Tainted love: art's ethos and capitalization suhail malik/ andrea phillips
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
t ainted love: art’s ethos
and capitalization
suhail malik/
andrea phillips
rance was again the target of jittery investors,
F
worried its top AAA credit rating is at risk.
Yields on its benchmark 10-year government
bonds climbed and their spread over Germany’s
equivalent bunds hit a record for the euro era.
Paris said the risk premium was “not justified.”
… Analysts warn it may well not be the steady
sale usually expected from a country with a
coveted AAA rating.
“ The price action in European monetary union
(EMU) AAAs (excluding Germany) in the last
few sessions clearly highlights that it is not about
value in EMU AAAs at the moment. It is about
fear and positioning,” said Jamie Searle at Citi.1
One of the primary masks of capital is the naturaliza-
tion of its processes as inevitabilities. British Prime
Minister Gordon Brown’s language in the Autumn
of 2008—that the global financial crisis “happened
to us”—is testament to the rapid and strategic shifts
in alliances of power and profit that support crisis
economics. We were just in the wrong place at the
wrong time; it was chance that it happened to us; it
suhail malik/andrea phillips
209was predetermined from above, and so on. The same That such passions, chance encounters, and de-
heady mixture of belief and money—or, more precisely, cisions are irreducibly involved in the operations of
naturalized urge camouflaging monetary transaction— the art market perhaps accounts for the relative fail-
is evident in the art world when a collector buys or a ure of investment funds to rationalize it. In his com-
dealer sells an artwork on the basis of an inexplicable prehensive overview of recent developments in the
and even capricious love. Just as “fear and position- contemporary art market Noah Horowitz remarks that
ing” now motivate the price action in the EMU, the the art fund industry “is not only emblematic of the
same sensuous pathologization is evident in the elite enterprising new ways in which contemporary art is
mechanisms of art buying and selling. We argue that sold and experienced, … nor of how the art economy
the love of art, here characterized as an ascendant as a whole has embraced globalization; it is modern
property of art market transaction beyond the norma- global finance embodied.”2 However, we learn over
tive duties of care and control, is not simply a fetish the ensuing pages that art investment funds—for
but a powerful agent in the further redistribution of which art is an “alternative asset class” to standard
wealth, practiced in clear systemic collaboration with equities, shares, and bonds—have in fact not done
artists, curators, critics, and other actors in contem- very well over the first decade of the twenty-first cen-
porary art’s infrastructure. As elaborated below, art is tury. Such funds have generally failed to draw in in-
situated as an “alternative” commodity in part because vestors, have “weak historical track records” on their
of standard, received expectations of the personalities returns, dissolve, or have closed down (in the case of
and passions of both artists (as quixotic, passionate, Fernwood, one of the leading art funds, shutting shop
unpredictable) and their dealers and collectors (vari- because of suspected embezzlement by its CEO).
ously holding back ready stock from the market, not These failures, together with the more general broken
selling at the height of profit, etc.) The art market is in optimism for art investment funds, could be taken as
this sense peculiar not simply because it lacks trans- an ironic confirmation that they did indeed embody
parency because of its unregulated, opaque, and in- “modern global finance” over the decade to 2008, not
efficient market but also because its trade is built on least in the leading role the global finance sector took
the impulsive and chancy gesture of love. As we shall in bringing about the systematic social and economic
see, such amorous/erotic transactions filter across the distress that has since ensued.
private to the public sector as museum and state-run In light of all this it may seem perplexing if not per-
galleries become increasingly reliant on the donations verse to maintain that the art market can indeed be
and bequests of private collectors in order to maintain understood as the embodiment of finance. Not that
both their permanent collections and temporary exhi- this is Horowtiz’ claim: he remarks only that art invest-
bitions, thus significantly blurring the boundaries be- ment funds are such embodiments even though, as
tween state care and private passion. we have seen, this is also why they have limited to no
financialization of art suhail malik/andrea phillips
210 211success in establishing themselves in the art market. these prices by the artists’ dealers is a well-known
Yet, as we now argue, art does indeed embody the part of such highly visible valuations. In other words,
truth of finance, and it does so precisely in its failure the ownership and trade of art is far from being
or limitation as a kind of free-market investment. Pro- the transparently- and openly-costed, easily-trans-
posing as much not only allows the convergence of ferred, low-maintenance circulation of claims that
interests and operations of art (in particular contem- modern global finance is built upon. On the one
porary art) and finance to be apprehended theoreti- hand, this is the advantage it is supposed to pres-
cally, it also reconfigures the significance of what is ent to art investors, who look to profit from the high
frequently heralded as the condition and satisfaction level of “asymmetrical information” offered by art’s
of its collectors: their love of art. “pricing inefficiencies” 5 —that is, they deploy to
Warranted though the acerbic identification of their advantage knowledge gained through closer
the failure of art investment funds with modern global involvement with art dealers. On the other hand,
finance may be, it leaves unexplained how and why however, it means that art’s economy has a “weak
art investment funds in particular did not live up to the pricing system” because it “lacks a single generally
promises made for them in the finance-led boom of accepted valuation methodology,”6 such a method-
the mid-2000s. Horowitz presents many of these in- ology being a primary and constitutive assumption
trinsic reasons, which arise mainly due to the particu- for the finance sector.
larities of art as an investment. For example, it is highly There are two interconnected aspects to this
illiquid (it cannot be quickly converted into money weakness, one is theoretical-ideological, to which
flows); it has many upfront and additional costs in- we later return, the other is sociological-institutional:
cluding insurance, storage, handling, shipping, etc.; that “art funds’ investment objective may be intrin-
it does not pay dividends or returns over the time it is sically flawed”7 because the free-market precepts
held by the investor, and so on. That art generates no core to such vehicles and their investors are in fact
earnings until its sale but has ownership costs makes inapplicable to art. In Horowitz’ wry words: because
it a “negative cash flow asset.”3 The particularities of such investment funds’ “vindication of art as an asset
art as an investment are not, however, limited to its class is based so strongly upon free-trade economic
material conditions and the requirements of preserva- theory, they may have underestimated the behavioral
tion; they also arise from the specificities of its trad- aversion of the market … towards such unabated
ing, which include “high transaction costs, … limited speculation.”8 It is not only that the art market is
arbitrage opportunities,”4 and highly “opaque market averse to the standard pricing mechanisms constitu-
information,” in that actual transaction prices are not tive of modern global finance’s operations and pro-
openly advertised outside of auction resales of art cesses but, moreover, that art dealers’ “antispecula-
(the secondary market) even as the manipulation of tive vehemence” makes for “sound business sense.”
financialization of art suhail malik/andrea phillips
212 213In fact, dealers’ suppression of the economic price on both primary and secondary markets. This
[meaning here the free market principles under- art is the “royalty” of the art market (just as the “blue”
lying modern global finance] … may ultimately of blue-chip is said to derive from “blue blood”); the
strengthen their financial prospects: collectors prizes in private and public art collections the world
continue to do business with them because they over (local cultural significations and traditions not-
trust their prices, and so the quality of their inven- withstanding). If you have a Picasso or a Warhol
tory. … As goods leave the dealer’s inventory in your museum (currently and colloquially, the saf-
and extend beyond the network of collectors who est bets, the bluest chips) you are likely to ride the
comply with the first right of refusal, their control storm of any market crash. Thus the game of betting
over supply diminishes—and with it, their is played by those who like to feign at gambling and
monopolistic price control mechanism.9 have the means to do so. The term “blue-chip,” applied
to companies that are regarded as “safe bets” on a
“Antispeculative vehemence,” highly regulated trade, stock exchange—corporations of any type that per-
tight control mechanisms on ownership and subse- form consistently well and operate profitably through
quent resale; all of these standard business practices ups and downs—is notably transferred to the informal
are how and why dealers “strengthen” their market “ratings” mechanisms of the art market, evidencing
share and are “commonly regarded” as better art the relationship between luck and profit actualized in
investors than art investment fund managers.10 But art investments. The term derives from poker, where
if this is so it is because the methods and transac- a blue chip is valued higher than a red or white chip.
tional processes most successfully deployed in art’s Evidently, the game of chance, for those that can or
commercial markets contravene in almost every way must play it, transitions neatly across money actions,
the free market principles and investment assump- and the “safe bet” epitomizes in its “anti-speculative
tions and patterns core to “modern global finance.” vehemence” the critical link between risk and aspira-
If such patterns are indeed embodied by art invest- tion, the brag of profit and the depths of loss.
ment funds it is little surprise that they tend to fail so The idea of a safe bet is, of course, a non-sequitur;
often or remain so modest. Equally, anti-speculative wished for in all capital transactions, the safe bet is
vehemence is intimately allied to the amorous/erotic perhaps especially and dramatically apparent in the
involvement in art, widely flaunted in the acquisition art market. Gambling on art is then only a specific
of blue-chip art and the cloying discourses and be- type of investment, in which the passion of the game
liefs of central figures in both public and private art is matched by other passions—the love of art and the
sectors who support and rely upon such collectors. performative instantiation of that love on and through
But such artworks—and therefore artists—are blue- “buying action.” The titillation of such an ethos for
chip precisely because they return a consistently high the “civilian” onlooker is clear in the popularity of art
financialization of art suhail malik/andrea phillips
214 215auction and art opening features in popular newspa- of charisma; a love ‘irreducible to money and any ob-
pers and magazines, as well as in the sales of semi- jects of bourgeois interest.’”12
serious research publications giving an “insider” and The centrality of this amorous ethos to the con-
interview-based account of dealing and collecting.11 centration of social and capital power in art of course
Such marketplace hagiographies attempt to make relies upon and maintains the belief that while art is
public the private world of art dealing, yet they isolate indeed traded on a market it is the very obstruction of
the privacy of monetary transaction to the shock and that market to liberal free-market principles and prac-
awe of numerology (in the sense that the cash figures tices that accords with an involvement in art itself.
are dramatically and thus mystically out of reach). It is The art market is rather a market of “care,” deemed to
these forms of action, private yet made public in the be appropriate to art because art itself is decontami-
glare of gossip after art auctions (the secondary mar- nated from capital accumulation.13 Through art and
ket) and through rumor and the awarding of prestige the love of art, wealth and power excuse themselves;
and cultural capital through deals made with art gal- they demonstrate their ethos of human passions over
leries and art consultants (primary market), that are that of money. Interviewing the art consultant Philippe
under examination. Ségalot about how he finds and matches the right
Spending on blue-chip art—a practice already artwork to a buyer, Sarah Thornton asks:
made paradoxical and thus separate from standard
stock and share transactions through the concept ow does Ségalot know when he has encoun-
H
of “safe betting”—ties the buyer into an interested tered the right work? “You feel something,” he
bundle of socio-cultural mechanisms whereby the says with fervour. “I never read about art. I’m not
action of spending money is primarily seen as quix- interested in the literature about art. I get all the
otic and impulsive, and only secondarily, if at all, art magazines, but I don’t read them. I don’t want
as investment-based. Drawing on the research of to be influenced by the reviews. I look. I fill myself
Raymonde Moulin on the French art market and with images. It is not necessary to speak so
connoisseurship in the 1960s, Ulf Wuggenig points much about art. I am convinced that a great work
to the relation between amateurism, defined as speaks for itself.” A faith in gut instinct is common
the engagement in an activity for pleasure rather to most collectors, consultants and dealers, and
than profit, and love (amator—lover). Reflecting on they love to talk about it.14
Moulin’s interviews with collectors, and quoting
Pierre Bourdieu, Wuggenig says, “their self image The asymmetrical shape of the art market is concomi-
was that they collected not for instrumental reasons tant with the collector being a lover. This in turn ren-
but for the ‘love of art’—and more particularly for the ders the market one of passion—a passion built on
sort of ‘pure love’ that has its roots in the ideology the eroticism of impulsive taste and fueled by dealers
financialization of art suhail malik/andrea phillips
216 217and consultants formulating that love competitively. place in the equity and real estate markets”16 —or in-
Such incalculable passion is the avowed ethos not deed any conventional pricing calculation deployed
just of the agents in the art market but of art’s insti- in liberal economic theory. As Jonathon Nitzan and
tutionalization more generally; it is the identifying as- Shimshon Bichler explain, this formula “tells us how
sumption as to why one would be involved in art at all. much a capitalist is prepared to pay now”—the price—
But while it is relatively easy to characterize the impul- “to receive a flow of money later,” reducing “a future
sive collector as a pathological subject, or the aggre- stream of earnings to their present value.”17 For Nitzan
gate movements of the art market to be of behavioral and Bichler “capitalization” is defined by the process
rather than rational economics,15 a more complicated of “reducing” earnings to their present value together
and more urgent issue is the relation between the with the ordering of that which is thus priced.18 In con-
convenience of that pathology (the irrational collector trast to the supposed universal salience of this pric-
who bankrupts him or herself in the name of love for a ing formula, which is core to neoclassical economic
particular artist’s work, for example) and the method dogma, art has no basis for its future earnings other
of accumulation as it is signaled by art’s price. Our than speculative guesses. The best the art buyer can
interest is precisely the logic of the relation between do is “make an educated bet that the price of an art-
the art market’s price-setting mechanisms and the work may rise in the future, but calculating such gains
evident “irrationality” of art’s pricing in relation to pro- is hardly a perfect science”19 —hence the problematic
duction costs or other supposed “real” bases for pric- relation between investment fund strategies, which as-
ing. We aim here to remove the (proto-ideological) sume such pricing formulas, and art market dealings,
support for the decontamination of power through which decry them. Contrary to this apparently irreduc-
art’s ethos, which is no less a moral-affective support ible incongruity, Nitzan and Bichler propose that the
for finance gained by the separation in principle of neoclassical formulation of price is itself a falsehood
economy (price), social order, and art, the rationality if not a mystification. The unsurmountable problem it
of one being opposed to the irrationality of the other. faces is that since expected earnings are gained in the
future, those earnings and therefore the rate of return
The rationality of the liberal markets and the art mar- are in fact unknown and only speculative expectations.
ket’s countermanding of it are central to the more Furthermore, since the expected rate of return is cal-
theoretically-ideologically situated aspect of art’s culated on the basis of future earnings, it is not even
“weak pricing system.” Not only are art prices on the known if variables in this “elementary” calculation of
primary market set “monopolistically,” but these prices capitalization are interrelated or not. The core formula
do not observe the basic diktats of modern economic for the neoclassical price-setting model thus says
theory: “art investors cannot simply determine the dis- nothing to the content or relation of its determinants.
counted value of its future cash flows, as is common Or then price. In other words, standard price-setting is
financialization of art suhail malik/andrea phillips
218 219never in fact the “discount value of future cash flows.” that, as such, price and capital are not predicated
While the pretence that price can be calculated on production, use-value, consumption, or other
on the basis of discounted earnings can be mostly bases external to finance.21 It is not then that art
maintained by reference to a “real economy” of earn- pricing is a puzzle compared to other, produc-
ings, debts, production, and so on—all of which can tive or consuming, sectors of the economy, but
be called upon as a supposed basis for calculating that the art market dispels their obscuring of
“future earnings” and “rates of return”—its actual im- capitalization as the primary determinant of price
plausibility is wholly apparent in art’s price-setting, as (which is also why its price-setting mechanisms
Horowitz recognizes. In other words, the price-setting present such a practical and theoretical difficulty
of art reveals capitalization as such, without the le- to neoclassical and Marxian (NCM) accounts).
gitimizing, retro-fitted measurements and theories For Horowitz, the only tendentious salience of
seeking to justify earnings on the basis of production standard theories of price-setting to art is the fact
(Marxism) or consumption (neoclassical liberalism). that art has a “weak pricing system.” And while it
That is, the art market demonstrates the truth of all is indeed “weak” from the perspective
price-setting: that there is no basis in production or of the neoclassical precepts to which
consumption for pricing, only capitalization. In itself, Horowitz subscribes, it is for just that reason
this result is hardly news: art prices cannot be ratio- a pronounced example of the conditions of
nalized by reference to production.20 But its deriva- capitalization as Nitzan and Bichler account for
tion from Nitzan and Bichler’s theory of capitalization it, namely that “all capital is finance and only fi-
brings with it two important corollaries, which return nance.”22
to the sociological-institutional conditions of art and
its market: (ii)
(i) s Horowitz observes, interest from regular
A
financial investment funds in the art market
If art prices are explicitly financially generated tends to go rather badly thanks to the
without reference to production, they make “monopolistic price control mechanisms” of the
manifest the condition of all price-setting, or primary market. Nitzan and Bichler’s notion of
what could be called capital’s procedural and capitalization, however, proposes that such mo-
operational “fincanciality” (the term is not Nitzan nopolistic price controls are not the exception
and Bichler’s). Financiality here designates that in price-setting but the standard. In particular,
finance is a primary condition for, rather than con- the primary market is only a trenchantly orga-
sequence of, capitalization and price-setting and nized market of “administered prices” that are
financialization of art suhail malik/andrea phillips
220 221usual business practice. Administered prices Buffet’s assets to anyone at all is an issue of ownership
stabilize earnings on the basis of the markup on not technical limitation. In more general terms, private
their wares.23 As for the primary art market, such ownership is the condition of capitalism because “it is
prices are set by highly concentrated and often wholly and only an institution of exclusion, and institu-
colluding businesses and sectors. More exactly, tional exclusion is a matter of organized power.” What
administered prices are a form of control over is key here is that ownership is not productive per se
prices and represent the “degree of monopoly” since it “has no bearing” on industry intrinsically, and
of the firm over the market. Horowitz’ remark is certainly does not add to it. Industry and business are
then a recognition from inside the neoclassical different in kind. But business can profit by gaining an
paradigm that the primary market is one of admin- advantage over industry it does not own by damaging
istered prices. it, and thereby lowering the maximization of industry
overall. Sabotage is then the condition and actuality
That capitalism’s financiality is independent of its pu- of capital earnings. Furthermore, since business capi-
tative justification of production is, however, only a tal necessarily sabotages industry, capital is then not
partial result in Nitzan and Bichler’s larger and more just sometimes unproductive with regard to industry
general claim, which they make following Thorstein but is necessarily counterproductive.27 In stark con-
Veblen’s distinction between generalized social pro- trast to the shared tenets of NCM paradigms, capital
duction (industry) and private ownership (business). always lessens industry rather than profiting from its
Industry is “an integrated creative process whose increase: “the only way for capitalists to profit from
productivity derives from the totality of its purpose- productivity is by subjugating it and limiting it. And
ful resonating pulses,”24 the latter phrase meaning since business earnings hinge on strategic sabotage,
the integrated effects of production across society. their capitalization represents nothing but incapacita-
Business, on the other hand, is the “power process tion.”28 Sabotage is the shaping of generalized indus-
carried out through the prerogatives of ownership.”25 try, ordering it to specific and particular interests; it is
For Nitzan and Bichler the primary question core to all a technique of concentrating power. As such, capital-
capital accumulation is “how does private ownership ization is a social ordering for the sake of privatized
‘generate’ earnings?”26 They note that the etymology earnings and is therefore directly power. Economy
of private is from the Latin privatus, “restricted,” and is then always and necessarily a political economy;
related to privare, “to deprive.” Private ownership is there are no “free” markets.
for them the “power principle of capitalism” not be- While this general result holds for art as it does
cause “it enables those who own” but because, as for anything else that is capitalized, what is specific
just noted, “it disables those who do not.” To use about art’s financiality is that because art prices are
their local example, not being able to transfer Warren set with reference to nothing but its financiality and
financialization of art suhail malik/andrea phillips
222 223as its market is so highly administered, art prices — Since sabotage is a necessarily social act
explicitly demonstrate the ordering and sabotage of of institutional ordering and exclusive priva-
general production by and for private earnings.29 Art tion, capitalization cannot be analytically or
prices are unequivocal instantiations of capital-power practically separated from social organization.
without any recourse to socio-political accountability. In particular, wealth accumulation is not ana-
In these terms, the difference between art’s primary lytically or practically distinct from symbolic,
and secondary markets is that such sabotaging capi- cultural and technical power. The integrity of
talization—the degree of monopoly, the concentration political economy proposed by Nitzan and
of institutionalized power—is greater in the primary Bichler’s theory of capital power thus
market, while the demonstration of sabotage is more dispenses with the explanatory categories
overt in the secondary market. These two aspects are established by Pierre Bourdieu of symbolic
in no sense contradictory nor do they even contravene or cultural capital, or of direct and indirect
one another as in the “Hostile Worlds” scenario in capital, which presume a difference in kind
which art and money do not touch, identified by Olav between economic capital and social capital
Velthuis to be commonly mobilized by agents defend- where the latter is mobilized in the service
ing the monopoly of the primary market against the of the former.31 Rather, and as art clearly in-
encroachments of the secondary, often by recourse stantiates, prices are correlated at once and
to the impassioned ethos of the former.30 Rather, both necessarily with cultural or symbolic institution-
markets are effectively mobilized together to further alization. “Values” of many kinds are intimately
increase the total and specific “degrees of monopoly” coordinated in a nexus or complex that inte-
of capital power. This result accords with the obser- grates meaning and its (dis)establishment, “in-
vation that for all the drama concerning the shifting tellectual property,” social status, money, price-
power and positioning of the two markets with re- setting mechanisms, and so on. Art prices thus
gard to one another, in practice both are deployed by rescind the “Nothing But” paradigm, in which
the same agents as part of their standard business the value of art is determined simply and exclu-
operations; and, that the degree of monopoly over sively by its price.32
prices is never really weakened by competitive sales
but only differently administered (art does not com- — Art’s marketization is constituted by its finan-
pete against other art in arriving at its price; it is only ciality, without reference to its production, or
ever a question of the markup). the basis for production, or even its products.
Identifying art’s financiality with sabotage enables In particular, art’s marketization is not an issue
yet further characteristic features of art’s current in- of commodification, or of art’s content. The
stitutional ethos to be systematically accounted for: influential Marxian disputes on this identifica-
financialization of art suhail malik/andrea phillips
224 225tion result from an anxious recognition of the autonomy, is then a legitimizing figure of highly
historical error of art’s commodity status in monopolistic production that is itself emblem-
contradistinction to another kind of production atic of the configuration of business-sabotage
that would somehow free it from its marketi- contra social industry.
zation. In this they base art in production—
perhaps even the generalized production of — The now standard critique proposing art to be
industry at large—and look to surpass art’s irreducible to capital and the latter’s culture
financiality for this reason. However, capital- because of art’s unproductivity, dejection,
ization qua sabotage is wholly indifferent to non-perfomance, failure, useless expenditure,
production: it makes no odds to capitaliza- and so on (in short, the Adornian-Beckettian-
tion how or why production takes place, only Bataillean repertoire) advocates a cultural
that some production is to be institutionally determination of art qua sabotage. Accepting
affirmed and others sabotaged (thus reduc- this “Hostile Worlds” paradigm of art comple-
ing industry overall). Whether or not art is a ments art’s financiality even as these counter-
commodity is no issue for its capitalization, the capitalist theories claim to contend it. These
question having no traction on its financiality. institutionally stable discourses thus take a
leading role in the justification and legitima-
— Similarly, looking to the (individual or collective) tion—the remoralization—of institutional
artist as the basis and condition of art in sabotage, most notable perhaps in the sup-
need of support against the depredations of port they give to the highly concentrated
marketization and institutionalization (inflicted monopolies of art already in place and the
by those very markets and institutions) is an prevailing social power represented thereby.
appeal to a return to production as the basis The continuity of interests between financiality
for art’s value. When such appeals act as a and such prevalent critical claims is evidenced
moral vindication of the ethos of art’s financial- by the their centrality in the marketization of art
ity (selling the artist’s work is for the benefit of through theoretically-informed journalism.
the artist), the artist acts a compensatory fable
for the continued sabotage art’s institutional If it’s a commonplace that art’s financiality damages
capitalization inflicts on general production. a more general proliferation of “art” simply because
Art’s amorous ethos looks to individualize and the art market excludes more art than it includes, the
give alibi to ownership-sabotage by configur- analysis proposed here offers a different, specific
ing the artist as a unique producer of original determination of the damage inflicted by art’s finan-
works who, on the basis of their putative ciality: it is a sabotage of art as a part of general
financialization of art suhail malik/andrea phillips
226 227production, as industry. Art’s price indexes the power aspects of its privatization, which are interrelated. The
of such sabotage in the terms set out by that sabo- subjective account requires one last visit to the deri-
tage. Art’s capitalization is not then predicated on vation of price-setting as institutional sabotage.
aesthetic-artistic determinations but sociological- Given that art has “little intrinsic worth” in terms of
financial power; or, at least, the power concerns of material costs,33 art’s financiality is only another way of
institutional capitalization determine its aesthetic- saying that prices are set almost entirely by its mark-
artistic interests. Art’s amorous/erotic ethos is a cru- up.34 If one of the standard puzzles in art-pricing is how
cial medium of transmission between the two: the im- to justify prices in “fundamentals” beyond hype and
plementation of power-sabotage is authorized by the risk, Nitzan and Bichler’s derivation of pricing suggests
common yet unaccountable enactment of the love of that prices in general have no foundation in objective
art, which in any given case is an irreducible element. conditions such as production but are predicated only
Such institutional power is on the one hand fashion on convention (historical earnings and a standard rate
within art, in which every party looks to every other for of return) and a subjectively determined speculative
an unaccountable and otherwise criteria-less valida- zeal or positioning, which is a trade-off between hype
tion of what counts as worthwhile art. And on the other and risk above a standard rate of return.35 Moreover,
hand it is the prevailing institutional insistence on while the sabotage business inflicts upon industry in
presenting work of putative “quality” and “value.” The general is a consequence of sectorial-collective sabo-
assumed obviousness (and consequent consent) tage (outlined above for art as the appeal to “quality”
enforced by such terms inflicts in morally protected and “excellence”), that sabotage is nonetheless un-
form the social sabotage of a power that need not dertaken for earnings made by private ownership and
account for itself but is simply occasioned by its claims is exclusively against industry. There is then a private,
on/through art. subjective correlate to the sectorial sabotage of capi-
The love for art declared not only by collectors but talization and, in particular, its positioning. When spec-
also by any of its agents is the subjective, privatized ulative zeal is low (hype is low or outweighed by the
account of such a morally protected sabotage power. risk coefficient)—as when markets contract or, with
It is an ethos. While such power equal to capitaliza- art, the speculative interest is directed towards art that
tion, and thus finance, is perhaps most evident with is not secured by power (or reputation, another name
the collector-dealer nexus, where monetary transac- for sectorial sabotage)—the general name for this pri-
tions are most palpable, it is by no means restricted vate, subjective correlate is fear. When hype is high
to these actors since capitalization is a matter of gen- or outweighs risk—when positioning is highly positive,
eral social ordering organized through private owner- as it is with blue-chip art—the received name in art’s
ship. The reorganization of power legitimized through ethos for the private subjective dimension of sabotage
art’s amorous ethos has both subjective and public is love. Love completes the logic of the privatizing
financialization of art suhail malik/andrea phillips
228 229sabotage of production in general; it is the confirmation displayed, and accounts for much of the pandering and
of power over the social order through capitalization groveling that takes up an increasing percentage of the
pursued through institutions. Love is but the private, time of all publicly-funded galleries and museums. The
subjective—and therefore capricious, owned—posi- sheer fact that “public” art museums and galleries in
tive positioning of art’s capitalization. many parts of the world are now being predominantly
The love of art is thus still a “source of legitimacy” funded by private donation attests to this. Once the im-
for empire-making allied to capitalization; it is how brication of private patronage in spaces once deemed
sabotage can be privately and publicly vindicated.36 ideologically public is complete it becomes clear that
Looking at the recent history of this socio-cultural contemporary art, its production and curation, be-
privatization, the political economy of culture, in Eu- comes an advanced mechanism of experimentation for
rope and North America, it is clear that the hierarchies the sabotage of (ideologies of) access and equality.
ascribed through such territory-building projects have
dissipated to a major extent through the reorganization Taking art’s institutional capitalization to be a mode of
of fiscal power mechanisms at a transnational scale, sabotage vectored/legitimized through an amorous/
prioritizing revenue for the type of finance that works erotic ethos then permits a number of medium-term
beyond the simple philanthropic, charitable gestures future scenarios for the political economy of art and
of previous decades, and beyond the clear territorial- the privatization of care to be anticipated. Though
ization of ownership. Love has no borders. Playing the practically-integrated, these transformations can be
risky game of buying and selling art not for profit but thematically demarcated as follows:
because you love art and are perhaps addicted to its
irrationalities and impulses in some way is a sure fire I
method of distracting a public gaze, which accepts the
distinction between capitalization and love, from ques- capital
tions concerning the deep inequalities caused by your
wealth accumulation or indeed the investments you espite the claims of the art investment sector
D
may make in order to produce that wealth. Such dis- that it is counter-cyclical or uncorrelated to the
connection between normative investment and return movements of broad equities markets, the art
methodologies and the practices of the contemporary market is entirely dependent on the available
art market leave stranded a welfare state model of pub- cash flows or liquidity available to higher-income
lic art beneficence, which the funders are simply un- earners.37 Two schematic scenarios can then be
able (though of course not unwilling—in fact have no put forward for the decade from 2012, depend-
choice but) to compete with. This suggests a marked ing on the fate of the finance sector and private
shift in the modes through which art is distributed and wealth accrual in the period.
financialization of art suhail malik/andrea phillips
230 231(i) prevalent as art will seek to gain greater moral
value in order to stabilize capitalization in terms
increase in liquidity (which is not to say
an other than those of wealth accumulation. Here,
a strengthening of wider economies) will terms such as “quality” and “excellence” will be
strengthen the art market, which will be most contested as public-collective (moral) claims
ostentatiously marked by escalating prices for rather than privatized gain, but will again, for this
blue-chip work. The “Hostile Worlds” scenario reason of securing power, mark the sabotaging
between primary and secondary markets will institutionalization and marketization of art.
be resurrected, but as mock-battles because
all sides will increase the power of art’s institu- II
tional capitalization against (art’s) industry. The
characteristic ethos of art will concentrate power institutional infrastructure
with even greater degrees of monopoly to those
who are most able to love art subjectively—that It’s said that you can’t help who (or what?) you
is, without care for what that love means, how it fall in love with. In loving art and playing safe bets,
is constituted, and what it more generally reorga- modern and contemporary art collectors mask,
nizes. The period of the art market slump, 2009– inadvertently or not, their worldly dealings. Soci-
201X, will be seen as a valuable “correction” in ologies of collecting, whilst often focusing either
an otherwise continually developing market of on museums and patronage or the oddities of
privately recognized “quality” and “excellence.” obsessive collectors of everyday objects, throw
Dominant art institutions will exacerbate this light on the relation between collecting and forms
concentration of power. of domination, but they do so under the terms of a
type of statist thinking that the buyers and sellers
(ii) of contemporary art now move far beyond. John
Elsner and Roger Cardinal, for example, propose
ragile or thinning liquidity in the coming period
F that “if the peoples and the things of the world are
will result in a contraction of the total market, collected, and if the social categories into which
again putatively intensifying a conflict between they are assigned confirm the precious knowl-
primary and secondary markets but increasing edge of culture handed down through genera-
their co-dependency to secure a shrinking capital tions, then our rulers sit atop a hierarchy of collec-
base. In this scenario, power will again be con- tors.”38 The rise of the private museum, its public
centrated but the appeal to subjectively private accessibility, its collection built on the impulsive
love as its legitimizing ethos will probably be less and quixotic taste of its owner (in fact advised by
financialization of art suhail malik/andrea phillips
232 233a group of arts consultants and public museum over at least the next two decades as this type of
directors hoping to gather some crumbs), attests inventive public-private methodology becomes in-
to a pathological and political shift from a culture creasingly necessary to maintain institutions in the
of care to a culture of love within the dominant wake of the decline of state funding for culture.
structures of neoliberal states.39 If care is what
the state-funded arts were supposed to do, either III
through psychic and experiential transformations
of the viewer or through participation in programs reputational venues
of community cohesion, such narratives of amelio-
ration and healing of publics have been replaced If privatized sabotage becomes more prominent as
by privatized love. The private collector, making the organizing principle of art and its institutional-
his or her mark, through the use and abuse of his/ ization, then institutional capitalization and its
her own passions by trading art, no longer does attendant prestige- and reputation-building of art
so on the basis of a public’s expectation of benefit will shift more decisively to overt market-based
(he is not doing it to “do good”). This is not the organization—notably, from biennials to art fairs.
field of patronage developed in the industrial age Given the importance of prioritizing subjective
of Europe and North America. Instead of a gen- positioning as a condition for art’s institutional
eral commitment to care (however homogenized capitalization, and the importance of providing
and hierarchized this system of care was), private an ersatz public service, these procedures of
art buyers care for their own passions and then legtimization are not conducted through the vend-
allow the public to see glimpses of them though ing formats and venues themselves but the prolif-
the gauze of mediators, arts consultants, and the eration of off-site projects (entry to which is only
like. Rather than be understood as a neo-feudal sometimes charged). Such projects rely upon the
arrangement, here the previously state-organized veneer of a “Hostile Worlds” scenario internal to
public is demanded to share in the love of art the primary market itself, allowing the love of art
on the terms of private corporatism. The new “for its own sake” to continue to be materialized
museum (The New Museum?) is identified as a and specified at precisely the point of its most
location in which any civilian can participate— intense sites of marketization. If the availability of
publicly—in the spectacle of elite spending, doing such art fair project programs to the public is a
so in the sharing or appreciation of a privatized leading factor in their presentation, the transforma-
love. This endemic configuration of people, space, tion of state-level organization by capitalization and
and shared but unequal love will be the ever more its private solace again comes to the fore.
prevalent shape of public galleries and museums The availability of art to a (bourgeois) public was
financialization of art suhail malik/andrea phillips
234 235the task of the national museum and, in post-war notes — with
which capitalism is ordered”
and the “pattern of order—namely,
Europe, the biennial, overcoded as these were 1 G raeme Wearden and Katie Allen, the way in which prices are struc-
“Eurozone Bond Markets in Turmoil tured and restructured relative to one
by a pedagogic-formative command typical of as France and Germany Dig in over another—is governed by capitaliza-
modernizing industrial nation-states seeking (to ECB,” guardian.co.uk, November tion” (153). The argument in the
16, 2011, www.guardian.co.uk main text depends on the following
project) a public base. The art fair project re- /business/2011/nov/16 schematic formulation of capitaliza-
places this complex network of institutional and /eurozone-bond-markets-germany
-ecb/.
tion (185–192, paraphrased in the
following lines and in n. 34 below):
social care, in which culture and art might have 2 N oah Horowitz, Art of the Deal: representing capitalization at a
acted as vectors of common identification, with Contemporary Art in a Global Finan-
cial Market (Princeton: Princeton
certain time as Kt , earnings as E, and
the rate of return as r, the formula of
the eliciting and adulation of private excitements; University Press, 2011), 145. capitalization is:
3 Ibid., 170.
a dab of knowledge-generation in such projects 4 Ibid., 170. (A) Kt = E / r
allows them to also take on the mantel of cultural 5 Ibid., 174.
6 Ibid., 170. ( The / operator marks a division,
education from that previous formation. Yet what 7 Ibid., 186. which finds the ratio between the
is public here is not a common or collective task 8 Ibid., 188.
9 Ibid., 176.
quantities on either side of it. Below,
x is the operation of multiplication of
but subjective positioning, the power of private, 10 Ibid., 177. the quantities on either side; op-
speculative zeal we are all permitted to occasion- 11 Sarah Thornton, Seven Days in the
Art World (London: Granta, 2009);
erations in brackets are carried out
before the operator outside of them.)
ally taste. Don Thompson, The $12 Million To take the simplest example,
Stuffed Shark: The Curious Econom- expected earnings of €1000 at 5
ics of Contemporary Art and Auction percent interest rate over a year re-
Houses (London: Aurum, 2008). quire an initial capitalization (invest-
12 Ulf Wuggenig, “Attached by an ment) of 1000 / 0.05, or €20,000.
Umbilical Cord of Gold,” Texte Zur Price can be directly formulated in
Kunst 83 (September 2011): 56. terms of capitalization through the
13 Suhail Malik, ‘‘Critique as Alibi: example of shares. The share price
Moral Differentiation in the Art Mar- for a company at a given time (P t ) is
ket,” Journal of Visual Art Practice, its total capitalization (Kt ) distributed
Special Issue on Critique, ed. over the total number of shares (N).
Mary-Anne Francis, 7:3 (December The price per share is also the pres-
2008): 283–295. ent value of the perpetual earnings
14 T hornton, Seven Days in the Art per share (EPS) of that company
World, 10. (or total earnings per share, E / N):
15 H orowitz, Art of the Deal, 173.
16 Ibid., 170. (B) P t = Kt / N = (E / N) / r = EPS / r
17 Jonathan Nitzan and Shimshon
Bichler, Capital as Power: A Study (A) and (B) here are basic formulas
of Order and Creorder (London: for price as the index of present value
Routledge, 2009), 153 and 183. of future earnings.
18 In order to keep the main text on 19 H orowitz, Art of the Deal, 171.
topic, details of Nitzan and Bichler’s 20 Ibid., 78.
argument are relegated to the foot- 21 P redicating price on finance reverses
notes with references to Capital as neoclassical pricing doctrine, which
Power in parentheses. Capitalization drastically changes how the relation
for Nitzan and Bichler “represents between prices and markets are to
present value of the future stream be understood. Rather than markets
of earnings” (153). Price is “the unit setting prices, for Nitzan and Bichler
financialization of art
236 237— “modern capitalists are ‘price 28 Ibid., 249. — the extent to which capitalists are — a factor against the rate of return
makers’: they fix the price of the 29 Administered prices demonstrate investing optimistically (H is greater in which investors have maximum
product and then let ‘markets forces’ two business principles: (i) profit is than one) or pessimistically (H is less confidence (rc ). As with hype, confi-
do the rest for them” (242). It is not maintained by generalizing sabotage than one). Whether capitalists have dence can be incorporated into the
that market imperatives set prices (ibid., 241); (ii) prices are determined hyped their capitalization up or down price formula (C) by decompositing
but that prices “set” the market. by a target rate of return and the cost can only be known when their initial the rate of return:
While there may indeed be market of goods is set to meet this return. capitalization or price is assessed
forces, such forces are not primarily The degree of monopoly is a mea- against their actual earnings. The (D) P t = EEPS / r = (EPS x H) / (rc x ∂)
those shaping prices but rather those sure of industrial sabotage required hype coefficient thus “represents the
that prices impose on social, indus- in order to maintain a rate of return. ex post collective error of capital- When confidence is high, the risk-
trial, and institutional arrangements. As the phrase implies, it is a measure ists when pricing the asset, and is coefficient is close to one and it
22 Nitzan and Bichler, Capital as Power, of power: higher prices mark a revealed only once the earnings are increases when confidence falls
262. greater degree of monopoly over announced” (189)—at which point back, resulting in a lower share price
23 As noted, the classical doctrine of industry, indexing more power to hype can be measured. (all other things being equal). The
price theory has it that market pres- sabotage. That is, the greater the Nitzan and Bichler remark two risk coefficient is not to be confused
sures and competition generate the markup that can be set, the greater important key characteristics of with the risk premium described
prices set by firms or competitors the power of those who set it; and hype (191): it actively shapes price in standard finance theory, which
for their wares. However, following the contrary. and thus commands markets; it is claims to measure the risk in prices
the work of Gardiner Means at the 30 O lav Velthuis, Talking Prices: Sym- not an individual intervention but a and actual volatility, not speculative
time of the Great Depression, Nitzan bolic Meanings of Prices on the Mar- collective-sectoral coalition combin- confidence. Higher risk premiums
and Bichler emphasize that there are ket for Contemporary Art (Princeton: ing regulators, policy-makers, execu- imply higher returns but a higher risk
in fact “two types of prices” (240): Princeton University Press, 2005), tives, opinion-makers, traders, and so coefficient means less confidence
competitively formed market prices 24–26. on—a capitalist ruling elite—to push and so lower prices.
set by standard supply and demand 31 P ierre Bourdieu, Distinction: A prices up or down and give confi- 35 T he price per share is the trade off
constraints and also what Means Social Critique of the Judgment of dence that such swings are justified between how much earnings per
called “administered prices,” which Taste, trans. Richard Nice (London: and rationally explainable. The intro- share are hyped-up against the risk
are typical of concentrated industries. Routledge, 2003 [1979]). duction of hype in the formulations that the shares will not beat a stan-
Administered prices do not respond 32 V elthuis, Talking Prices, 26–27. of capitalization makes apparent that dard rate of return. Actual earnings
to market circumstances very fast 33 H orowitz, Art of the Deal, 208. investors are not essentially reactive and the standard rate of return can
(if at all) and the firms setting them 34 T he complication in the schematic to market forces through pricing, as both be retrospectively measured.
do not seek to maximize their profits formulas of capitalization (A) and neoclassical precepts have it (208), Though Nitzan and Bichler do not
but to secure them. Desired profit price (B) in n. 18 is that the future is and that prices are not automatically take their argument in this direction
rates are set in advance and this, in uncertain, which means that the ba- or mechanistically derived from earn- in Capital as Power, the retrospec-
addition to “output costs,” determines sic variables are in fact unknown and ings (just as the market does not set tively measured “objective” factors in
prices that are kept relatively stable unmeasurable. But each variable can prices but is “set” by prices). price-setting can be separated out
(Apple is a good example of one such be retrospectively decomposed into It is then the earnings projections from the right-hand side of formula
firm). In other words, administered the objective aspects of earnings and of capitalists that are the key factor in (D):
prices are not guided by the market’s rate of return and, on the other hand, price-setting. Yet these projections
invisible hand. Moreover, studies a speculative element that measures also depend on the confidence of in- (E) P t = (EPS / rc ) x (H / ∂)
show that most prices are adminis- the degree of “expectation” that was vestors in their own predictions. This
tered prices (n. 19, 241). Nitzan and the capitalist’s projection into the confidence can be measured against Implementing this separation allows
Bichler turn to Michal Kalecki’s notion future, itself composed of hype and a benchmark (government bonds, the speculative element of price-
of the “degree of monopoly”—the confidence in predictions. In detail: for example) in which a maximum setting to be identified as the trade-
extent of control over prices—as an E xpected earnings are first decom- certainty of a given rate of return is off between hype and risk. Price-
explanation of how and why price posited. For the share-price formula assumed. This is called a “risk free” setting as it is formulated in (E) can
setting is determined by conditions in particular (188): rate in standard finance theory be split into the following descriptive
other than those of market circum- though, as Nitzan and Bichler terms:
stances (242). (C) P t = EEPS / r = (EPS x H) / r observe, it is not explained “why it
24 Nitzan and Bichler, Capital as Power, is risk free nor what determines its P rice per share = (objective return) x
239. W here EEPS is expected future level” (209). By contrast all other (speculative zeal)
25 Ibid., 239. earnings per share, EPS is actual investments have a degree of con-
26 Ibid., 228. future earnings per share and H the fidence that can be measured by If this formulation corresponds with
27 Ibid., 249. hype coefficient which measures the “risk coefficient” (∂) that acts as a conventional sense of what
238 239— speculation
involves—the anticipato- — eds., Caring Culture: Art, Architec-
ry “hunch” of the investor who follows ture and the Politics of Public Health
the markets—what is telling about (Amsterdam/Berlin: SKOR/Stern-
it is that: (i) subjective speculation berg Press, 2011).
“shapes” the price rather than follows
it (even when there is no hype (H = 1)
and no risk (∂ = 1)), and thus shapes
the future of the market (210); and (ii)
speculative zeal can be given an ex-
act measure (it is the ratio of the price
per share to its actual return, which is
a number that can only be retrospec-
tively known). In the words of Jamie
Searle at Citi Bank in the epigraph
to this essay, speculative zeal is the
“positioning” of the speculator who
shapes the market and the future but
whose “accuracy” or “distortion” of
what the price should have been can
only be retrospectively measured.
Speculative fear is when hype is
outweighed by risk (H / ∂ is less
than one); speculative enthusiasm
is when hype outweighs risk
(H / ∂ is more than one). Since the
future is unknown, however, confi-
dence can never be at a maximum.
And since hype is a sectoral (which is
to say collective-institutional) pres-
sure, positioning is but the shaping of
price by power. It can be measured
by comparing price to actual earn-
ings, which is to say: capital accumu-
lation, profit gained by sabotage.
36 Wuggenig, “Attached by an Umbilical
Cord of Gold,” 62.
37 H orowitz, Art of the Deal, 161, 186,
199–201; Suhail Malik, “A Boom
Without End? Liquidity, Critique
and the Art Market,” Mute: Living in
a Bubble: Credit, Debt and Crisis,
2:6, (2007): 92–99, www.metamute.
org/en/A-Boom-Without-End
-Liquidity-Critique-and-the-Art
market; Andrea Fraser, “L’1%, c’est
moi,” Texte Zur Kunst 83 (September
2011): 114–127.
38 John Elsnor and Roger Cardinal, eds.
The Cultures of Collecting (London:
Reaktion, 1994), 2.
39 A ndrea Phillips, “Too Careful: Con-
temporary Art’s Public Making,” in
Andrea Phillips and Markus Miessen,
240You can also read
