Is Modern Finance Ruining Modern Art? (Part 2): Mark C. Taylor

Jan. 31 (Bloomberg) -- In ways that are not immediatelyobvious, today’s overheated art market can help us understandthe recent collapse of the overleveraged global economy. Thoughfew have made the connection, developments in the art markethave been following the changing investment strategies infinancial markets. The global growth in the art market parallelsthe worldwide spread of finance capitalism. In recent years, thevalue of art assets has often risen faster than the value ofreal estate or financial assets.

This growth has, of course, been driven by the exponentialincrease in wealth among those who benefit most from the newfinancial system. Each week brings another account of a newlyrich hedge-fund manager buying art at a ridiculously inflatedprice. This preoccupation with “celebrity” collectors, however,obscures a more interesting and important development: Thetitans of finance capitalism are also transforming the artmarket through the financialization of art. They manage theirart collections in much the same way they manage theirportfolios.