On 13 November, Creative United, an offshoot of Arts Council England, hosted an ‘unconference’ at Somerset House in London to announce a new report on The Future of the Art Market written by Lucy Rose Sollitt.
What, you might ask, does the future of the art market have to do with political economy? In fact, this is the topic I tried to cover in one of the three fire-starter five-minute talks at the unconference. In short, in the age of Citizens United and money in politics, the equity structures being explored in the art market could alter conversations around everything from the student debt crisis to the broad economic disenfranchisement that some attribute to causing Brexit or the rise of Mr. Trump.
At first blush, the art market is very boring. And elitist. And esoteric. It is a less exciting version of the excellent circa 1980s American game show The Price Is Right, where contestants try to guess the right price for an outdoor grill or a brand new car without going over. In the case of the art market, bidders with paddles, or their phone-bidding designees out of central casting, have to go over. They have to be the person in the room willing to spend the very most if they are to walk home with the priceless work of art and what auction theorists call the “winner’s curse”—knowing you won but almost surely overpaid.
So the art market becomes a price tag—sometimes a gut-wrenching one as when a now discredited Leonardo da Vinci (Salvator Mundi) sold in 2017 for $450.3 million or when a Jeff Koons balloon dog sold in 2013 for $58.4 million—which the art economist Don Thompson noted was almost exactly equivalent to spending on Ebola eradication and research across all U.S. government agencies. Artists struggle economically, making on average $20,000 to $30,000 per year.
Enter new equity models. These models ask a simple but fundamental question which is: What would the art market look like from an artist’s point of view? One answer is: very frustrating. The canonical story is of the American artist Robert Rauschenberg who sold an artwork Thaw to the American collectors Robert and Ethel Scull in 1959 for $900. The work sold through the famous art dealer Leo Castelli. By custom, the dealer kept half and the artist received the other $450. In 1973, when the Sculls were acrimoniously divorcing, Thaw sold at auction for $85,000. None of the increase in value went to the artist. Rauschenberg famously turned up at the auction, probably a few drinks in, and playfully shoved Scull.
The story is of course not so simple. Scull looks like a villain here, but he was also the silent backer of another gallery of the time, Green Gallery. It was Scull who paid artist Dan Flavin’s lightbulb bills well before he was famous but when the lighting company sent letters to Flavin’s gallery threatening to cut the artist off. And Rauschenberg’s story doesn’t really start in 1959. Even by 1953, Rauschenberg and his fellow traveler Jasper Johns were already showing up to cold-water flats to make art. And Rauschenberg’s first show with Castelli—which sounds so fancy now—actually only saw one artwork sell, and only because Castelli bought it himself. (That artwork Bed (1955) would be donated by Castelli to the Museum of Modern Art in 1989—after MoMA had failed to collect Rauschenberg’s work early enough, and at a time Castelli could give away an $11 million work, while of course also cementing his artist’s place in the canon.)
Rauschenberg’s story is used to explain the Artist Resale Right, an amount of money that goes back to the artist when an artwork is resold. The United States does not have a resale right. The United Kingdom has had one since 2006. During that time, DACS, the UK-rights-management body, has distributed £80 million across thousands of artists. In 2018, DACS distributed £18 million to over 58,000 artists, as compared to the £12 million given in 2018 by the Arts Council England’s Grants for the Arts (‘project grants’) visual arts category.
The key part of this story is equity. Equity is a way of managing the uncertainty of markets by granting ownership rights to the upside that might be created. Equity is a deeply risky financial instrument but also an optimistic one. If things go well, you get to participate in that future.
Equity is a profound tool in an age of staggering wealth and income disparity and at a time of deep structural critique of Neoliberalism. The democratic primary to the 2020 U.S. Presidential election has seen Senators Warren and Sanders promise to forgive student debt. Forgiving the estimated $1.5 trillion in student debt would change a whole generation of lives, exactly up to the students who go to university next year, at the universities still structured on tuition. The infrastructure is not built for a radical shift from debt to free any more than a human body is built to go from habitual intoxication to cold turkey. The system does not need to be flushed clean. It needs to be rebuilt. The cost structure of universities and the means of creating sustainable support need to be designed and reassembled—really in the manner of an art project itself. Some universities are starting to experiment with income-sharing agreements where students pay for college by promising a future share in their income.
Here is where equity comes in. Equity is a way of recognizing value that cannot priced in and using property rights to contain the value, while we figure out what it is worth. Equity is a way of dealing with things like education that are not a form of consumption but a form of investment. Equity serves art in a similar way because creative work is also a form of investment. The term “value creation” has been sucked dry of meaning but it is actually the engine of the economy.
So what the art market has to offer political economy is a testing ground for whether what Will Davies calls “the disenchantment of politics by economics” can be settled by the reimagination of economics from consumption to investment. If the art market can start to model fractional equity systems, the larger society can take them on board too. For instance, if Rauschenberg sold an artwork for $100, he could instead sell it for $90, take $40 and retain 10% equity. That 10% share would mean that he would have been paid by Mr. Scull. It also means that he has a property right during that stretch of years from 1959 to 1973 that he could turn around and resell.
If we look at inequality, most of it comes from equity. Wealth is mostly generated by ownership of equity not by pay of salary or other consumption or rent-based means. The wealthiest people in the world—Gates, Bezos, and so on—are wealthy because they owned things. They owned upside in the risks they took. (We could have a sidebar policy conversation about how their companies should pay tax and I agree with Anand Giridharadas here that philanthropy is not a reliable replacement for government.)
But what we can isolate is the odd nexus of the following:
Being an artist is a proxy for being a citizen, because the nature of being an artist is to think independently and thinking independently is the greatest lever of power in any democracy, possibly the only lever of power that really matters.
Being an equity holder is also a form of being a citizen because one owns one’s own place in the republic. One shows up and is counted. One has a share in the collective enterprise.
In the next ten years, blockchain technology and other means will give us wildly kaleidoscopic tools for redesigning financial instruments as civic tools. We can create new community currencies that distribute equity from scratch to level playing fields. We can use equity tools to create reparations—for slavery in the United States and for theft of indigenous property anywhere. We can use shared equity tools to represent the idea that value creation is rarely a solo enterprise. We can model the government as an investor in the body politic. More people can become equity holders—in all senses—in the art project that is democracy.
These tools are speculative but possibly the only avenue of antivenom and progress to the Citizens-United world order of money in politics and robot dystopian futures of universal basic income, sort of. Equity is not a handout. It is an invitation of belonging writ in financial form.
So perhaps the art market will continue to be a paddle-raise at the upper end, but will quietly see artists come together to build these equity systems, to pool them together into cooperative investment trusts, and to quietly expand out a notion of citizen-belonging that uses tools of ownership, however imperfectly, to reclaim principles of democracy.
(In the meantime there is PLINKO.)
Amy Whitaker is Assistant Professor of Visual Arts Administration at NYU and currently a visiting researcher at PERC.