The curator of the Venice Art Biennale, Ralph Rugoff, sinks into a black leather sofa in the opulent Sala di Rappresentanza of the Italian embassy in Berlin. He has only a few weeks before the art world begins streaming to Venice to have the American show them what is happening in art today. A task that has not become easier since prices in the millions are regularly reached on the art market, and all the other costs have risen as well: production, transportation, insurance. Ever since billionaire collectors such as François Pinault and even artists such as Damien Hirst began organizing parallel exhibitions in the palazzi and sailing into the Venetian Lagoon like the cruise ships as tall as apartment buildings. “I think at the high end of the market, prices are determined by a very small group of collectors. And that’s why it often feels like there is no connection any more to the rest of the art world. This world is out of whack with the way the rest of the art world is trying to set value.”
Rugoff sends his points out into the room with the warm smile of an intellectual. He speaks of “court artists to the superrich” and “pissing contests” in which collectors at an auction drive the price of a work from two to twenty million simply because they can. He recalls that the artist Carl Andre decided that his works should cost ten percent of the buyer’s income: he was practicing redistribution. “I’m disappointed that artists do not try to play with the market that way. Everybody is letting the dealer set the price. In that respect, I think that artists have given up a role they might play.”
When Rugoff was appointed a year and a half ago, people were surprised: the sixty-two-year-old is not a star curator. He had been director of the municipal Hayward Gallery in London for twelve years and had come up with programs to get school classes and laypeople enthusiastic about art. Now he is organizing the most important large-scale exhibition in the world and has to deal with the big money. What is seen in Venice is usually paid for by galleries, collectors, or foundations. The few million euros that the Italian government provides go largely to the high labor costs in Venice. The mock pavilion for refugee artists, which the Kurdish artist Halil Altindere is erecting, is funded by a Turkish foundation. The always shrill, excessive, and correspondingly expensive video installations of Thai artist Korakrit Arunanondchai are financed by his gallery. And it is not yet entirely clear to Ralph Rugoff who will come up with the money for the even larger video installations of Ed Atkins, one of the most exciting artists today. “If necessary, we may have to cut works.”
Just as the audience will notice nothing about these difficulties in the finished exhibition, the ever-new price records on the art market also convey the impression there are no problems there. But under the surface, the signs are increasing that art is stuck in one of its most profound identity crises ever: overrun by digitalization, overpriced by the ever-increasing wealth inequality, oversaturated by the international cycle of increasingly similar art fairs, and threatened with paralysis by the power concentrated in four large gallery corporations, which snatch successful artists away from smaller galleries. Gagosian alone has more turnover than the entire German art market. “There are artists who are very influential, get great press, but actually their galleries are struggling,” Rugoff explains. “I was shocked by galleries I thought were rich telling me they haven’t made any money the past year and a half.”
Many people are unaware of these divides, which simply reflect the divides of the real world: the art market is the nerve system of the world economy. It is the most realistic image art has ever created. Before the subprime crisis hit in 2008, demand at art fairs was declining. “Sometimes I wonder whether it’s like ants with earthquakes,” Ralph Rugoff says. “They leave their holes: they feel the earthquake coming before everybody else does. When people start to see that their other investments aren’t working at the same way, or businesses aren’t doing so well, the first thing you are going to cut back is your art consumption.” What then does it mean that in six years more than forty medium-sized galleries from New York to Berlin, which produced many important artists, have closed? And that only a few gallerists are not complaining that collectors seem to be dying out in Europe and America?
The woman who must know that, Clare McAndrew, is sitting in a meeting room in the VIP lounge of Art Basel Hong Kong. The VIP lounge of Art Basel Hong Kong is not very different from the VIP lounges of Art Basel Miami, Art Basel in Basel, the Frieze London, the Frieze New York, and the Frieze Los Angeles. Just like the drama out there in the halls is the same: From all sides, works of art in crowded booths bore their way into your eyes, as if you were flipping through the channels of the television very quickly. Gallerists who have risked their existence to pay to rent the booth and for transportation peer, while trying to hide their nervousness, after a millionaire couple who are disappearing down the corridor.
Fine, perhaps the VIP lounge in Hong Kong is a little larger. And an escalator leads up to the VIP VIP lounge for major customers of UBS bank. There, the noise is absorbed by the eggshell carpet, and attentive waiters are offering fried food. Here, among the discreetly clothed superrich, you can also finally charge your mobile phone.
Clare McAndrew and her analysis company Art Economics have just published the Art Market Report that is commissioned every year from her by Art Basel and its sponsor, UBS. The market report collects all of the available data on wealth growth and thus draws a global map of potential customers. For example, art collectors generally have an annual income over 100,000 euros. That is true of 479 million people worldwide, twice as many as in 2000. Or: in 200, there were 12.9 million millionaires; in 2018, there were 42.2 million. Their total wealth last year increased by ten percent to 142 trillion US dollars. Or: China has two new billionaires every week. Above all, however, McAndrew and her team travel around the globe and interview gallerists and auction houses. They come up with figures like this: In 2018, the art market—auctions and gallery sales together—was 67.4 billion dollars, 12.5 percent more than in 2008. The number of works sold in the same period decreased by 11.2 percent. While less art is being sold, more is being paid for it. This number reflects that: the growth of the art market since 2000 shows an eighty per cent analogy to the growth of the greatest wealth.
Such figures, which are commissioned by a company that has an existential interest in keeping faith in the market stable, are, of course, open to criticism. When Art Basel conceals the rather shocking fact that only sixteen percent of American collectors are under fifty behind the sensation that forty-two percent of collectors in Singapore were born after 1980, it is clear the purpose that serves: countering the impression that the next generation is no longer interested in collecting art. Or to encourage all of the American and European gallerists who sense that that is the case to come to Asia, where, for example, now as much as 300,000 dollars are being paid for works by the young Colombian artist Oscar Murillo, whose work could still be purchased for 20,000 dollars just a few years ago.
This year’s market report is strange. It is speaking two languages at once: one of numbers and another of feelings. And they contradict each other.
In 2018, sales declined by three percent, but the market grew by six percent. The numbers are stable. But the mood is pessimistic: If there is a financial crisis in 2020, countries would not be as well prepared as they were in 2008. Most galleries and auction houses fear that demand is decreasing because of the economic trend—and on the art market it is more fears than facts that influence buying behavior.
Clare McAndrew is a numbers person, and she is British: rational, rigorous, and matter-of-fact. But she says: “2019 has seen a slow start for some segments of the market. People’s outlook is pessimistic. It is becoming more difficult, especially for small galleries.” Turnover of companies with less than 250,000 dollars in sales—and that is most of them—decreased by eighteen percent. Many of them owe two-thirds of their sales to their top three artists. “If a bigger gallery takes one of them away, they are in a very dangerous position.” Between 2008 and 2018, the number of galleries decreased by eighty-six percent. That is bad even for the big ones: “If the market is only dependent on a smaller number of people, then it bears a greater risk if some exogenous shock affects ultra-high net-worth buyers.”
If we see the art market as a seismograph of the world economy, what picture does it offer? “It’s going up a little more slowly than it did the previous year. Global wealth is still growing quite strongly, but inequality is getting worse and worse.”
The plane from Hong Kong lands in Zurich shortly after sunrise. On the switchbacks into the Engadine, it becomes evident why more and more people from the art world are moving up here. The gentle, snow-covered mountains shield the valley, whose light Nietzsche, Segantini, and Beuys all loved, from the outside world. As many as 14,500 planes take off and land annually at one of the highest airports in Europe outside St. Moritz, which is a little out of proportion to the 8,879 passengers served. An expansion is planned for 2021. The architect Norman Foster lives and draws here; the curator Adam Szymczyk has an apartment here. Between Christmas and New Year’s Eve, you can see the director of Art Basel, Marc Spiegler, dance at Dracula, the members-only club founded by Gunter Sachs. “You dance with the rich kids of the world and have the feeling that World War III could break out outside and it wouldn’t matter,” says a gallerist who was there on New Year’s Eve. In the hotel sauna, you meet the same gallerists and collectors you see at openings in Berlin, London, New York, and Zurich.
“The best thing about the Engadine is that the landscape is still the same,” says Julian Schnabel, who, when he is not in his Neo-Renaissance palazzo in Manhattan, lives in the little artists’ pension Villa Flor in S-chanf, a few steps from his temporary studio. He talks as if he had nothing to do with the jet set that his son attracted by opening the Galerie Vito Schnabel in 2015. “Watch your head,” the father painted in thick red brushstrokes above the narrow staircase that leads down to the lower story. The paintings in the exhibition by Pat Steir, on which paint obeys gravity, cost half a million dollars.
St. Moritz and the surrounding villages have the most galleries per inhabitant of anywhere on the planet. “On the short winter days, people are happy they can still go to a gallery after sunset,” Filippo Percassi says, “here they have time for art.” Percassi directs the Galleria Monica De Cardenas in Milan, which recently moved its headquarters to Zuoz: “We have more walk-in customers here than in the city.” The Engadine is the contrast program to the hurried experience of the art fair. “It’s where some of the world’s most discerning collectors spend their vacations,” raves the gallerist Iwan Wirth, “, and it is simply a beautiful environment in which to exhibit and sell art.” If it keeps going this way, then those who earn their living with art will have to leave the vacation spot less and less.
Several collectors even live here, such as Poland’s richest woman, Grażyna Kulczyk, who opened the Muzeum Susch in January in a former monastery brewery down in the valley. One climbs narrow stairs into rooms with nooks and crannies; entire caves have been dynamited into the cliffs; well water runs over the floors. One could scarcely build a monument more sensitive or humble before the place and its history. Artists created site-specific installations; it opened with a marvelously curated exhibition of feminist art.
Kulczyk is sitting in wood-paneled room on the upper story of the five-hundred-year-old monastery. She speaks with reserve, almost shyness. “On the Riviera, it was terribly hot last year, because of climate change. Here it is nicest in the summer. You don’t have to lie on the beach and ask yourself: Oh my God, what I am going to do the next few hours? A lot of Asians come here. The mentality of the Engadiners is similar to that of the Japanese. People need calm, fresh air, healthy food. The valley gives them everything.” Kulczyk thinks it’s fantastic that Norman Foster wants to build a little Silicon Valley. After all, the Internet is already faster than it is in the city.
St. Moritz, which recently elected an opera singer as its mayor, has become the center of a model region for the economy of enrichment that the sociologists Luc Boltanski and Arnaud Esquerre recently analyzed. They show how the wealth of those who own important works of art, wineries, and old real estate is now increasing entirely on its own, thanks to the raw material of culture, which is the oil of the twenty-first century, financed by luxury tourists and state subsidies and produced by a reserve army of underpaid artists, art historians, curators, and critics, who not only provide new commodities but also keep up the public’s faith in art and hence keep its price stable. But they will never have an opportunity to move into the castles whose value they increase with their expert reports or afford the paintings the praise.
It is increasingly difficult to distinguish oneself from the similarly rich by means of yachts and soccer clubs. In addition to low interest rates, that is one reason that more and more money is flowing into art, the branch that produces truly unique works and values. “I know a collector who says ‘I buy Gagosian,’” the gallery director Percassi relates, “the way you say ‘I buy Prada.’” The collector who trusts his or her own education and taste is increasingly being steamrollered by speculators investing in safe brands: Art Basel, David Zwirner, Richard Serra.
No one serves this market as well as the Swiss husband-and-wife gallerists Manuela and Iwan Wirth, who list eighty-four artists and estates on their website and in addition to two locations in New York have branches in Hong Kong, London, Gstaad, and Zurich, where the customs authorities have even granted the gallery its own free-trade warehouse. Last December, they opened their latest branch in St. Moritz, opposite the imperial Palace Hotel. The stained pine parquet floors have a bewitching scent.
Anyone passing the elegant logo of Hauser & Wirth is stepping into an entirely different world. Its branch in Los Angeles looks like a museum, including a souvenir shop, which offers pocket squares designed by Jack Whitten and skateboards designed by Paul McCarthy. In Somerset in southern England one can spend the night on an organic farm with a sculpture park, and since December Iwan and Manuela Wirth have been running the nineteenth-century Fife Arms hotel in the Scottish Highlands, which was restored by craftspeople from the region, and whose ninety rooms they decorated with antique furniture and contemporary art—which corresponds precisely to the strategy of “enrichment” that Boltanski and Esquerre describe: historical monuments are improved by contemporary art and what is typical for a region is linked to cosmopolitanism. At Hauser & Wirth, art takes on a new essence; it becomes a lifeworld: the aura of works is transferred to the spaces, to the souvenirs, to the books published by the gallery’s own house, and hence to the brand itself. The gallery’s own magazine, Ursula, whose editor, Randy Kennedy, was wooed away from the New York Times, rounds out the world with meaning.
Two drifts are pulling on art: the drift toward Asia and the drift upward. All that is solid is vacuumed up; everything once valorized snapped up from above for further exploitation. Up there, however, the idyll of Somerset reigns. The organic meat comes from the farms that have been bought up, and the gallery’s artists are provided with quince marmalade and wool blankets from the sheep of Somerset.
Recently, in the tranquil Sils Maria, a quarter of an hour from St. Moritz, the beloved Andreola pension, with its Chesa Marchetta restaurant, was sold. An application has been submitted to the commune to convert it into a hotel. The applicant: Hauser & Wirth. What happens when the art market turns into a luxury market where it is not quality that decides but the investment climate of the brand? Art’s value added was based until now on the assumption that every work of art, no matter who owns it, belongs in principle to everyone. For that reason, too, the radicalization of wealth differences is more palpable here than in most other branches: Everyone can carry a fake Louis Vuitton handbag. But an abstract painting by Wade Guyton printed on a giant inkjet printer that is auctioned for a million cannot even be printed out again, although it would be technically possible. A work of art that is out of reach is truly out of reach. The yardstick of the claim to eternity makes it possible to see the water level.
How long will the faith hold up that all art is about the same thing, that the stay in Somerset revolves around the same values as the project space in Berlin-Neukölln? How long will another unique feature of the art world exist, namely, that the underpaid artist’s assistant finds herself next to the billionaire at the dinner table? And when that faith is broken, will the prices hold up?
It is usually after midnight when the art world regains consciousness: Nearly everyone has left the dinner party that a gallery hosted for the artists, collectors, and museum directors; only two collectors and two critics remain; the conversations return again to the insight that somehow contemporary art is over. “Five years ago, you still had to go to Art Basel Miami, otherwise you would have missed something. Now it doesn’t matter at all. You see the same thing everywhere.” “It is oversaturation,” says the one. “It is overproduction,” says the other. Why are a quarter of the positions managed by Hauser & Wirth the estates of dead artists? “Because of a profound mistrust in contemporary art.”
It is one of the moments in which people reflect on what matters: a claim to quality, which is not the same as taste, more like knowledge or at least a hunch, one that touches on a thread that runs from the art of the ancient Greeks to, say, the sled by Joseph Beuys with a rolled-up felt blanket and a flashlight, that for sale at the David Zwirner booth for 330,000 euros. It is the most beautiful work at Art Cologne, we agree, in its clarity, its sparseness, its charge from another world, a guest from a predigital era, when a thing was still a thing, a yardstick still a yardstick, a weight a weight. If we only could afford it.
And then the collector says the terrible thing that reflects the whole monstrousness of today’s art market. David Zwirner, who did not even fly to the fair himself, did not place this sled here to sell it. Who in the Rhineland would buy a Beuys? Everyone here has been buying Beuys since the 1960s, for a hundredth of the price. In 1969, for example, when the gallerist René Block sold Beuys’s VW bus with twenty-four East German racing sleds to the nonfiction author Jost Herbig for 110,000 deutschmarks and in the process brought the German market for contemporary art to the American level. Today, there are not so many nonfiction authors who are interested in collecting art, and there are not so many people who could afford 330,000 euros for a Beuys sled. But the houses in the Rhineland are full of art, and the collectors, with their careers as dentists and industrialists, have grown old, and their children jet around the globe for their creative and planning jobs and can no longer use an art collection.
So the sled is not seeking a home. It is calling its kind back to the market. Those who have a Beuys in the cellar that once cost 3,000 deutschmarks who now see one going for 330,000 euros will perhaps get ideas. And who knows where they can bring it. The sled stands for a reversal of thrust: Zwirner’s father, Rudolf, too, once sold Beuys in Cologne, at the oldest art fair in the world. Now, his son is using the fair to call in what his father once sold. The David Zwirner booth is a ghost booth, and the sled is bait. Zwirner will perhaps sell it to one of the new billionaires in Asia, where the art world, which is stuck in a crisis of identity in the West, is emerging again: with even bigger private museums and even higher prices.
Art fairs have turned galleries into global traveling circuses. Now, fifty years after the founding of Art Basel, the fair that dominates the market may itself be put on the market. The Swiss MCH group that runs it is suffering from the massive shrinking of other fair markets and last year reported a loss of 190.4 million Swiss francs. It is having difficulties paying off the trade fair hall that opened in 2013. Recently, it withdrew from smaller trade fairs in in Düsseldorf and India. The Basel business consultant Tobias Gombert, who is a recent fan of the Engadine, recommends it be crushed. If Art Basel should decide to look for a new owner, two scenarios seem conceivable: Hauser & Wirth together with other mega-galleries such as Gagosian, Pace, and David Zwirner takes over the fair as well as its subsidiaries in Hong Kong and Miami. Or one of the two biggest profiters from the economy of enrichment expands his value chain: Bernard Arnault, who with 76 billion dollars is the fourth richest person in the world, and whose empire owns Louis Vuitton, Dior, Céline, Kenzo, Rimowa, Givenchy, Moët & Chandon, and Hennessy, or François Pinault, who owns the fashion labels Gucci, Yves Saint Laurent, Balenciaga, Alexander McQueen, and Brioni, the auction house Christie’s, and one of the largest art collections in the world, which he shows in the Palazzo Grassi in Venice (wealth: 29.7 billion dollars). The two of them recently demonstrated their buying power in a competition over who could donate the most to restore Notre-Dame cathedral after it was destroyed by fire. If one of them were to take over the largest art fair as well, the luxury-art-fashion-tourism complex in his hands could close the feudal circle of value-creating activity—fueled by the self-exploitation of artists and art experts who still believe in values other than money.
First published in its original language in F.A.Z. Quarterly, 29.05.2019, Materialien Kunst (Quarterly), Seite 140
Power on the art market is concentrating more and more. The Gagosian empire of galleries alone has more turnover than the entire German art market. This divide reflects the divides of the real world.
The art market as a seismograph of the world economy: The wealthiest are still growing strongly, and inequality is increasing.
What happens when the investment climate of the brand makes the decisions on the art market? Will the underpaid artist’s assistant still sit next to the billionaire at the dinner table? If not, will the system then collapse?
"Delusional Crime and Punishment," a 2016 video installation in which Lu is tormented by the gods of Eastern and Western religions. The still depicts a "wheel of misfortune" showcasing different methods of torture. Credit: Lu Yang