to the levels of his erudite taste and linguistic skills.

The auction houses can be accused of aggressively encouraging collectors to sell. Whether they offer guarantees or attach unrealistic estimates, there is nothing an auction house or art dealer can do to force someone to buy. Grandiose estimates and bullish guarantees are punished by the same mechanism–a failed sale. (Though peple forget that bought-in lots can actually work out in the end.)

But the point is that price is a mechanism of distribution, not a moral category. Prices in the months and years to come will be determined more by the available stock of money in the world (there’s a lot less today than there was two months ago) than by auction house experts.

Cool-headed buyers are now running the show (IHT)