"A fair price is the highest one a collector can be induced to pay." Robert Hughes
Word comes that the artworld version of a major bank meltdown occurred in London a few days ago. At a big Christie's auction paintings by Mark Rothko and Francis Bacon went unsold. I've been following major auctions for a lot of years and have never seen that before. Other artists, some with big-ticket histories, come and go, but Rothko and Bacon have both been part of the gold standard for retaining value and even price appreciation.
At the same auction a Richard Prince went unsold and a Jeff Koons was propped up by his dealer, Gagosian. Another Koons went for less than half what a piece from the same edition cost a year ago. The long term value for Koons or Prince might well be open to question, but not Rothko and Bacon, until now.
This matters. If the belief in the limitless appreciation of art is too firmly eroded, it affects the whole market. While it's a known fact that the cash value of most artworks depreciates rather than grows, the possibility of the opposite happening is one of the main bulwarks of art prices at every level. Art prices are unlike prices in any other business because they are set totally on faith. You can't refine a work of art and sell it to run cars, or eat it or have a house built on it. When belief erodes, there's nothing left. Behind every sale, no matter how insignificant, there's a tacit understanding it will be worth at least its current price at some later date, and maybe much, much more.
There's more to this than just prices. The hair-raising millionaire success of people like Julian Schnabel and Richard Prince has fueled the ambitions of literally tens of thousands of art students, supplying the cash flows of hundreds of growing tuition-driven schools across the country. Parents and loan officers have been financing grand dreams of the next big artistic thing. If that bubble bursts, or even shrinks significantly, the current erosion of the number teaching positions will accelerate at a rousing pace.
The owners of buildings that have been split up to make warrens of studios will find the market won't support the rent prices, and they will have to look for more honest work. MFA's will search for saleable skills. These things could come to pass very quickly if other fiascos like this last Christies auctions occur. The auction houses didn't get rich by being stupid, so there will be some significant behind-the-scenes support being assembled, but money might be hard for them to raise, even to support the value of multi-million-dollar collections.
So look for an art world very different from what we're used to. With the evaporation of grant funds, the non-profit organizations that like to put themselves between the artists and the public will be drying up, galleries are going to have to find interesting ways to survive, and artists will be looking for creative ways to pay the rent. I'm betting the future will look more like the 1950's, with a much smaller artist population and cheaper, but crummy studios and real, not vanity, co-op galleries. I could be very wrong about this, but I think it's a pretty good bet that the next ten years in visual art will be very, very different from the last twenty.
For more on the Christie's auction, go to http://www.bloomberg.com/apps/news?pid=20601088&sid=aiEStiSNYalM&refer=muse