Meanings of prices for art. Determining the value of contemporary artworks in Amsterdam galleries Olav Velthuis Marc Expensive? Serge Two hundred thousand. Marc Two hundred thousand? Serge Huntingdon would take it off my hands for two hundred and twenty. Marc Who’s that? Serge Huntingdon? Marc Never heard of him. Serge Huntingdon! The Huntingdon Gallery! Marc The Huntingdon Gallery would take it off your hands for two hundred and twenty? Serge No, not the Gallery. Him. Huntingdon himself. For his own collection. Marc Then why didn’t Huntingdon buy it? Serge It’s important for them to sell to private clients. That’s how the market circu- lates. Marc Mm hm… Serge Well? Marc … Serge You’re not in the right place. Look at it from this angle. Can you see the lines? Marc What’s the name of the … ? Serge Painter. Antrios. Marc Well-known? Serge Very. Very! Pause Marc Serge, you haven’t bought this painting for two hundred thousand francs? Serge You don’t understand, that’s what it costs. It’s an Antrios. Marc You haven’t bought this painting for two hundred thousand francs? Serge I might have known you’d miss the point. Marc You paid two hundred thousand francs for this shit? Deel 9 Strategies 04-10-2001 21:55 Pagina 345
Meanings of prices for art. Determining the value of contemporary artworks in Amsterdam galleries
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contemporary artworks in Amsterdam galleries
Olav Velthuis
Marc Expensive? Serge Two hundred thousand. Marc Two hundred thousand? Serge Huntingdon would take it off my hands for two hundred and twenty. Marc Who’s that? Serge Huntingdon? Marc Never heard of him. Serge Huntingdon! The Huntingdon Gallery! Marc The Huntingdon Gallery would take it off your hands for two hundred and twenty? Serge No, not the Gallery. Him. Huntingdon himself. For his own collection. Marc Then why didn’t Huntingdon buy it? Serge It’s important for them to sell to private clients. That’s how the market circu- lates. Marc Mm hm… Serge Well? Marc … Serge You’re not in the right place. Look at it from this angle. Can you see the lines? Marc What’s the name of the … ? Serge Painter. Antrios. Marc Well-known? Serge Very. Very!
Pause
Marc Serge, you haven’t bought this painting for two hundred thousand francs? Serge You don’t understand, that’s what it costs. It’s an Antrios. Marc You haven’t bought this painting for two hundred thousand francs? Serge I might have known you’d miss the point. Marc You paid two hundred thousand francs for this shit?
Deel 9 Strategies 04-10-2001 21:55 Pagina 345
INTRODUCTION
Serge and Marc, two characters in Yasmina Reza’s play Art, are looking at Serge’s recent acquisition: a monochrome, white canvas with a number of diagonal scars.11
Marc is unable to appreciate the artwork one of his best friends bought; in particu- lar, it infuriates him that Serge paid 200.000 francs for it. Afraid that Serge will start fancying himself ‘in some grotesque way’ as a collector, that Serge values the Antrios more than him, Marc perceives the price as a major obstacle to their future friendship. ‘I give a fuck about you buying that painting. I give a fuck about you spending two hundred grand on that piece of shit’, as Marc would confess later on. More than just the neutral outcome of a market process, prices are apparently able to arouse fierce emotional responses.
From an economic perspective, Marc’s reaction is difficult to understand. As the outcome of the market process, a price is a neutral representation of value; the fact that prices for artworks are so high, is caused by the fact that each artwork is unique. Supply is in other words restricted to one, so that demand will determine the price of the painting (cf. Heilbrun and Gray 1993). Economic theory suggests that this adjustment process will take place without the interference of any human action at all. The formation of prices is thus ‘depersonalised’. However, in this paper I will show that pricing contemporary art involves more intricacies than economic theory allows for.
From a sociological perspective, Marc’s reaction is less surprising. Pierre Bour- dieu has rightfully characterised the art market as ‘a trade in which things have no price’ (Bourdieu 1993: 74); the economy of the arts is negated. As a part of that negation price tags are conspicuously absent in gallery spaces, while talking about prices is considered to be vulgar.12 Pricing, in other words, is far from a neutral activity. Indeed, the fact that Serge is willing to pay so much money for a mono- chrome canvas is telling as far as Marc is concerned; to him the price indicates that Serge wants to become part of a different community, and he fears this will alien- ate him from Serge.
The main argument of this paper is that in order to understand the price mecha- nism on the market for contemporary art, we need to take the meanings that prices have to actors on the market into account. Like anthropologist Robert Prus noted with respect to price setting on ‘ordinary’ retail markets: ‘Despite its ‘deperson- alised’ (…) referents, price-setting is a socially derived activity.’ (Prus 1985: 89-90). Likewise Viviana Zelizer has highlighted the non-economic meanings of economic processes. Her research shows that markets for ‘sacred’ goods, i.e. goods with a
Deel 9 Strategies 04-10-2001 21:55 Pagina 346
strong humanitarian or symbolic value, are infused by non market values and extra-economic logics (Zelizer 1979, 1988).
In this paper I argue that prices communicate rich and meaningful messages about the value of art to consumers, producers and distributors of art. The main evidence I present is based on interviews conducted with Amsterdam gallery own- ers;13 furthermore I will draw on eclectic sources such as academic and literary texts, reviews in art magazines, interviews with artists, collectors or gallery owners out of books and magazines, guidebooks to the art market for artists, etc. In order to analyse the meanings of prices that these qualitative data hint at, I draw a loose analogy between the price mechanism and a linguistic system: the social and cul- tural meanings of prices are only understandable if we speak the ‘language of the market’.14
FUNCTIONS OF PRICES
Rob Scholte, a successful contemporary Dutch artist, once remarked that ‘the only real thing about art is the price.’15 No matter how difficult it is to assess the value of an artwork, or how difficult even talking about art might be, the price functions as the single definite attribute of an artwork. That univocal appearance confers an attractive, seductive quality on them. As a result the price mechanism serves pur- poses that surpass the economic purpose of allocating scarce means optimally by bringing supply and demand for art in line. These non-economic purposes may be as different as selecting the audience for an artist, describing the development of an artist’s reputation, characterising the ‘aesthetic eye’ of collectors, or expressing the status of a gallery in the artistic field. Thus social, cultural and economic values are intertwined in a complex way.
For instance, sculptor David Smith set his prices so high that only a very small group of most persistent admirers could afford to buy his work; thus he expressed a scornful attitude to a world that he believed had too long ignored and disdained him – and it resulted in very few sales during his lifetime and great misery for his heirs and the executors of his estate immediately after his death (Grant 1991: 17). By contrast, social ideals may induce artists to keep prices as low as possible; even
Deel 9 Strategies 04-10-2001 21:55 Pagina 347
if the ‘pull’ of market demand would induce the artist to increase the price level, she may resist. One strategy may be to make more work that is inherently cheap (like drawings or prints); alternatively, the owner of an established Amsterdam gallery explains the price setting of work of one of the artists he represents as fol- lows:
Look at the difference between something that costs 20.000 or 100.000 guilders: you will get another audience with either price level, and you may find one sort of pub- lic nicer than another, to put it in general terms. Maybe it is more pleasant to sell things that cost 20.000 guilders, because the people that can afford it are nicer to deal with and speak to. G11
Apart from the fact that they may operate as a social selection mechanism, prices can have explicitly cultural meanings. Take the case of Tim Robbins, a heterodox artist who works with learning-disabled and emotionally handicapped teenagers in the South Bronx, New York. Because of the exceptional group of people he works with, Robbins recounts how prejudiced people were about their projects. Remark- ably, to prove they defied these low expectations, the artist refers to the price of the work: ‘I think we have done that – from $5 bricks in 1981 to over $150.000 for a major work today’; the increased prices mean in other words, that they have been accepted by the artistic community.
To give another example of these cultural meanings of prices: Sidney Janis, a famous post-war gallery owner in New York, recounts in an interview how difficult it was to sell works of abstract expressionist painters when they had their first exhi- bitions in his gallery. Work by Willem de Kooning was sold for $1800, while a work by Jackson Pollock cost only $8000 in 1952. Just like Robbins, Janis rephrases the artistic success of his gallery and the artists he represented in economic terms:
Twenty years later I bought it back for 350,000 dollar and gave it to the Museum of Modern Art.We sold Blue Poles [by Pollock], a somewhat smaller picture, for $6000, and eventually it was sold to the Canberra Museum in Australia for a reputed $2 million (De Coppet 1984: 39).
High prices may also serve the purpose of enhancing the preservation of art. The contemporary German artist Markus Lüpertz stated for instance that:
It is important to take care of the fact that your art becomes expensive while you are alive. The more expensive your art is, the greater the chance that it survives.16
Collectors may be confronted with this principle when donating artworks to a museum. The American couple Tremaine, who belonged to the worlds biggest
Deel 9 Strategies 04-10-2001 21:55 Pagina 348
collectors in the 1980s, occasionally saw work they donated to a museum disappear in storage space. As a result, the couple decided to sell work to museums rather than donate them:
With good reason, Emily [Tremaine] thought the museums appreciated works most if they had to pay for them. When the Metropolitan paid a great price for a work, people came to see it, and even if tainted by commercialism at the moment, it was displayed as a major work of art with the full prestige of the museum behind it (De Coppet 1984: 168).
Although these examples merely illustrate that prices may serve social and cultural purposes for people involved in the art world, in the remainder of this paper I will analyze the meanings involved in more detail; paying attention to these meanings is all the more important since they influence the determination of prices perva- sively. First, however, I will present a theoretical framework that enables me to ana- lyze the communicative function of prices.
THE PRICE MECHANISM AS A LINGUISTIC SYSTEM
The fact that prices are a signaling device has been recognized by some econo- mists. According to Nobel laureate Georg Stigler, prices function as ‘reporters’: they communicate ‘innumerable messages on the state of supply and demand for each commodity or service’ (Stigler 1987: 14). If a shortage of a certain good exists in a certain community, a rising price will communicate this to producers in other communities. Other economists have argued likewise that:
‘The market process solves the problem of economic calculation by generating ‘signals’ of individuals to orient their behaviour to one another. The institutions of the market society serve as ‘aids to the human mind’ in their capacity as guide- posts to human action within a complex and uncertain world’ (Boettke 1995: 66, emphasis added).
Even the analogy between money and language has been alluded to by some het- erodox economists: markets would be efficient because they are assisted by a mon- etary language which transmits information ordinary language is unable to trans- mit (Horwitz 1995: 157).
But whereas economists focus on prices as an economic language, and on the market as a network for economic information, the case of the market for contem- porary art shows that the nature of the information transmitted may also be social and cultural.77 Semiotics, which is loosely defined as the study of the production
Deel 9 Strategies 04-10-2001 21:55 Pagina 349
and consumption of signs, can provide opportunities to study these meanings of prices.18 But rather than providing a structural, semiotic analysis of prices, I will draw an analogy between the price mechanism and a linguistic system by eclecti- cally using the conceptual framework of the Swiss linguist Ferdinand de Saussure.19
Three concepts are central in De Saussure’s semiology: the sign, the signifier, and the signified.20 The signifier, to begin with, is the empty container of a commu- nicative message. In the case of the word table, the signifier is simply the five letters this word consists of. The signified is the concept the signifier refers to, in this case the concept of a table. The sign, finally, is the combination of the concept and the sound pattern, or, in other words the complex of associations between the signifier and the signified (cf. Barthes 1957: 252). To give an example: a bouquet of roses is in itself an empty or ‘meaningless’ signifier. It only becomes a ‘sign’ (of love) when a particular ‘signified’ or meaning, usually some kind of affection, is attached to it.
How does this approach to language apply to the study of prices? Let me propose three ways. No doubt the main similarity between language and the price system is the fact that both start with an ‘empty’ or meaningless ‘container’: the sound pat- tern in a linguistic system has its counterpart in the numbers a price consists of is; this number-combination is entirely meaningless. For a foreigner who does not have any knowledge of English language, the word ‘table’ will mean as little as the number ‘2500’ on a price label means to somebody who has no knowledge what- soever of a particular market. Just like the relationship between signifier and signi- fied, the relationship between price and a good is therefore arbitrary: it is based on convention. For prices of contemporary art this holds because no ‘natural connec- tion’ exists between the price and the artwork; according to most analyses, even cost of production hardly account for the price of the work (cf. Bourdieu 1993, Plat- tner 1996).
Because of the so called arbitrariness of the sign both a linguistic system and the price mechanism imply social activity:
‘A community is necessary in order to establish values. Values have no other rationale than usage and general agreement. An individual, acting alone, is inca- pable of establishing a value’ (Saussure 1913: 112, cf. Cooley 1913).
As a result, we need to know the conventions in order to understand meanings of words as much as of prices. This insistence on the conventions or customs that shape the distribution of art has also been highlighted by Howard Becker’s approach of ‘art worlds’ (Becker 1984).
Deel 9 Strategies 04-10-2001 21:55 Pagina 350
A second similarity between a linguistic and a price system, is that both have a so- called ‘synchronic’ and a ‘diachronic’ dimension. The synchronic dimension encompasses the static aspects of the system, or the systematic relations at a cer- tain point in time. How do certain signs relate to other signs in contemporary soci- ety, would be a question to ask in that context. The diachronic dimension, on the other hand, is all about the historical evolution of the system: how did associations between a signifier and a signified develop in the course of time? As De Saussure argues, this duality in linguistics is duplicated in economics by the distinction between study of the economy proper on the one hand, and study of economic his- tory on the other (Saussure 1913: 79). When explaining the meaning of prices on the art market, this distinction between the synchronic and the diachronic dimen- sion turns out to be fruitful.
The third and most important reason for analyzing the price system from a semi- otic perspective is that both economics and linguistics deal with a notion of value. In fact, De Saussure makes another explicit reference to economics because of it:
‘as in the study of political economy, one is dealing with the notion of value. In both cases, we have a system of equivalence between things belonging to different orders.’ (Saussure 1913: 80; emphasis in original text).21
Value, De Saussure argues, is based on a paradoxical principle. On the one hand, the value of an item involves something dissimilar, which can be exchanged for it; on the other, values involve similar things, to which a good can be compared. To give an example: the value of a five-franc coin is simultaneously based on the fact that it can be exchanged for something different (e.g. a loaf of bread) and compared to a similar value (e.g. of a one-franc coin; Saussure 1913: 113). This distinction will also provide an important entry point to the art market.
With these similarities between linguistic and monetary systems in mind, I will now turn to the meanings my informants on the market for contemporary art referred to. I will make a crude distinction between meanings conveyed to con- sumers and producers of contemporary art on the one hand, and diachronic and synchronic meanings on the other hand.
Producer Consumer
- price differences - price differences
- lack of price differences
- price increases - price increases
- price discounts
Furthermore, while most meanings of prices are cognitive, in some cases like the meaning of price-discounts they are of a relational nature. I will show that in an art world that opposes commercial values, people find ways of communicating non- economic values via the economic medium of a price. However, this communica- tion process is only meaningful for actors who know the conventions and speak the language of the market; thus prices constitute a communicative play of a distinct social group.
SYNCHRONIC AND DIACHRONIC MEANINGS
Price differences: self esteem for the artist
By comparing their work to the work of their colleagues, prices enable artists to get some indication of their respective reputation. Just like De Saussure shows with respect to language, not just the absolute value of their artworks counts to artists, but also the relative value. Thus, prices convey the social meaning of self-esteem to the producer of the good. This is all the more important since uncertainty prevails about artistic quality per se.
Artists may ‘read’ the quality of their work by looking at other prices in the sys- tem; as a result the prices, or rather the price difference can be a source of self- reward or self-esteem for an artist: ‘High prices are read as messages sent by the student to the community which say (…) ‘I am pretty damned good, I am better than you are’ (Warchol 1992: 324). Here we are confronted with a synchronic mean- ing of prices, since the inter-relationship of prices is at stake. As a gallery owner confirms:
The artists that exhibit in my double exhibition space always start comparing prices, especially if one artist has been active for a longer period than the other one. You will get remarks like: ‘why is his work worth so much and mine only this much.’ Indirectly it proves that self-esteem is a major issue for an artist. G2
Price differences: indicator of value to the collector
Obviously prices do not have the same meaning to all actors on the market. To col- lectors, they have less to do with self-esteem than with the quality of the work. Exactly because an object is worth so much on the market, buyers may be induced to attach aesthetic value to it. The idea that ‘expensiveness’ induces people to value a good has been a major theme in Thorstein Veblens The Theory of the leisure class (1899). Value, Veblen argues, is informed by ‘pecuniary canons of taste’:
‘Any valuable object in order to appeal to our sense of beauty must conform to the requirements of beauty and of expensiveness both’ (Veblen 1899: 108).
If beauty and expensiveness are related, this is because we tend to value an object ‘in proportion as they are costly’ (Veblen 1899: 108).
Deel 9 Strategies 04-10-2001 21:55 Pagina 352
The main reason why prices contain meanings about the quality of the work, is because uncertainty prevails as far as aesthetic evaluation is concerned. An impor- tant characteristic of…
Olav Velthuis
Marc Expensive? Serge Two hundred thousand. Marc Two hundred thousand? Serge Huntingdon would take it off my hands for two hundred and twenty. Marc Who’s that? Serge Huntingdon? Marc Never heard of him. Serge Huntingdon! The Huntingdon Gallery! Marc The Huntingdon Gallery would take it off your hands for two hundred and twenty? Serge No, not the Gallery. Him. Huntingdon himself. For his own collection. Marc Then why didn’t Huntingdon buy it? Serge It’s important for them to sell to private clients. That’s how the market circu- lates. Marc Mm hm… Serge Well? Marc … Serge You’re not in the right place. Look at it from this angle. Can you see the lines? Marc What’s the name of the … ? Serge Painter. Antrios. Marc Well-known? Serge Very. Very!
Pause
Marc Serge, you haven’t bought this painting for two hundred thousand francs? Serge You don’t understand, that’s what it costs. It’s an Antrios. Marc You haven’t bought this painting for two hundred thousand francs? Serge I might have known you’d miss the point. Marc You paid two hundred thousand francs for this shit?
Deel 9 Strategies 04-10-2001 21:55 Pagina 345
INTRODUCTION
Serge and Marc, two characters in Yasmina Reza’s play Art, are looking at Serge’s recent acquisition: a monochrome, white canvas with a number of diagonal scars.11
Marc is unable to appreciate the artwork one of his best friends bought; in particu- lar, it infuriates him that Serge paid 200.000 francs for it. Afraid that Serge will start fancying himself ‘in some grotesque way’ as a collector, that Serge values the Antrios more than him, Marc perceives the price as a major obstacle to their future friendship. ‘I give a fuck about you buying that painting. I give a fuck about you spending two hundred grand on that piece of shit’, as Marc would confess later on. More than just the neutral outcome of a market process, prices are apparently able to arouse fierce emotional responses.
From an economic perspective, Marc’s reaction is difficult to understand. As the outcome of the market process, a price is a neutral representation of value; the fact that prices for artworks are so high, is caused by the fact that each artwork is unique. Supply is in other words restricted to one, so that demand will determine the price of the painting (cf. Heilbrun and Gray 1993). Economic theory suggests that this adjustment process will take place without the interference of any human action at all. The formation of prices is thus ‘depersonalised’. However, in this paper I will show that pricing contemporary art involves more intricacies than economic theory allows for.
From a sociological perspective, Marc’s reaction is less surprising. Pierre Bour- dieu has rightfully characterised the art market as ‘a trade in which things have no price’ (Bourdieu 1993: 74); the economy of the arts is negated. As a part of that negation price tags are conspicuously absent in gallery spaces, while talking about prices is considered to be vulgar.12 Pricing, in other words, is far from a neutral activity. Indeed, the fact that Serge is willing to pay so much money for a mono- chrome canvas is telling as far as Marc is concerned; to him the price indicates that Serge wants to become part of a different community, and he fears this will alien- ate him from Serge.
The main argument of this paper is that in order to understand the price mecha- nism on the market for contemporary art, we need to take the meanings that prices have to actors on the market into account. Like anthropologist Robert Prus noted with respect to price setting on ‘ordinary’ retail markets: ‘Despite its ‘deperson- alised’ (…) referents, price-setting is a socially derived activity.’ (Prus 1985: 89-90). Likewise Viviana Zelizer has highlighted the non-economic meanings of economic processes. Her research shows that markets for ‘sacred’ goods, i.e. goods with a
Deel 9 Strategies 04-10-2001 21:55 Pagina 346
strong humanitarian or symbolic value, are infused by non market values and extra-economic logics (Zelizer 1979, 1988).
In this paper I argue that prices communicate rich and meaningful messages about the value of art to consumers, producers and distributors of art. The main evidence I present is based on interviews conducted with Amsterdam gallery own- ers;13 furthermore I will draw on eclectic sources such as academic and literary texts, reviews in art magazines, interviews with artists, collectors or gallery owners out of books and magazines, guidebooks to the art market for artists, etc. In order to analyse the meanings of prices that these qualitative data hint at, I draw a loose analogy between the price mechanism and a linguistic system: the social and cul- tural meanings of prices are only understandable if we speak the ‘language of the market’.14
FUNCTIONS OF PRICES
Rob Scholte, a successful contemporary Dutch artist, once remarked that ‘the only real thing about art is the price.’15 No matter how difficult it is to assess the value of an artwork, or how difficult even talking about art might be, the price functions as the single definite attribute of an artwork. That univocal appearance confers an attractive, seductive quality on them. As a result the price mechanism serves pur- poses that surpass the economic purpose of allocating scarce means optimally by bringing supply and demand for art in line. These non-economic purposes may be as different as selecting the audience for an artist, describing the development of an artist’s reputation, characterising the ‘aesthetic eye’ of collectors, or expressing the status of a gallery in the artistic field. Thus social, cultural and economic values are intertwined in a complex way.
For instance, sculptor David Smith set his prices so high that only a very small group of most persistent admirers could afford to buy his work; thus he expressed a scornful attitude to a world that he believed had too long ignored and disdained him – and it resulted in very few sales during his lifetime and great misery for his heirs and the executors of his estate immediately after his death (Grant 1991: 17). By contrast, social ideals may induce artists to keep prices as low as possible; even
Deel 9 Strategies 04-10-2001 21:55 Pagina 347
if the ‘pull’ of market demand would induce the artist to increase the price level, she may resist. One strategy may be to make more work that is inherently cheap (like drawings or prints); alternatively, the owner of an established Amsterdam gallery explains the price setting of work of one of the artists he represents as fol- lows:
Look at the difference between something that costs 20.000 or 100.000 guilders: you will get another audience with either price level, and you may find one sort of pub- lic nicer than another, to put it in general terms. Maybe it is more pleasant to sell things that cost 20.000 guilders, because the people that can afford it are nicer to deal with and speak to. G11
Apart from the fact that they may operate as a social selection mechanism, prices can have explicitly cultural meanings. Take the case of Tim Robbins, a heterodox artist who works with learning-disabled and emotionally handicapped teenagers in the South Bronx, New York. Because of the exceptional group of people he works with, Robbins recounts how prejudiced people were about their projects. Remark- ably, to prove they defied these low expectations, the artist refers to the price of the work: ‘I think we have done that – from $5 bricks in 1981 to over $150.000 for a major work today’; the increased prices mean in other words, that they have been accepted by the artistic community.
To give another example of these cultural meanings of prices: Sidney Janis, a famous post-war gallery owner in New York, recounts in an interview how difficult it was to sell works of abstract expressionist painters when they had their first exhi- bitions in his gallery. Work by Willem de Kooning was sold for $1800, while a work by Jackson Pollock cost only $8000 in 1952. Just like Robbins, Janis rephrases the artistic success of his gallery and the artists he represented in economic terms:
Twenty years later I bought it back for 350,000 dollar and gave it to the Museum of Modern Art.We sold Blue Poles [by Pollock], a somewhat smaller picture, for $6000, and eventually it was sold to the Canberra Museum in Australia for a reputed $2 million (De Coppet 1984: 39).
High prices may also serve the purpose of enhancing the preservation of art. The contemporary German artist Markus Lüpertz stated for instance that:
It is important to take care of the fact that your art becomes expensive while you are alive. The more expensive your art is, the greater the chance that it survives.16
Collectors may be confronted with this principle when donating artworks to a museum. The American couple Tremaine, who belonged to the worlds biggest
Deel 9 Strategies 04-10-2001 21:55 Pagina 348
collectors in the 1980s, occasionally saw work they donated to a museum disappear in storage space. As a result, the couple decided to sell work to museums rather than donate them:
With good reason, Emily [Tremaine] thought the museums appreciated works most if they had to pay for them. When the Metropolitan paid a great price for a work, people came to see it, and even if tainted by commercialism at the moment, it was displayed as a major work of art with the full prestige of the museum behind it (De Coppet 1984: 168).
Although these examples merely illustrate that prices may serve social and cultural purposes for people involved in the art world, in the remainder of this paper I will analyze the meanings involved in more detail; paying attention to these meanings is all the more important since they influence the determination of prices perva- sively. First, however, I will present a theoretical framework that enables me to ana- lyze the communicative function of prices.
THE PRICE MECHANISM AS A LINGUISTIC SYSTEM
The fact that prices are a signaling device has been recognized by some econo- mists. According to Nobel laureate Georg Stigler, prices function as ‘reporters’: they communicate ‘innumerable messages on the state of supply and demand for each commodity or service’ (Stigler 1987: 14). If a shortage of a certain good exists in a certain community, a rising price will communicate this to producers in other communities. Other economists have argued likewise that:
‘The market process solves the problem of economic calculation by generating ‘signals’ of individuals to orient their behaviour to one another. The institutions of the market society serve as ‘aids to the human mind’ in their capacity as guide- posts to human action within a complex and uncertain world’ (Boettke 1995: 66, emphasis added).
Even the analogy between money and language has been alluded to by some het- erodox economists: markets would be efficient because they are assisted by a mon- etary language which transmits information ordinary language is unable to trans- mit (Horwitz 1995: 157).
But whereas economists focus on prices as an economic language, and on the market as a network for economic information, the case of the market for contem- porary art shows that the nature of the information transmitted may also be social and cultural.77 Semiotics, which is loosely defined as the study of the production
Deel 9 Strategies 04-10-2001 21:55 Pagina 349
and consumption of signs, can provide opportunities to study these meanings of prices.18 But rather than providing a structural, semiotic analysis of prices, I will draw an analogy between the price mechanism and a linguistic system by eclecti- cally using the conceptual framework of the Swiss linguist Ferdinand de Saussure.19
Three concepts are central in De Saussure’s semiology: the sign, the signifier, and the signified.20 The signifier, to begin with, is the empty container of a commu- nicative message. In the case of the word table, the signifier is simply the five letters this word consists of. The signified is the concept the signifier refers to, in this case the concept of a table. The sign, finally, is the combination of the concept and the sound pattern, or, in other words the complex of associations between the signifier and the signified (cf. Barthes 1957: 252). To give an example: a bouquet of roses is in itself an empty or ‘meaningless’ signifier. It only becomes a ‘sign’ (of love) when a particular ‘signified’ or meaning, usually some kind of affection, is attached to it.
How does this approach to language apply to the study of prices? Let me propose three ways. No doubt the main similarity between language and the price system is the fact that both start with an ‘empty’ or meaningless ‘container’: the sound pat- tern in a linguistic system has its counterpart in the numbers a price consists of is; this number-combination is entirely meaningless. For a foreigner who does not have any knowledge of English language, the word ‘table’ will mean as little as the number ‘2500’ on a price label means to somebody who has no knowledge what- soever of a particular market. Just like the relationship between signifier and signi- fied, the relationship between price and a good is therefore arbitrary: it is based on convention. For prices of contemporary art this holds because no ‘natural connec- tion’ exists between the price and the artwork; according to most analyses, even cost of production hardly account for the price of the work (cf. Bourdieu 1993, Plat- tner 1996).
Because of the so called arbitrariness of the sign both a linguistic system and the price mechanism imply social activity:
‘A community is necessary in order to establish values. Values have no other rationale than usage and general agreement. An individual, acting alone, is inca- pable of establishing a value’ (Saussure 1913: 112, cf. Cooley 1913).
As a result, we need to know the conventions in order to understand meanings of words as much as of prices. This insistence on the conventions or customs that shape the distribution of art has also been highlighted by Howard Becker’s approach of ‘art worlds’ (Becker 1984).
Deel 9 Strategies 04-10-2001 21:55 Pagina 350
A second similarity between a linguistic and a price system, is that both have a so- called ‘synchronic’ and a ‘diachronic’ dimension. The synchronic dimension encompasses the static aspects of the system, or the systematic relations at a cer- tain point in time. How do certain signs relate to other signs in contemporary soci- ety, would be a question to ask in that context. The diachronic dimension, on the other hand, is all about the historical evolution of the system: how did associations between a signifier and a signified develop in the course of time? As De Saussure argues, this duality in linguistics is duplicated in economics by the distinction between study of the economy proper on the one hand, and study of economic his- tory on the other (Saussure 1913: 79). When explaining the meaning of prices on the art market, this distinction between the synchronic and the diachronic dimen- sion turns out to be fruitful.
The third and most important reason for analyzing the price system from a semi- otic perspective is that both economics and linguistics deal with a notion of value. In fact, De Saussure makes another explicit reference to economics because of it:
‘as in the study of political economy, one is dealing with the notion of value. In both cases, we have a system of equivalence between things belonging to different orders.’ (Saussure 1913: 80; emphasis in original text).21
Value, De Saussure argues, is based on a paradoxical principle. On the one hand, the value of an item involves something dissimilar, which can be exchanged for it; on the other, values involve similar things, to which a good can be compared. To give an example: the value of a five-franc coin is simultaneously based on the fact that it can be exchanged for something different (e.g. a loaf of bread) and compared to a similar value (e.g. of a one-franc coin; Saussure 1913: 113). This distinction will also provide an important entry point to the art market.
With these similarities between linguistic and monetary systems in mind, I will now turn to the meanings my informants on the market for contemporary art referred to. I will make a crude distinction between meanings conveyed to con- sumers and producers of contemporary art on the one hand, and diachronic and synchronic meanings on the other hand.
Producer Consumer
- price differences - price differences
- lack of price differences
- price increases - price increases
- price discounts
Furthermore, while most meanings of prices are cognitive, in some cases like the meaning of price-discounts they are of a relational nature. I will show that in an art world that opposes commercial values, people find ways of communicating non- economic values via the economic medium of a price. However, this communica- tion process is only meaningful for actors who know the conventions and speak the language of the market; thus prices constitute a communicative play of a distinct social group.
SYNCHRONIC AND DIACHRONIC MEANINGS
Price differences: self esteem for the artist
By comparing their work to the work of their colleagues, prices enable artists to get some indication of their respective reputation. Just like De Saussure shows with respect to language, not just the absolute value of their artworks counts to artists, but also the relative value. Thus, prices convey the social meaning of self-esteem to the producer of the good. This is all the more important since uncertainty prevails about artistic quality per se.
Artists may ‘read’ the quality of their work by looking at other prices in the sys- tem; as a result the prices, or rather the price difference can be a source of self- reward or self-esteem for an artist: ‘High prices are read as messages sent by the student to the community which say (…) ‘I am pretty damned good, I am better than you are’ (Warchol 1992: 324). Here we are confronted with a synchronic mean- ing of prices, since the inter-relationship of prices is at stake. As a gallery owner confirms:
The artists that exhibit in my double exhibition space always start comparing prices, especially if one artist has been active for a longer period than the other one. You will get remarks like: ‘why is his work worth so much and mine only this much.’ Indirectly it proves that self-esteem is a major issue for an artist. G2
Price differences: indicator of value to the collector
Obviously prices do not have the same meaning to all actors on the market. To col- lectors, they have less to do with self-esteem than with the quality of the work. Exactly because an object is worth so much on the market, buyers may be induced to attach aesthetic value to it. The idea that ‘expensiveness’ induces people to value a good has been a major theme in Thorstein Veblens The Theory of the leisure class (1899). Value, Veblen argues, is informed by ‘pecuniary canons of taste’:
‘Any valuable object in order to appeal to our sense of beauty must conform to the requirements of beauty and of expensiveness both’ (Veblen 1899: 108).
If beauty and expensiveness are related, this is because we tend to value an object ‘in proportion as they are costly’ (Veblen 1899: 108).
Deel 9 Strategies 04-10-2001 21:55 Pagina 352
The main reason why prices contain meanings about the quality of the work, is because uncertainty prevails as far as aesthetic evaluation is concerned. An impor- tant characteristic of…
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