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Back in the 1630s, when “Tulipomania” rocked the Netherlands, fortunes were made and lost over frenzied speculation in rare tulip bulbs.
In his new book The Orange Balloon Dog — a title inspired by the stainless-steel sculpture Balloon Dog (Orange) by Jeff Koons — author Don Thompson explores the recent landscape of art speculation, from Qatar to Los Angeles. Taking the pulse of a phenomenon that is part Wild West and part South Sea Bubble, Thompson adopts an almost Cassandra-like approach to today’s art market. In other words: beware, for this too shall pass.
An economist by trade, Thompson clearly knows his way around the art world, and is able to bring readers into some surprisingly rarified circles. Author of two previous books on the art market: The $12-Million Stuffed Shark (2010) and The Supermodel and the Brillo Box (2014), Thompson has an intuitive understanding of the urge to collect at any price, the urge to sell at the highest price, and the urge to create work that will cement a reputation.
Most readers will already have a sense of how the art market works. A gallery features an artist in a group or solo show. You like the work. You buy the work. Or an auction house presents important works of art for sale. You like a work. You bid on the work. Or perhaps you attend an art fair such as Art Basel Miami. You see a work you like. You buy the work.
In today’s art world, however, these scenarios are all literally the tip of the tip of the iceberg. As Thompson relates — while gracefully resisting the urge to point fingers — there is a whole backdoor scene behind the shiny public face of the trade in fine art.
Some of the shenanigans are hard to credit. The famous “Knoedler Fakes” are a case in point. It is a long and complex tale involving a New York-based Chinese artist named Qian, who churned out fraudulent works by the likes of Jackson Pollock, Barnett Newman and Wassily Kandinsky. It is not entirely clear whether he deliberately produced fakes for sale. Apparently there is no law against producing copies — and even signing them with the original artist’s signature — as long as you don’t sell them as originals.
The problem came when a female middleman bought the works, selling them to reputable dealers as originals, for hundreds of thousands of dollars. The dealers in turn doubled the prices, selling the works on to museums and private collectors.
Although numerous experts had been unable to spot the fakes, it was eventually discovered that one of the pigments in a “Jackson Pollock” had not existed during the artist’s lifetime. The jig was up, and one of the most venerable galleries — Knoedler and Company — quietly closed its doors.
Today’s highwire art market seems, to Thompson, to be peopled by gamblers. High rollers buy art expecting it to go up in value, selling it on a couple of years later. Other buyers purchase what essentially amounts to artist “futures.” Buy an up-and-coming artist’s work in bulk, and you may be sitting pretty in a few years. If the artist goes out of fashion, however, the collector may be in big trouble.
One of the more bizarre forms of artist future, however, is the buying of a work years before it is ever made. In a chapter called “Ludwig’s Play-Doh,” Thompson describes agreements between artists such as Jeff Koons (who was planning a series of works based on his son Ludwig’s pile of Play-doh) and buyers keen to get in on the ground floor.
In Koons’ case, however — as for many other artists of his popularity — the buyer isn’t given a set price. He or she pays a percentage of the final cost, but the artist is allowed to require additional amounts while producing the work. If the buyer refuses to pay these additional amounts, or feels the work is taking too long to create, the buyer must make a decision: keep shelling out, or take a loss and potentially miss out.
Thompson also explores some peculiar phenomena that sound more like they belong to the shady world of money launderers. Although art is surprisingly immune to money laundering, high-end art does have a few flavours of tax dodge. For example, buy a work of art in one of the many “freeports” around the world — Luxembourg, Beijing and Geneva, among others — and it’s like shopping at an airport duty-free store. Just move it from one freeport to another, and taxation becomes a non-issue.
Not everyone involved in today’s high-end art trade is a latter-day pirate, of course. But there do seem to be rules to the game, and to stay in, you have to be willing to play by those rules. Dealers, gallerists, artist and buyers all appear to be caught up in an odd dance, and if Thompson is right, no one is quite sure how to get off the merry-go-round. Nor is anyone sure if they actually want to.
Thompson expresses dismay at the current state of the art trade and its backroom deals, but his primary concern appears to be today’s overinflated prices. As an economist, he makes it clear that this is not sustainable, and muses about how fast and how far the market will fall. It is not a matter of if, but of when — and he appears to believe that it will happen sooner rather than later.
To Thompson, this is clearly a source of sadness. It didn’t have to play out this way, he seems to suggest. At the same time, he also sees no easy remedies. Then again, there’s not much you can do if a headstrong kid takes off with wings of feathers and wax, and decides to fly a little too close to the sun.
The Orange Balloon Dog: Bubbles, Turmoil and Avarice in the Contemporary Art Market by Don Thompson (Douglas & McIntyre, April 2017), is available from the NGC Boutique.
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