What to make of the $70-billion business that is today’s art world? According to experts including economist Nouriel Roubini, speaking at a luncheon held last week in Davos, Switzerland, during the annual meeting of the World Economic Forum (WEF), the unregulated art market is susceptible to money laundering and other economic crimes.
As Davos played host to the world’s wealthiest and most influential businessmen and politicians, the Financial Times and Bank Julius Baer invited important collectors, dealers, museum workers, and economists to discuss art as a growing sector of the financial market (see Meet Australian Artist Lynette Wallworth at World Economic Forum). Is the skyrocketing market a bubble? And how does it affect collecting, art fairs, and museums?
“Anybody can walk into a gallery and spend half a million dollars and nobody is going to ask any questions,” NYU professor Roubini said during the lunch, reported Swiss Info. Well known for predicting the 2008 financial crash, earning him the nickname “Dr. Doom,” Roubini now fears that price manipulations, money laundering, and colluding auction houses could be tainting the art market.
In our modern, globalized world, international art fairs have made the art market accessible to people on all corners of the globe. As the 1 percent grows exceedingly wealthy, more and more people are investing in art, creating a growing demand for artworks as financial assets—a marked change from how the art world functioned in decades past.
Francis Bacon, Three Studies of Lucian Freud (1969), sold at Christie’s New York for a record $142.4 million.
“There have been enormous changes in the ecology of the art world in the last 20 years,” Financial Times arts writer Peter Aspden argued. “There was very little sense of glamour, popularity, or money when I discovered the art world at the age of 17.”
As the auction houses post record sales (see Christie’s Reports 17 Percent Rise in 2014 Sales), the world has become inured to figures that were once unimaginably high. Paired with a lack of regulations, the ballooning prices render the art market ripe for abuse, Roubini asserted. “Whether we like it or not, art is used for tax avoidance and evasion,” Roubini added.
Art collector Patrizia Sandretto Re Rebaudengo also noted the shift in the way art is collected. When she first began buying art in 1992, she said, “nobody talked about the art market.” Now, art flippers are snapping up works in the hopes of selling them off in the near future for a hefty profit. To her mind, a strong market for young, untested artists can lead to their valuing quantity over quality (see Will Oscar Murillo’s Colombian Chocolate Factory Stunt Damage David Zwirner’s Brand?).
Emerging artists aren’t the only party put at risk by today’s art world business practices. Martin Roth, director of the Victoria and Albert Museum, London, cited his institution’s meager yearly acquisition budget of £300,000 ($450,000) as the reason museums can no longer compete at the auction house. Instead, he argues, institutions contribute intellectually, driving the discourse. Roth’s advice for those interested in learning about what really matters in the art world? “Don’t listen to art advisers. Come to museums.”