Scott Reyburn latches on to the book of the moment, Thomas Piketty’s Capital in the 21st Century, and tries to apply some of its findings to the art market. Of course, the art market is a product of a the emergence of a global class of “ultra high net worth individuals” who congregate around, and communicate through, the world-wide cavalcade of the art market.
Piketty’s essential point is that as long as invested capital produces a greater rate of return than economic growth, wealth accrues to the owners of capital. Reyburn mistakenly tries to apply this idea to the art itself. But Piketty’s point isn’t that a few wealthy persons will make all the money from art:
Courtesy of the above-growth returns identified by Mr. Piketty, the rich are further increasing their wealth by buying art. Many millions have been made by a new breed of investor-collectors who buy Bacons, Warhols and Richters high, and sell even higher. Art by desirable investment-grade names makes the rich richer. And more and more wealthy individuals are now prepared to make bids of more than $100 million at auctions, while outside, beyond the shiny bubble of the art world, living standards in the rest of society stagnate or decline.
Although the trend, if Piketty is correct, will be toward an even greater concentration of wealth the numbers continue to enlarge the size of this global class from the current few hundred thousand to several millions. Even with this prospect of having a greater population of potential buyers, Reyburn quotes art dealers and their near-sighted frustrations:
“This is well beyond the norms of inflation,” said Ivor Braka, a London dealer who has been buying and selling high-value art since 1978. “The art market has become an excuse for banking in public. People are displaying wealth in the most ostentatious way possible. It’s luxury goods shopping gone wild.”
“People are spending millions on works by artists who have questionable long-term value,” Mr. Braka said.
“Do they have taste?” he added. “I don’t know. That’s capitalism. You can spend money on what you want.”
Can an Economist’s Theory Apply to Art? (NYTimes)