Worldwide financial crisis and its influence to buying behavior in art market
By Dr. Wolf Tekook
Bankrupt of Lehman Brothers Bank in September 2008 marked the begin of a worldwide financial crisis. Stock price dropped at all emporiums, millions of employees lost their jobs. Governance of industrial states launched auxiliary programs to attenuate follow- up bankrupts. In Europe and North America they established massive support for car market by scrapping premium for old vehicles. Governments gave billions of dollars to banking companies in tilt, to prevent total collapse of financial markets and attenuate unemployment in industrial branches.
Middle class and freelancer didn’t benefit of state aid, however. In the following we will concentrate on buying behavior in art market.
Artists normally are self- employed persons, if we abandon salaried graphic designers, employees in movie industry and artisans. They offer the art works created by direct marketing, in galleries or art fairs. Those, who are very lucky, get mandates by public agencies, or are invited to exhibit in museums. Commonly art works are regarded as luxury goods; people don’t need them to fulfill their primary personal needs. So it’s apparent, that citizens in social misery first save expenses by not buying ‘luxury goods’.
However, when an artist presents his works in a gallery or at an art fair, he will be surprised by big number of applauding visitors. They intensely busy themselves with shown pictures, objects and installations, debate over styles and saying, compare and analyze. Presenting artist is ravished and overwhelmed by interest; but then the possible customers vanish – even without an attempt of bargaining. In next section of gallery or art fair the game starts again. Visitors – holding a glass of sponsored champagne and tasting delicatessen finger food offered – admire, debate and disappear, and the presenting artist lost another chance to earn money for his living by selling an artwork.
Why do art lovers act that way? They just look upon those exhibitions as a temporary place to get inspired for a short time. Later, when having an excellent dinner with friends, they go on with debating and evaluating recent art. Right from the start they never planned to buy an art work. ‘Luxury goods’ are made for watching and discussing about, but not for buying them; we are living in times of economical crisis – see above.
On the other hand, every now and then newspapers or magazines give an account of a new world record, when a painting of Renoir or van Gogh realized an enormous price at an art auction. Christie’s or Sotheby’s frequently achieve an unbelievable price- performance ratio, when offering art works. So there is a market for art, and there are customers, who are willing to spend millions of dollars for it.
Are those customers of auctions art lovers? They are rather financial investors. In the 80ies of past century Japanese banking companies started buying highest rated art works of the impressionism era; they often locked the purchased merchandise behind the solid walls of safes, and waited. They waited for a further rise in prices, to sell the art works again with nice proceeds. They made art works part of their financial circuits.
Few living artists managed to integrate those circuits, like Damien Hirst from Great Britain, who in 2008 managed to let Sotheby’s auction part of his art works for total proceeds of 200 million dollars – within 2 days. At same time financial crisis in USA and Europe reached its first peak. Later Hirst himself stated, that this auction was a proof, that inhumanity prevailed over humanity. He called the event ‘bestiality of doom and mendacity”.
And the prosperous art collectors? They still exist with their hidden private museums, with their foundations and their infrequent public appearance. Some of them indeed act as patrons for (still unknown) artists, buy their art works and so enable living and development of artists. But their number is delimited, and so very few artists can partake.
The majority of wealthy art collectors first consult their analysts from banking companies, who actually often give the advice not to reinvest in art in times of financial crisis.
And so another circuit is closing: Those, who caused the financial crisis, which heavily reduced market opportunities for artists, exert their influence to partition artists from the recovering markets. It’s always been a hard job earning his livelihood as an artist; but in time of financial crisis it is much worse.