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What happened? Luxury spending is the first thing to fail when the oxygen goes out of the economy; art is the canary in the mine shaft. But behind that lies something more basic. The art market is inherently volatile because, unlike other markets, it is tied to no intrinsic value. The price of art is determined purely and solely by desire. The art prices of the '80s -- from $231,000 for a work by graffitist Keith Haring a year ago to the $82.5 million a Japanese businessman splurged on Van Gogh's Portrait of Dr. Gachet last spring -- struck many people as crazy because they were fetishism, the greed of punters and the vanity of competing buyers run amuck. One jump in price was supposed, by some magnetic impulse, to guarantee the next. The art market in the '80s parodied the belief rampant in the wider economy that a speculative binge could last forever. It was a bubble, sustained by dealers' pressure, ratified and manipulated by public bidding. Auctions supplied the "objective" basis for hype.
Not anymore. Contemporary art will keep coming to auction; that is guaranteed, if only because more art speculators will be forced to sell as the larger economic gloom deepens and the banks close in. But the vista of unsold pictures with lower prices will crimp the flow of top-quality work. The boom shook a lot of first-class art back into circulation, along with masses of lesser stuff, all of which was snapped up. When buyers get more cautious, so do sellers, and circulation grinds down. This affects private dealers as well as auction houses: the same tidal flow that lifted all boats in the '80s is now dropping them in the '90s. In particular, it will be more difficult for dealers to "defend" the prices of their living artists by bidding them up. The latest auction results suggest that some of them have already stopped doing so.
Still, the signs suggest that the misfortunes of the auction houses must inevitably benefit private dealers. No seller wants to see his picture do badly in public. Private dealing is discreet, and prices can be quietly negotiated. Hence, in times of recession, works of art go to the private trade that would automatically have been consigned to auction when the boom was on.
Because contemporary art was the most inflated area of speculation, one may assume that for certain artists of the '80s, no bottom is yet in sight. But anyone who thinks the market decline will instantly produce saner relations between art and the public ought to think again. In the short run, the more likely result will be that works of art, their meanings already distorted by the strain of acting as big-ticket investment commodities, must now suffer the further ignominy of being viewed as failed bullion. In the long run, in art as in nature, the fittest will survive. Meanwhile, one can only hold on to one's hat and remember the Dutch tulip mania of the 17th century, when men bet their farms and fortunes on a single bulb. That market blew up; yet, curiously enough, the tulips themselves continued to be as beautiful at a few stivers as they had been at a hundred guilders.