The Financialization of Art
NFTs are the inevitable result of reducing art to an investment
Art is both undervalued and overvalued in the modern world today. While the majority of working artists struggle to make a living, pay off art school debts, or work decent hours (particularly in the field of animation) a select few of the fine art world make millions of dollars by selling to wealthy collectors looking to sell their works for even more money.
Anyone who has paid some modicum of attention to the art world has wondered why certain works, such as the banana taped to a wall, have fetched such outrageous sums of cash. Why there are consistently new records being set for world’s most expensive painting to ever go at auction.
This is what happens when speculation takes over a market.
There’s a reason speculation was a crime in 17th century Europe. It’s the reason Jesus flipped over the table of the money-lenders. Greed poisons and corrupts everything it touches. It extracts from real wealth and leaves hollowed husks in its wake.
Speculation: What’s It All About?
And who spectates the speculators?
In present day America, our economy largely runs on financial speculation. To use a basic explanation from Wikipedia, speculation is:
the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable in the near future….
Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, fine art, collectibles, real estate, and derivatives.
Journalist Chris Hedges wrote of speculators:
They produce nothing. They make nothing. They just manipulate money.
Stuart Rosenblatt writes of speculation in his review of Rana Foroohar’s book ‘Makers and Takers’:
The real “takers” are the financial parasites who feed off what is left of the real economy, but they do not include all “rich people.” Entrepreneurs engaged in developing the physical manufacturing economy may be wealthy, but they are nevertheless productive. The output of their industry, be it steel or machine-tools, increases the real productivity of the economy. Wall Street sharks, private equity speculators, hedge fund managers, etc., produce no real wealth; hence they are the true takers.1
In short, speculation turns the art world into a casino where the dealer always wins.
Art As Business
A brief history
The wealthy have long been the primary commissioners of art. That’s nothing new. For years art was traditionally commissioned by ruling families or the church. There’s a longer tradition in the east of more commonly affordably art prints making up the art market, such as the ukiyo-e woodblock prints of Japan. But if an artist in the West was to make a living, this typically meant they were doing something like painting the Sistine Chapel like Michelangelo, or painting the royal family like Diego Velázquez, or designing grenades for the military like Da Vinci.
It seems that beginning with the Medici family and the Renaissance in Italy, art collecting took on a more important role for the upper classes. Specifically portraiture. As with most trends, the upper class starts them. The lower classes emulate them, and so it is with art collecting. The traditional patronage model is one where the patron supports the artist and promotes their work.
But this traditional model of art patronage and art collecting took a turn with art speculators entered the business.
As art collector, Mark Rubinstein explains:
Speculation undermined this model, hence the need for gatekeepers….
This market structure affords dealers a lot of power. They create a market for the artists they represent and maintain it by controlling price levels, tempering speculation and courting influential buyers. The heterogeneous nature of the market, where every item is unique, further supports a dealer-intermediated model.
An outsider might assume that the fine arts world is a place of free range creativity, but in reality the galleries are gatekeepers with their own way of doing things, down to the grammar. It’s estimated that 50-60% of the market sales is run by art dealers. Artists who make it into prestigious galleries are often trained in the ways to make art that appeals to big buyers. Sometimes this includes limiting the number of paintings produced per year to just a handful to create artificial scarcity.
Artist studios are incorporated and registered as companies with teams of assistants pumping out works of art like a factory. These studios behave like companies as well, needing to turn over millions of dollars in profits [income?] a year just to sustain themselves.
Galleries are no different, demanding more work from artists and almost never questioning the quality or the significance of the works they’re buying, simply assessing how much of a return they might get for it.
This is art as speculation.
Between you and me and the lampost that thing should double in value by next Christmas.
Quantity over quality
Among the common artists who are trying to break in or carve out some sort of a healthy living from their craft, we see the old Protestant work ethic promoted. The promise of hard work and dedication leading to greater success. The belief in meritocracy. Enter hustle culture.
Now, I’m not exactly “knocking the hustle”. There’s nothing inherently wrong with hard work. The reality is that there’s nothing inherently good about hard work for hard work’s sake either, particularly within an economic systemic driven more so by speculation.
Advice given to young artists these days by popular influencers such as Gary Vaynerchuk including creating and posting a work of art to social media once per day. Once. Per. Day. Hell, create 64 pieces of content for social media if you can, according to Gary.
It’s not necessarily bad advice for gaining a following on social media. It can be quite effective if the messaging is clear and consistent. Still, translating that following into a healthy income is another matter. Maintaining your sanity while reducing your passion to robotized mechanics is a great deal more.
Money’s a necessity for survival within this system, but when artists must put money before true creativity, we get a plethora of artists producing fan art from corporate franchises, apologizing for not posting lately to Instagram, and essentially the same works churned out over and over and over again for content. Fodder for the internet. Food for the machine. We create for social media. The medium becomes the message, as Marshall McLuhan observed so many years ago, with all his cutting insight into the nature of media and new technologies. 2 3
Art as selfie fodder and social status primer
I’m as guilty as anyone of taking selfies in front of admirable art. Who wouldn’t want to take their photo by Van Gogh’s Starry Night?
But with the rise of social media and selfie taking with art, some recent art has been specifically crafted for selfie taking. For example the ball pit for adults art installation in London.
If we follow the logic of this trend through, art will no longer be primarily what makes our physical environment beautiful, but rather it will be what we insert into our own social media landscape to boost our personal status. In this way we will emulate the upper classes by using art to “enhance” our image of ourselves.
Social media paves the way for the rise of the NFT.
Introducing the NFT
“Original” digital works of art
NFT, which stands for non-fungible-token, is jokingly referred to as more appropriately standing for ‘no-fucking-thing’. Essentially what it is, is the application of blockchain technology to a specific digital file, such as a jpeg, a pdf, an mp3, etc. The blockchain authenticates or “proves” ownership of the original of these files.
Is it really the original work of digital art? Well, no. But it’s the original non-fungible-token of it. And what’s so special about being about to prove ownership of a .gif of Nyan Cat? Beyond “it can make you a lot of money” and “you’ll be on the ground floor of an exciting, novel technology” I haven’t seen an answer to satisfy me personally.
This isn’t to say NFTs are a passing fad. Regrettably, I don’t think they are. The corporate landscape is investing so much to get us, the public, acclimated to the idea of NFTs. In the art world specifically, the 10th Art Investment Conference asks if “new technologies can make art a better investment.” Maecenas, an art investment platform that uses blockchain technology, can divide an artwork in shares for trading.4
More broadly, as real home ownership becomes all but a pipe dream for so many Americans, virtual real estate will be the substitute to subdue the masses. Transitioning from a service economy to a stakeholder economy will likely mean less physical goods and more digital consumption. We are being primed for a final retreat into fantasy.
The Painting vs The Photo of the Painting
Which is worth more? Are you sure?
Damien Hirst is a British artist with an estimated net worth of $700 million. One of his recent projects is titled “The Currency”, which features a series of dot paintings correlating to NFTs of each painting. After a certain period of time, buyers of the NFTs can opt to either opt to trade in their NFTs for the real deal, or the real artwork their NFT represents will be destroyed. The project is estimated to have made $25,000,000 after only a couple months since its release.
This is really an experiment in human behavior. How quickly will people take to the novel “art form”? How much do they anticipate a traditional work of art to increase in value, versus this new, very much hyped, NFT medium?
If we took money out of the equation, which would rather have? Assuming you enjoy looking at the work of art, do you want the physical piece you can admire and hang in your home, or do you want the .jpeg that dwells within your phone?
If we take away all the hype and the promises of riches, is this even a question?
Making Art Collecting for Everyone
Be careful what you wish for
There’s been a push from many angles to get more of the public involved with art collecting. As with the previous era of art collecting, the upper classes seek to shape how think of art collecting with the hype around NFTs.
However a sincere argument to get more people into art collecting for the pure love of art was made by German entrepreneur Magnus Resch at his 2018 TED Talk:
Resch has also produced an app, called Magnus, to give its users access to a price database for artworks. This attempt to bring transparency to the art market upset German galleries, and his app was removed by Apple for some time before being reinstated.5
Magnus has done great work in exposing how the art market really works, and I agree with him. Art collecting should indeed be for everyone. My hope is that we’ll be mindful about how and what art we choose to collect, instead of going down this path of collecting digital art assets out of the desperate hope it will fatten our wallets.
Although I certainly understand why so many are desperate this day and age. Minimalism today is becoming a trend often not out of desire but economic necessity.
Still there’s wisdom to be found from from the British artist and thinker, William Morris, who’s often credited as being the father of what we now call minimalism.6
Have nothing in your house that you do not know to be useful or believe to be beautiful.
This mode of thinking emphasizes quality and meaning above all else. It’s mindful and deliberate by nature, although it is something of a luxury to even be able to live in a minimal way such as this.
Art for art’s sake
Generally we don’t need to be taught how to appreciate something. But as we have an out of control art market appraising art to ungodly sums we’ll have to hold onto our sanity in this insane world.
Often it’s the style (movement or period) of art that gets the blame for the way art’s valued today. While certainly there’s some truth to this point of view - though there can be some snobbery involved too - I’ll confess that I don’t resent much of the modern art that many others do. Some modern art I find aesthetically pleasing. I don’t hate it. That is, until I see the price tag. Or until I’m reminded of how modern art has been used and promoted for money laundering schemes and Cold War propaganda purposes. The context of the art is enough to leave a bad taste in your mouth about the whole style of art, yet still, corruption is far from being exclusive to modern art.
Perhaps we should get back to the fundamentals.
Art has many purposes but money making was never where the heart in art came from.
Art is expressive. Emotional. We say art moves us. It’s political. A tool for consciousness change. At its best it speaks truth, heals us, nourishes us. Its resonance within us helps us better understand ourselves. Good art empowers and liberates the individual’s human spirit. It wakes us up to life.
At its worst it manipulate us. Bypasses our rational conscious mind to play dirty tricks on the subconscious. It plays on our insecurities. It reinforces groupthink, and has everyone thinking and parroting the same banal thoughts and feelings. It get jingles and slogans stuck in our heads. It suppresses individual thought and thus the individual. It exploits our base instincts and fears. It is a hollowing out of the human spirit. It doesn’t necessarily resonate with your own experience, so much as it may provide a cheap experience for you to passively accept. It merely seeks to entertain (which simply means to keep someone bound; entertain, maintain; entretenir in Old French meant to “hold together”). You might say it’s spellbinding. Hypnotic. It puts us to sleep.
How do we discern good art from bad art? Or perhaps more appropriately, healthy art from junk? 7
One thing I made note of in a previous publication of mine is a technique for artist to better know themselves and create more personally satisfactory work, is to simply make note of all the qualities they notice that they appreciate in a given work of art. This is could be just as valuable an exercise to a casual art appreciator. Document your own insight into what it is you enjoy about art. Get to know what you like. Know thyself.
True art has never been about the price associated with it.
It can’t be measured like a science or a commodity. Like a spiritual experience, it has to be known on a personal level. You can’t very well measure an experience any more than you can give it to someone else. Perhaps this is why so many folks today are confused about what art is all about.
Art isn’t just worth a thousand words. It can express what even words can’t.
Art, real art, is priceless, as it resonates with us in a way little else on earth can. Certainly in a way money never can.
Money can strike but a few notes in the human psyche. It can make us salivate with excitement like Pavlov’s dogs, or it can crack an invisible whip over our heads to give us the anxiety and urgency a slave needs to get back to work. Enough of it can, for a time, quell that anxiety.
Is that living? Is that how we want to view art? From the perspective of how it’s valued on the market today? If so, God help us.
Personally, I would say there’s also often some taking or exploitation going on in “productive” modes of enterprise too. See for example Wage Theft is a Much Bigger Problem Than Other Forms of Theft
McLuhan also had a lot of far-out overly-abstract ideas and a rather ahistorical notion that Western “left-brained” phonetic alphabets gave rise to civilization (how he explains China, with its logogram based language, as a civilization, I do not know). But what makes McLuhan’s writings and lectures worth while are the way he gets you thinking about things you typically don’t think about. How media like TV, radio and the printed word, shape our environment regardless of its content. Whereas most people study the figure (the content of media) McLuhan studies the ground (the media itself).
Some readers are probably already aware of my affinity for etymology. Something I learned from McLuhan is that to “read” literally means “to guess”. Reading is a guessing game. A game of making rapid decisions. We guess what a particular word means given the context. Consider how many alternate definitions words can have, or varying shades of connotation within the English language.
I do not know what, if any, changes may have been made to the app in order for this reinstatement to have been approved.
Though if you really wanted to you could argue Diogenes was something of an extreme minimalist.
I don’t mean to overly moralize here. We all like a bit of junk food from time to time. But a junk heavy diet will poison you over time.