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November 20, 2017
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Dollar Painter. Credit: Jordi Elias. Source: Getty Images.

The House of Medici was intrinsic to the dual development of the banking system and the cultural Renaissance in Florence during the late 14th century. Somewhat paradoxically, to absolve themselves of the sin of usury, the Medicis sought to assuage their guilt by ploughing money into religious inspired art, sponsoring the likes of Michelangelo and Botticelli to produce their great works. The social and cultural status of artists was elevated to divine messenger and art became collectable. When considering this context, it is perhaps not surprising that works of art are now considered as a tangible asset in which shares can be bought and sold.

Trading was suspended when the value of
shares in Bai Gengyan's Roaring Yellow
River painting rose in an unrealistic fashion.
Source: flashartonline.com.

The art world has been increasingly underpinned by finance over the last decade. Investment advisories and hedge funds have been created to buy and hold art during a period in which the market is particularly buoyant. Art, like gold, has become an attractive and lucrative proposition for investors spooked by erratic currency fluctuations and growing inflationary pressures. Last year over 65,000 people attended Switzerland's Art Basel 42, the world's premier international contemporary art show, where collectors, dealers, artists and curators meet and make deals. The artwork on display at the exhibition was insured at US$1.75 billion; a huge sum that illustrates the kind of wealth that is being generated by the modern art industry.

It's inevitable that sharks will begin to circle when such lucrative figures arise. With their predatory eye keenly watching out for an opening that will create a position within the food chain, a number of opportunists have found a unique way to create a successful business from the buying and selling of art.

Over the past few years, there has been a sudden plethora of companies looking to present art as an investment vehicle, mainly in China but also Europe. The result has been the "stock market" model, in which artwork is traded between investors, as well as available for collectors to buy joint shares in their favourite pieces. Instead of talking paint and palette, companies such as the Paris-based Art Exchange and SplitArt - a Luxembourg enterprise - have begun schmoozing potential buyers with talks of profit margins and liquidity.

According to The Art Newspaper, Art Exchange offers clients the opportunity to buy shares in individual works of art that are valued at €100,000 (C$132,386) or more on the open market. With shares available from between €10 and €100, the exchange say they are looking to reinvigorate the market. Pierre Naquin, the 26-year-old French entrepreneur behind the scheme, told The Guardian in 2010, that new investors would be "reassured" by a marketplace that copied the financial mechanisms they were used to. Naquin added that the exchange, "will bring in new buyers, and allow people who can't afford to pay €100,000 for their own work to take part. We're actually opening up the market to art lovers."

There were even conceptual "mobile booths" in which visitors would blow a given number of breaths into a balloon in exchange for a demonstrator's balloon filled with one less breath - a satirical reference to the economic bubble that currently encapsulates the art world...

In return for a 5% commission, participating galleries grant the exchange the exclusive right to sell shares to a piece of artwork over a period of three to six months. If preferred, galleries can decide to keep the work of art while shares are sold, provided they agree to exhibit them. Alternatively, the exchange can loan them to other galleries for display. If one collector attains 80% of shares in a single piece, they have the option to buy the artwork outright. On launch, there were shares offered in six works including a work by Sol LeWitt - Irregular Form (1998) - from Yvon Lambert, a Mike Kelley installation offered by Galerie Hussenot with a value of US$1M, and a large sculpture by Richard Texier offered directly by the artist.

Unfortunately for those involved, the lack of a regulatory authority for policing the financial transactions that take place consequently harms the credibility of the system, leaving the market vulnerable to speculator manipulation and insider dealing. The Tianjin Cultural Artwork Exchange in China experienced this kind of problem last March, when shares were issued on two offerings from artist Bai Gengyan. After only two months of trading, shares in Bai's Roaring Yellow River painting had risen substantially above its initial valuation. According to art magazine, FlashArtOnline, the piece gained a market value in excess of RMB103 million (C$16.2 million). A figure made even more ludicrous when you consider that previously, the artist's highest priced work, Meet the Clouds, was sold for RMB 3.92 million (C$615,000) under the hammer in an open auction. The exchange halted trade on two of Gengyan's paintings, including Roaring Yellow River, while administrators adjusted protocols to safeguard the system from similar hypes in share value happening again. When trading reopened on the paintings, the shares were of a much lower value and consequently investors lost money.

Caroline Matthews, Operating Manager for the Art Exchange's parent company A&F Markets, recently informed CNN International that, "at present there is no official authority for this sort of trading. We are obviously regulated in the sense that we are subjected to property laws, especially those regarding artwork." As statements go, hers is certainly lacking in reassurance for potential investors.

Recognising these flaws within the system, activist group Occupy Museums (OM) has begun a mission to expose the elitism, corruption and money-driven policies within museums and galleries - starting with those in America. An offshoot of Occupy Wall Street, OM has taken their fledgling campaign to the street to directly question the art establishment's growing fixation with the pursuit of money and profit.

This year's Armory Show, a leading international contemporary and modern art fair and one of the most important events in New York's cultural calendar, was the scene of OM's "Art is for Everyone" campaign. OM's counter-culture arts fair with the tagline "no artists or art workers were exploited in the makings of this show," lined the Manhattan street outside the Armory. In front of curious passers-by and visitors queuing to enter the exhibition, OM engaged in an experiment with the transactional systems of art-exchange, celebrating spontaneous creativity and emotional connection over financial capital.

An activist from Occupy Museum questions
the profit-hungry motives of the art world
at the Armory Arts Fair in New York.
Source: attribune.com.

One activist offered up her own unorthodox method of barter by presenting a small and intricate terrarium filled with animals in exchange for a personal item or drawing made spontaneously by interested onlookers. Another offered tiny clay sculptures, created while holding his breath in a reciprocal exchange for any creative item a fair goer could also make in a single breath, whether it be a one-sentence story or an origami bird. There were even conceptual "mobile booths" in which visitors would blow a given number of breaths into a balloon in exchange for a demonstrator's balloon filled with one less breath - a satirical reference to the economic bubble that currently encapsulates the art world, which demands that art fairs such as the Armoury, London's Frieze and Switzerland's Art Basel are all consistent profit-making commercial ventures. While OM's philosophy may be perceived in some quarters as simplistic and naïve, they do offer a much needed counter balance to the money-fuelled feeding frenzy seen occurring at the other end of the spectrum within the art world.

Ever since the guilt-ridden Medicis of Florence began to patronise the arts all those centuries ago, there has been a real and symbolic connection between finance and the fine arts. Some would say they go hand-in-hand but many argue that the commodification of art is a bridge too far. I have to say I would agree with the latter assertion. Art is inspiration and as such, cannot be divided into segments and sold off via a few clicks on a computer screen. There is no doubt that the phenomenon of art exchanges will become more regulated and commonplace in the near future, offering the investor a chance to dabble and make money in a glamorous and exotic business. However, those who choose to participate may never grasp the concept that although art may be bought it can never really be owned - only appreciated.

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