Hirst=Giacometti? The relative-value paradox

Warhol_Dollar_Sign.jpgFor as long as I’ve been writing and thinking about the art market – roughly a decade, with increasing intensity – there have been two seemingly contradictory phenomena driving its development. I keep wrestling with how to reconcile them, but I haven’t yet, and I hereby throw the paradox onto the Artworld Salon floor for discussion.

The first phenomenon is the surge in what I’ll call “cross-category collecting.” It’s rare to meet someone these days who only collects, say, vintage photography or Old Masters or German Expressionism. Most collectors also buy within several mediums. And within those mediums, people have started to cover much broader swathes of history. As The Economist noted last month: “To some extent, interest is spilling over from hot markets to [Old Masters]: newer buyers who might start out buying impressionist, modern, Russian or contemporary art are increasingly drawn to the big names among the Old Masters. (Many older paintings fit surprisingly easily within contemporary interiors.) But the peculiar confluence of factors that has propelled prices sky-high in other markets has not had as extreme an effect with the Old Masters.”

That brings us to our second trend, much noted among artworld veterans: the erosion of “relative value,” meaning the notion that an artist’s market should reflect their standing compared with all other artists, not just their peer group. Explaining the July round of auction sales in London, Daily Telegraph art-market specialist Colin Gleadell wrote: “Last week a good Bacon sold for more (at  £21.6 million) than the two good Monets, and a flashy Damien Hirst ( £9.6 million) made almost as much as the much rarer Matisse….For fashion-conscious collectors, a Koons or a Hirst is now worth more than a Rodin and as much as Giacometti.”

And herein lies the paradox: If the collector bases for everything from Old Masters to the avant-garde are becoming more interwoven, shouldn’t more, not less relative-value thinking be reflected in the prices paid? Granted, I do know one contemporary-art collector who turned first to Morandi then toward Old Masters as the prices for contemporary paintings rocketed. But on balance it often seems to me that the various art-market segments are operating in wildly different ways – across even relatively minor increments in art history. So, clearly, though people are buying widely within different genres and generation, they’re not using the same metrics in judging what price they’ll pay for particular pieces. Thoughts?

3 thoughts on “Hirst=Giacometti? The relative-value paradox”

  1. The Economist quote, I think, holds at least part of the answer when it notes that “newer buyers…are increasingly drawn to big names among the Old Masters,” not to the market for Old Masters in general. It’s something of a tired terminology at this point, but you do see quite a bit of “brand” shopping by “newer buyers” at the moment. And with brands, “big names” are it.

    And where does one find the best brands and the biggest names? At the big art department stores of course. (Amy Cappellazzo has even referred to Christie’s as the “big box store” poised to put the “mom and pop” shops out of business, so it’s quite obvious that at least one auction house thinks of itself in this way.) It is these stores “departments” that are responsible for the lack of relative-value thinking among buyers. When the elevator man announces, “Third Floor! Impressionism and Modernism! Futurism and Surrealism on the mezzanine level!” buyers can’t see the price tags of the photographs on Four, or the contemporary work up on floors Five and Six. Given that the auction houses remain the only true gauge of the market for an artist’s work, it seems logical to assume that the way that the auction houses divide up their wares has an effect on the way that all of those “mom and pops” price their work.

    What all of this points up, however, and what seems even more urgent to consider, is how “art history” is reduced to something like mere “chronology” and so loses its place as the final judge of quality. In other words, within this scenario, instead of “importance”, all that we are left with is “relative value”.

  2. Good point about the auction house divisions. There was a noticeable shift in interest–and prices–for contemporary art when Christie’s rejiggered their impressionist & modern sales into postwar & contemporary.

    I think it’s inevitable that a flood of new money is going to end up in the contemporary market, though, if only because there’s enough supply of “good” material to soak it up.

    If there actually were good Giacomettis available at the clip “good” Hirsts come along, then relative value would come into play. But mediocre older work is always floating around, and as Jonathan points out, there are always Dennis Koslowski’s who’ll pay $4 million for the most random Monet or Renoir.

  3. Indeed, that seems to be odd. Especially when taking into consideration that it is quite likely that in the future there will be even more works by Hirst and Koons on the market as they are now, while the supply of Giacometti and Matisse can be expected to be more stable. That’s simply because Hirst and Koons are still alive and producing while the others are not. Increasing supply should lead to decreasing prices.

    But that is as Marc wrote not what we see. Maybe the buyers anticipate even stronger demand and prices in the future for the works they acquire now. That could be the case for example because they see Hirst & Co as the new Matisse and Giacometti, i.e. expect that the real price boom will start after their death as additional supply is phasing out then. Hence, buying them now even for high prices is relatively cheap as long not everybody in the market is pricing in the post mortem price rush (However, that might in many cases only be rational when the collectors think about their heirs as some of the buyers might not be alive anymore either when Hirst is dead and they can cash in).

    Just some speculations. More information about the market and its participants is needed to discuss the phenomenon more in depth. As the article in the Daily Telegraph is pointing out indirectly, some Old Masters are still more expensive than a work by a contemporary artist or at least as expensive (Just compare the prices for the cheaper Hirst with the Monet and the Matisse – they are almost the same while Hirst skull is much more expensive (but with its diamonds it has a high intrinsic value as well)). Even if one sees the art market as a whole, it can be divided and works by some contemporary artists as Hirst are part of another segment than a Matisse. Although collectors seeking a Hirst, a Koons, a Matisse and a Rodin, I assume, see a Hirst more as a substitute for a Koons than for a Matisse. It would be interesting to examine for what works a collector who was outbid when trying to acquire a Hirst did bid thereafter – a Koons, a Matisse or maybe only another Hirst?

    However, maybe the classical approaches to price building do not work in the art market and there is another rational behind. Or none at all.

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