Art Vs The Credit Crunch

Is the price of Art too high?

All around us the economic recession seems to be taking its toll on the world’s economy from dramatic falls in stocks and shares to soaring food prices, but what about the art market? How is this lucrative and fast growing market fairing at this time of financial insecurity? Have the auction houses lost the plot with their estimates? And what impact is the current economic climate having on artists themselves?

In June of this year one of Claude Monet’s large water lily paintings Le Bassin aux Nymphéas, sold for an amazing £40.1m, a record amount for a Monet anywhere in the world to date, despite the unstable economic climate and impending credit crunch.

(© Experience Music Project)

It was at this sale that Olivier Camu, head of impressionist and modern art at Christie's London explained that, “the art market is strong and it recognizes quality when it comes up. Art in the past has not followed stock market fluctuations, and also there is an element of people seeing it as a refuge.”

But is it utter desperation or because art is a secure financial “refuge” that Lehman Brothers Chairman, Richard Fuld , plans to boost his cash flow by auctioning 20 works at Christie’s in New York in November? Handed over to Christie’s for the sale, is reported to be a 1951 De Kooning, which was secured for a sum of around $20m back in July prior to the collapse of the bank.

The increasingly international nature of the art market means that if one or more countries struggles to produce buyers this should not dent the overall market dramatically. Whilst the US and Europe are creating financial rescue packages Russia and the Far East continue to thrive, with new buyers and collectors continually being born. We recall Roman Abramovich spending a cool £60m on a Lucian Freud and a Francis Bacon, and Sotheby's calling off its sale of Mstislav Rostropovich's art collection when the Uzbek billionaire Alisher Usmanov bought the entire package for £20m. In the former USSR a new wave of Russian billionaires and business magnates forever seem to have money to spend and with this has developed a passion for art, being especially keen on reclaiming Russian art lost or deported during the years of the Soviet State. This can only be good news for those who snapped up Russian Cubo-Futurist and Suprematist works when there was little demand and prices were relatively low. _

(© Sothebys London)

____________Furthermore, the art market is vast. By this I mean that art in its quantity and range of choice is abundant, from all historic periods and in all mediums. Art will always exist and appreciation and demand for high quality art will never decrease. Film makers and new media artists may find themselves in a more risky situation at present, but paintings of quality will continue to sell. Painting is a particularly easy medium to buy and showcase, with the Monet sale being an example of this.

Whilst the art market started off in a formidable fashion at the beginning of the crisis, recent sales in Chinese art have brought the market back down to reality. In October at a Sotheby’s auction in Hong Kong we saw 47 works go unsold after they did not reach their reserve prices. This poor sale is in stark contrast to the success of Damien Hirst who made £95m in his Sotheby’s auction in September. Representatives from Sotheby’s believed the Chinese auction flopped because of “estimates which were overly optimistic”. So perhaps it is Sotheby’s who needs to be brought back down to earth. Is the financial crisis merely highlighting the fact that art has become too expensive and auctioneers are becoming obsessed with breaking records?

For years now the art world has enjoyed unprecedented success, with prices rising all the time, therefore isn’t a slowdown in the market inevitable and could it possibly benefit the art world to be more realistic instead of greedy? Jonathon Jones wrote in his article “Art booms during a bust” for the Guardian that “a boom in artistic intensity is one of the few things we have to look forward to as the economy nosedives”. It has certainly been true in the past that economic depression has produced some of the best new artists and pieces. Perhaps it is time to invest more in new artists and projects, and in making art more accessible rather than unattainable for small collectors and art enthusiasts. Some artists seem prepared to adjust, such as sculptor Francis Upritchard, who when asked what she thought might happen if the art market followed the financial markets in a downward spiral replied, "I lived in a squat for six years, if I had to downgrade my studio, it wouldn't matter. I want to be an old lady making art. Perhaps I'll be out of fashion at 50, but trendy at 80".

(Picasso's Portrait of Angel Fernandez de Soto was expected to sell for $60m and was bought by Andrew lloyd Webber in 1995 for $28m © Christies)

With artists having to adapt to the current situation the art production of the next few years could be the most exciting we’ve seen in recent years. Similarly if auctioneers drop the ridiculous estimates, then action on the auction house floor should be exhilarating as we see rare and important pieces come under the hammer. The on-going controversy in New York over Andrew Lloyd Webber’s Picasso piece and its Nazi-era past gives us a glimpse of the potential drama possible in the art market. And at this time of down-sizing and cutting back what could be better than some artistic reinvigoration!

BW and HB For 3E News research by CK


  1. What we are forgetting here is the fact that the VALUE OF ART is different from THE PRICE OF THE ARTWORK; I feel the value is what people would pay for it if they had the money and obviously the price is how much people will pay for the work at that particular time so many people do end up confusing both. geddit right yehhh people :)

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  3. Yehhhh wotevs yehhh wotevs!!!
    get ur stuff sorted innit!!