Sunday, 20 January 2013

Art and the economy

Picture: Christie's
The Financial Times reports that the art market is ignoring the prevailing economic doom.  But maybe it's more accurate to say that the art market is reflecting prevailing economic doom.  The wealthy elite that buys art is having a good crisis. The very rich still have plenty of money, but the key factor is that they have fewer oppotunities to get great returns on investment.   So it makes economic sense to increase consumption, and buy more art.  The post-war economic boom was a time when the art market was relatively weak. It only started to take off in the 1960s and 1970s, after the period when returns on investment were highest. 
Of course a healthy market also needs supply, which in the case of the art market generally means that other rich people must be willing to sell.  That's why times of regionalised upheaval have been so good for the art market - when there's been a group of keen sellers, and another group of ready buyers (e.g. French Revolution, English Civil War).  Today demand has created its own supply by bidding up the works of contemporary artists. 

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