Saturday, January 7, 2017

The Economist explains: What makes a work of art valuable?


To mark the publication of “Go Figure”, a collection of The Economist’s explainers and daily charts, the editors of this blog solicited ideas on Facebook and Twitter. This week we publish five explainers suggested by our readers, who will each receive a copy of the book.   


THE first artists emerged in the Ice Age, when humans moved out of the eastern Mediterranean and into the rich central European plain with its plentiful supply of food. Initially they painted what they saw around them—people, animals, hunting—as scenes depicted in ochre and mud on the walls of caves. Then 40,000 years ago a skilled artisan in south-west Germany carved a standing figure from his imagination. Thirty centimetres high and known as Der Löwenmensch, it has human legs and an arm but the head of a lion. 

This was the first known true work of art. In due course, artworks became precious, desired and traded. The earliest illustration of the art market that we know of is on a Greek cup, painted by Phintias and dating to 500BC, that shows a young man buying a vase. But what makes a work of art valuable?

The art market as we know it today emerged in the 18th century. Before that works of art were commissioned directly from artists, chiefly by wealthy and powerful patrons such as the Medicis and the Catholic Church, rather than traded. Other collectors began to emerge with the industrial revolution and the rise of the middle class in Europe. Christie’s, an auction house, was founded in 1766. Wealthy dealers, who brought buyer and seller together, emerged in the 19th century. In the 21st century the market is enormous. Art sales in 2015 totalled $64bn, according to a report by Clare McAndrew, an art economist, making it bigger than the economy of Kenya or Costa Rica. Fashion drives the contemporary art market, as does scarcity (but not too much). “Validation” is important too: association with a great collector (such as David Bowie), participation in a much-lauded exhibition or being recognised as part of the story of art history.

About half of the market is accounted for by sales through dealers, either directly from the artist’s studio (the “primary market”) or by reselling a work that has already been bought once (the “secondary market”) and which is now being sold on, often with several commissions being paid to intermediaries along the way. The other half of the art market is made up of sales by auction, a system that claims to be open and competitive, with both artwork and potential bidders being visible to all. In reality, it can be as secretive as the dealing world, with complex financial arrangements and discounted commissions being not uncommon. The most expensive work of art sold at auction was Pablo Picasso’s “The Women of Algiers (Version ‘O’)”, which was consigned, in 2015, by a Saudi collector, who had kept the picture hidden away in his London home for nearly 20 years. It was bought, after frenzied bidding, by Hamad bin Jassim bin Jaber al-Thani, a former Qatari prime minister, for $179.4m. The imposing naked women it depicts (see picture, above) means it will probably never be exhibited in the Middle East, but it remains a trophy nonetheless, if only because of the record price. 

What of the non-financial value of art? This is perhaps the hardest question of all. Yet it is essential. To stand in front Matisse’s circle of dancing maidens or Rembrandt’s portrait of his mother is to recognise that they are masterpieces. 

As a viewer you are transfixed, lifted out of yourself, you feel your consciousness being stretched by a story that is both timeless and unending. 

That is the truest value of art. 

Today’s explainer was suggested by Joshua Chiang. 


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