Financial crisis impact on the art industry
ever wondered what happens to art when the economy crashes? Read on...
An asset - or personal asset - is anything you own that adds financial value. They are also known as tangible assets because they are things that you can touch. Examples of personal assets are properties you own - your home/commercial property, cars, gold/jewelry/coins, checking/savings/current/money market accounts, life insurance policies, retirement accounts, and arts/collectibles. Financial assets are intangible assets that you cannot touch. They are more liquid because they are easy for people to sell whenever they want to. Examples of financial assets are stocks, bonds, mutual funds for savings and investments. These assets can also lose value over time such as during a decline in a company’s share price, or a financial crisis.
Knowing now what the different asset classes are and how they perform during a financial crisis brings us to one key question; how does art fair during a financial meltdown? You may also wonder the role an artist plays in finance, crisis, and the economy. Should they attempt to alter it, fix it, take part in it, explain it, or none of the above?
Financial crises are a norm in a capitalist world. Tracing the financial crisis back to the earliest record of the ancient Roman Empire of 33 CE, Roman citizens experienced bankruptcy due to shortages in money and a credit crunch. Roman designers/artists engaged with the economy by commenting on events through art they produced. In modern times, artists actively comment and adopt new mediums to reflect the financial crisis in occurrence.
The downsides of art in a financial crisis
Loss of funding vehicles
Capitalism is in crisis and those of us in the art world are not exempt from it. Economic meltdowns have direct impacts on the collecting community - institutions, artists, and collectors. It is common to see organizations who typically sponsor the development and furtherance of arts, cut short or withdraw their sponsorship budgets during financial meltdowns. A practical example is that of the Lehman Brothers collapse in 2007-2008 which affected New York’s MoMA as it lost 1/3rd of sponsorships. A lot of Museums were also affected in that meltdown as they lost the majority of their funding. Due to the machinations of the financial markets, collectors are wary to spend top funds acquiring new pieces of highly priced artworks as they remain watchful of the markets.
Contemporary suffers
Contemporary pieces with lesser history tend to suffer the first blow. This is because these artworks tend to be first considerations up for sale in the art market by collectors who seek to be liquid in such uncertain times. They do not lose their value so much however, they get to change ownership too often which is not encouraged.
The upsides of art in a financial crisis
Diversity
Artists create art based on inspirations garnered from ongoing cultural, social, economical, and personal events. In a financial crisis, they drawn inspiration from the gaps experienced economically, politically, and socially. Taking into consideration how they play a part in history, artists document events and timelines which makes it easy for future generations to time travel and almost live in the times captured through art.
Stability
Art self-regulates supply and demand, even in a financial crisis. When the economy enjoys high liquidity, the art market experiences surges in sales as change of hands become commonplace. In uncertain times, art collectors who own master pieces typically hold on to them until the financial market stabilizes. This reduction in supply of master pieces ensures that the prices of such pieces maintain their market value and stay stable at the very least, until the market becomes favorable.
Resilience
Art is resilient. Let us consider the recent economic ruckus caused by the global pandemic starting in 2020. A lot of businesses were shut down while others were forced to downsize. Millions around the world lost their jobs, governments had to rescue citizens, plunging the global economy into a shocking decline. The art industry experienced a surge in sales of contemporary works as it was a great time for collectors to flip pieces in their collections for liquidity. The new normal forced the collecting community to embrace technology even more in how art is promoted and also in how dealings are done.
Taking you back to the global crisis of 2007, art sales volume did not diminish for long. In February of 2009 just 5 months after the collapse of the Lehman Brothers, Yves Saint Laurent’s record breaking collection brought in $483.8 million at Christie’s, making it the most valuable private collection ever sold at auction.
Art Index Top 5 monthly - August 2021
August’s selection brings about yet another month of Art Index’s top 5 monthly. August selection is mouth watery. Every month, Art Index Africa’s jury brings to your inbox a showdown of the top 5 well researched and curated art pieces everyone should want to collect, based on strong technique, message, style, and medium.
Here are our picks for this month of August:
And the sun stood still. Even the sun is thrilled when women dance. It pauses to appreciate, celebrate with, and give more daylight to women when they dance. It is sheer beauty to see African women dance away.
“My Artworks are such that they strike the inner core of my audience and bring critical thinking and realization about things, happenings, and events oblivious to our naked eye, mind, and in society.“
‘Neman Hutu, In search of rest’ is part of the artist’s second exhibition, “In search of Home“. It attests to a state of longing, loss, and suffering. The artist explores what comfort and convenience means to a person or group of persons in constant disarray.
The artist captures the disarray and what-could-be when man fuses technology and beast to recreate everything we see, touch, and smell. To create man’s own creation with science and technology. An attempt to be god of creation.
Being an activist in an emerging economy that pretends to be democratic is considered illegal. Any voice of the people that seems threatening to the government is a threat to national security.
In summary, we have come to know a few things about the performance of art in a financial crisis:
funding vehicles that help keep the lights on at art institutions suffer gravely due to budget cuts
contemporary art changes ownership too often during a financial crisis as they are the first to be flipped in the art markets
artists do engage and participate in financial crisis by creating art that is relevant and reflects the times lived in
artists pen down history in art they create
art self-regulates, which makes it a stable investment vehicle
art is resilient and can perform very highly at auctions even in financial crisis
Until September,
Stay safe and keep the masks on.
Keturah Ovio.