From The New York Times: Can an Economist’s Theory Apply to Art?

warholThe New York Times speaks about the new book of  Thomas Piketty, “Capital in the Twenty-First Century,” a historic survey of income inequality, where the French economist argues that the rich are only going to get richer as a result of free-market capitalism. The NYT then tries to apply this theory to the art market:

“The rich are further increasing their wealth by buying art. Many millions have been made by a new breed of investor-collectors who buy Bacons, Warhols and Richters high, and sell even higher. Art by desirable investment-grade names makes the rich richer. And more and more wealthy individuals are now prepared to make bids of more than $100 million at auctions, while outside, beyond the shiny bubble of the art world, living standards in the rest of society stagnate or decline.”

“Exactly 100 years ago, the czar of Russia, Nicholas II, clearly mindful of the unrest being fomented by his downtrodden subjects, bought Leonardo da Vinci’s “Benois Madonna” in a private transaction for $1.5 million. That Leonardo, priced at three times the record $500,000 paid by J. Pierpont Morgan for Raphael’s “Colonna” altarpiece in 1901, was cited by the late Gerald Reitlinger in “The Economics of Taste” (1961) as probably the most expensive art sale in history, factoring in inflation.”

“In those days, heads of state and industrialists were throwing their money at art. In the 2010s, it’s financiers and those who inherit wealth through death and divorce who dominate the market. For example, Elaine P. Wynn, the former wife of the American casino magnate Stephen A. Wynn and a co-founder of the Wynn Casino Empire, has been identified as the buyer of Francis Bacon’s 1969 “Three Studies of Lucian Freud,” which sold for $142.4 million — a record for any artwork at auction — in New York in November.”

Read the full article

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