Last week, the Financial Times Alphaville blog (subscription required) weighed in on the whole “art as an asset/market” thing, joining the series of recent commentaries from Quartz and Felix Salmon on the topic. Like those two, the piece, “Art as the sophisticated man’s Bitcoin,” offers some intriguing insights into how financial writers think about art, but was ultimately done in by its attempt to shoehorn art into an ill-conceived comparison with Bitcoin. The writer, Izabella Kaminska, explained that although art is not at all a traditional “safe asset” like gold, it is subject to the same irrational exuberances of “alternative” forms of liquidity — specifically, Bitcoin.

[Art] … it’s the pseudo safe store-of-value it aspires to, that is our intended meaning. Think sophisticated man’s Bitcoin rather than asset class outright.

For just as the Bitcoin market depends on the Emperor’s New Clothes effect, so does the art market.

This characterization is fair and accurate, but why compare art to Bitcoin, an imaginary algorithmic currency buoyed by the misguided shenanigans of anarcho-hackers and dubious tech socialites? Felix Salmon, in likening the art market to venture capital, was much closer to identifying the idiosyncratic way that art is valued and changes hands: opaquely, slowly, and behind closed doors.

Bitcoin, on the other hand, was designed from the ground up to be very easy to understand — structurally, at least — but fell prey to the irrationality of the people trading it, because, like gold, it is an asset without cashflows valued essentially on scarcity and investor sentiment. But sentiment is not emotion — as Warren Buffett once said of gold: “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

Even the most calculating Scrooge with the most inscrutable financial models would have to, at some point, make some kind of emotional, arbitrary, or otherwise subjective judgment about which art to actually buy as a “pure” investment — this is a decision that never comes into play with Bitcoin, a pile of meaningless ones and zeroes that you can’t even dive into. So sure, the art market operates in a way that is at times insane and unpredictable, but just because it quacks like a duck doesn’t make it a duck. Many markets exhibit wide-scale bubbles and irrationality, either in isolation (the tech bubble on the NASDAQ) or structurally (Silicon Valley).

Of course, it’s not the job of financial bloggers to think like labor economists, but the labor component of art, the actual artists, are entirely absent in the Alphaville story, save for a strange digression at the end. Was Andy Warhol participating in seigniorage (roughly the difference between the material and face value of currency), they ask, with his 1962 Dollar Bill series? Well, no, but the point is lost in the murkiness of the value of Warhol’s art being decoupled from the cost of his labor and him happening to have depicted money, among countless other pop signifiers.

The article concludes with a sort of poetically structured meditation on what it means to “overvalue” creative work, and whether or not that’s a bad thing.

Even if values of what classifies as aesthetically pleasing change, allowing greater access to those artists whose talents might not have been considered worthwhile in years gone by, can there ever really be enough creative and visionary expression in the world?

In the age of automated labour and a leisure class, we all become artists and creatives.

True creativity endures as one of the last eternal scarcities.

This is because you can never put a cap on how beautiful or aesthetically pleasing the world can get.

In which case it’s hard to say whether the bubbley nature of today’s art market really represents overvaluation.

It’s all very interesting, and probably partially true, though it’s unclear how it fits into the earlier discussion about Bitcoin. At the end, it seems that after comparing art to Bitcoin — because it’s unpredictably priced and sometimes enjoyed by the eccentric and reclusive rich — the author realizes that there are some positive externalities to creative work being overpriced. And that’s a conclusion we can all rejoice at seeing, because, apparently, we have all “become artists and creatives.” Give yourself a pat on the back.

[Via FT Alphaville, subscription required though you probably shouldn’t go through the trouble of creating an account]

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Mostafa Heddaya

Mostafa Heddaya is the former managing editor of Hyperallergic.