Josh Spero, the editor of Spear’s, is one of the more entertaining folks on Twitter. He’s a talented editor and writer too. But this quote from the Telegraph that was picked up by FT’s Alphaville illustrates a common idea that cannot be refuted enough. The art market is NOT a measure of art historical value. It is a distribution mechanism that prices the demand—mostly generated by social interactions—for works of art among individuals.

“The prices of so many of these artworks are disproportionate to their art historical importance,” says Josh Spero, the editor of Spear’s, a magazine that caters to the yacht-owning, Picasso-aspiring classes. “It’s all about ‘my Giacometti is bigger than your Giacometti’ now. Will you really get $140 million worth of pleasure from it? I doubt it. But you know you had to outbid three US hedge fund managers and a Russian oligarch to secure it.”

The rest of the Alphaville post goes on to discuss the idea of Vanity Capital, a term that is ideal for describing the art market. Vanity Capital is the social differentiation that one gets by owning enduring luxury objects. In that sense, the buyer does get their $140m worth of pleasure from it.

Let’s remember that the art market is driven by individual collectors. Those who buy to make great collections that are eventually donated to museums are no less driven by their own vanity (not always a pejorative term) than the trophy hunters spending to compete with their rivals.

One Picasso isn’t cool. You know what’s cool? (FT Alphaville)