ART IN A MARKET ECONOMY

(published in The New Matilda, 4 May, 2005)

© Donald Richardson September, 2003




Professor Donald Horne broached a very relevant issue when he declared - in a speech delivered at a seminar on arts management in Sydney in March, 2003 - that the arts are not an industry. But, surprisingly, there has been scarcely any discussion of this statement.

I wonder why. Are people stunned by Horne's audacity? Certainly the statement seems to have come out of the blue, although he traced the 'economization of culture' in Australia back to Keating's Creative Nation of the 1990s. In the ensuing ten years or so, have we become so inured to thinking in economic (ir)rationalist terms generally that we are unable to consider any alternative for the arts?

Perhaps Horne's thesis has been read as the nostalgic ramblings of an academic who is past his use-by date. I hope not, because his view is that of a large number of arts practitioners who have hitherto felt powerless to assert it themselves. If Horne's statement is allowed to disappear into oblivion, we will miss the opportunity to right a long-standing, grievous wrong .

The 'arts industry'
That the arts are not an industry is a matter of cold logic, not just Horne's personal opinion (however authoritative that may be). This is a fact that deserves the serious consideration - and adoption - of all our arts writers, academics and administrators as the tyranny of economic (ir)rationalism is increasingly shown to be the false religion it always was.

Industries exist solely for 'the bottom line' - profit to shareholders. Industries are only established after considerable research into whether their products will sell at a price high enough to pay expenses and yield that profit to shareholders. Usually these products are clones or variants of products that are already on the market in some form.

Nothing could be less like how the arts operate. True artists create things for which there is, by implied definition, no pre-existing market because the world does not yet - cannot yet - know about them. Art's products are not made to satisfy an existing market except in the most general sense (the human need for portraiture, music and entertainment, for example). Hence, the age-old practice of patronage - the funding of artists' living expenses by far-sighted royalty, nobility, the church, corporations or states.

The motivation of the true artist is a self-generated imperative to create - not monetary reward. Vincent van Gogh, the paradigm case, painted dozens of pictures but never sold one. These same pictures are now worth millions of dollars each. This is not a function of art per se but of the art market.

Sometimes artists work in awe of the cosmos. There are numerous examples in the history of music and poetry world-wide. Painter Lloyd Rees, accused by Michael Parkinson in a television interview of being 'an incurable romantic' replied that one could be nothing else sitting - as they were - 'in the middle of Eternity'.

And Joan Miro's reaction to those who thought art is about money was: 'Merde!'

The only instance where there is a concurrence between the arts and industry is in the marketing of the resulting products. While there cannot be an arts industry, there is an arts market. Its operatives are, not painters, composers or poets, but art galleries, auctioneers, dealers, box-offices, producers, publishers, agents, recording companies, etc. These operate by selling, on behalf of artists, their products. They operate in exactly the same way as any other marketing business, i.e., by selling product for profit and (if they are functioning well) promoting this product in the market. Apart from what it sells, the arts market has absolutely nothing to do with art per se.

Thus, 'arts industry' is a nonsense term and should be discontinued forthwith. In fact, no one term can adequately and validly cover both the creation and marketing of art's products and do justice to both.

Arts 'business'
Recently there have been moves to train artists in the 'business' of art: i.e., how to market their own products. But, having to peddle your works takes valuable time away from production. Even more, the mind-set required to sell being so different from that required to create means that having to take time out to sell work actually inhibits production as well as wasting production time.

And, business as a concept is even less appropriate as a paradigm for the arts than industry is: at least industry produces something; business produces nothing.

However, this did not prevent the Myer Report on the recent Contemporary Visual Arts and Craft Inquiry requesting the Australian Taxation Office to define for the sector 'what constitutes carrying on an art business'! One would have thought that this inquiry, which was instituted by the Department for Communications, IT and the Arts to 'scope' the sector nationally, would have taken the opportunity to assert that the arts are not business. Instead, it meekly submitted to the current irrational and erroneous official orthodoxy.

The realpolitik of selling visual art
Increasingly since the nineteenth century artists have chosen to express themselves freely as individuals. Consequently, they have usually operated outside any system of patronage - which means that they have had to sustain themselves financially by selling their products as commodities on the open market. In fact, selling works of art in this way is a paradigm example of laissez-faire trading - with all its well-known disadvantages to the producer. As with all primary producers, artists create products without any real assurance that they will be marketable at a price sufficient to sustain further production and, even, the lives of the producers and their families. In drought years, Australians are very familiar with this phenomenon as regards farming; in the arts the situation is always with us, regardless of the season.

Few realize that some of the artists who have operated under this system and became famous actually had private means (Degas, Toulouse-Lautrec, Drysdale); others had supportive spouses (Monet, Matisse, Conder). The fortunate, highly-talented few were taken up by enterprising commercial gallery operators who became their dealers and managed the marketing of their products for them - for a retainer or commission. Only the exceptional cases died wealthy: most true artists struggle all their lives to keep body and soul together.

But the commercial gallery system has conspired to keep the reality of marketing art as a commodity from the general public. The aura of wealth, pleasure, high prices and conspicuous entertainment and consumption it projects is misleading. The world sees an artist receiving $10,000 for a single work, but does not realize that he/she will probably net as little as $2000 of that.

A painter who sells a picture from a commercial gallery for, say, $1000 probably paid $200 for the frame and will have to pay between $330 and $500 commission to the gallery (after having contributed a considerable sum for printing a catalogue and for victuals for the opening and, perhaps, a preview). This leaves a net return to the artist of between $470 and $300. On this the artist will probably have to pay 10% GST and - if his/her income for the year reaches the taxable minimum - income tax. Insurance also is a cost borne by artists, if they choose to buy it.

And a one-person-show can take up to five years to paint - if the artist is able to devote full time to it, not having to teach or pursue some other means of earning an income. Thus an artist will have to net $200,000 from a show to average the modest income of $40,000 per annum over the five years. This means that the show will have to gross at least $600,000 in sales - a very rare event indeed! Consequently - except for those who have established a reputation and can sell their products at a reasonable price - artists usually live their entire lives in poverty.

Objective or rational methods of determining the monetary value of a work of art are bound to fail because there is no 'natural' equivalence of aesthetic and monetary values. Nor is it possible to estimate the sale price of a work of art by the time it took to create it (as, for instance, plumbers price their work) or the preciousness of the materials used. A piece of paper which was coloured by JMW Turner in an hour or two is worth more than many a solid gold trinket.

There are several major - and many minor - art prizes on offer in Australia each year. If an artist is lucky enough to win one, for a brief instant in his/her career, he/she will accrue a one-off $1,000 to $50,000 (on which, of course, tax must be paid). Luck does come into it because there are commonly hundreds of entries, many of them of high quality, but only one can win - and this at the whim of the judges, who are often not well qualified in the field. And each artist entering will have to pay a fee of up to, perhaps, $40 per entry and spend many dollars having works photographed for pre-selection and on freight, insurance and packing if the work is selected for judging. For those whose annual income is less than the taxable minimum these expenses are an un-recouperable loss.

And artists are expected to take part in those weekend exhibitions which are in support of worthy causes. Sometimes these, too, charge entry fees and prices are expected to be minimal. Artists have to frame and transport their works at their cost, but there is little chance of worthwhile sales within the two or three days the exhibition lasts.

It takes years for an artist to generate worthwhile prices for his/her works. This can be inimical because it requires that an artist develop a recognizable 'brand' style early in his/her career, whereas the natural thing is to progress through 'periods' to maturity in late middle age. It can be commercial suicide to move, however creatively, from one style or medium to another. The result is that some of the best artists, judged on aesthetic criteria, are some of the lowest paid practitioners. Only in the minority of cases - usually now aged artists who fought, in poverty, to establish Modernism in the post-World War II period - are now well off.

The enormous prices paid for the works of famous artists - the Nolans, Drysdales and Olsens - at auctions are not paid to the artists or their heirs, of course. These prices are tens or hundreds of times the few guineas the artists received for the works when they sold them. The profits of these sales go entirely to the marketeers, and this will continue until Australia adopts a system of resale royalty, such as operates in some countries. To its credit, the Myer Report recommended strongly on this to the government. Whether this recommendation will be accepted remains to be seen (it is being opposed vigorously by the auctions industry).

Art does not sell itself, whatever the price. The Picassos and Turners of this world were - frankly - promoted in the market-place by friends, enthusiasts or dealers. When the work of a new artist of worth comes on to the market, prospective purchasers (apart from the most experienced and sophisticated) wish to be told something about the artist's intentions, working methods etc - and to be assured that any 'courageous' choice they may make will not be ridiculed by the more experienced. This is the role of the commercial gallery director or dealer.

Thus, the realpolitik - for artists - of selling art as a commodity in a market economy.

Public perception
The public's total ignorance of all this can only be remedied through education, but arts education is devalued in our system currently. This is, of course, a self-perpetuating problem: generally our educators - at all levels - know little about the arts, so they are unable to teach their students about them. And so it goes on, generation after generation! The Myer Report has been criticized for ignoring this. At least it could have recommended the revival of the excellent 1995 report of the Senate Environment, Recreation, Communication and the Arts References Committee - which died when the government changed soon after its release. It is a national disgrace that this exemplary, land-mark, report was allowed to lapse into oblivion. Many of its recommendations are still vitally relevant.

Patrtonage is rarely practised in Australia these days. A publisher may sometimes pay an author an advance; a music, dance or drama company may use sponsors' funds to commission a work; an art gallery director may pay a retainer to an artist. But the artists so patronized usually have some track record in producing marketable things. The struggling unknown is rarely supported. This means that some form of government sponsorship is needed to redress this lamentable state of affairs.

If this were to occur, intervention should be effected first in the training of teachers and in curriculum, then by ensuring that every school - both primary and secondary - has on its staff teachers trained in the arts. The change would take many years to filter through, but the investment of human and financial resources would ultimately be well worth it.

Remuneration for artists
It is incredibly deficient logic to propose industry, business - or any other entity - as a model for art. As the above has surely shown, art has its own, unique, set of parameters and, therefore, its own economic conditions.

Of course, artists choose their life-style (and, therefore, their economic status) freely and willingly - just as some farmers choose to live on unprofitable farms. Governments have schemes for supporting primary producers in economic need, but not artists. But creative people are an asset to any culture and it is incumbent on government to ensure that they don't starve to death in the garrets of King's Cross and St Kilda - or give up trying to exist as artists.

The logical solution is to allow working as an artist to qualify for 'work for the dole'. British painter and art-theorist, Bridget Riley, locates the idea of the 'industrial concept of production' in art within the 'more fundamental crisis of work in general in the West'. Painting, she declares (quoting van Gogh), is 'in a sense "absolute work" - "work for work's sake" ....' Artists are prepared to live frugally in order to be able to practise, and true artists could rarely be labeled 'dole bludgers' because most actually work longer hours and with greater dedication than people in other employment do.

Artists create precious objects - and, thus, wealth - out of common materials. To some, this is equivalent to the honest toil of the labourer and peasant. But we should recognize that, in the days when work was more clearly divided into manual and professional, art was considered to be of the latter - which was indicated by its products being priced in guineas, as were those of architects, medicos and lawyers. Thus, it is relevant to speak of the 'professional status' of the artist.

Professional status
In Australia these days, most artists have tertiary qualifications but many graduates actually achieve little in the field; on the other hand, some artists gain professional recognition with few or no formal qualifications. Thus, professional status in art has no necessary relationship with formal training.

So, the problem for government in allowing artists to receive the dole will be to distinguish between the genuine professional and the free-loader. This can best be established by peer-assessment - long a successful operating principle of the Australia Council. This would just be an extension of the government's use of expert advice in many situations.

And there should be a quid pro quo. Artists receiving the dole for their work would be required to exhibit regularly and to allow Artbank to select one work per year for inclusion in its collection. This choice could either be gratis or by purchase under strictly regulated conditions. If the latter, to guard against prices being artificially inflated by commercial galleries or dealers, the prices could be negotiated at between 50% and 75% of the gallery price. Artbank's selection should be done by a peer-group consisting of one permanent Artbank officer and two local peers, the latter each retiring after three years to minimize personal or stylistic bias.

This would require a permanent Artbank office in each state and territory capital but, except in New South Wales and Victoria (and, possibly, Queensland) this work could be done by one permanent officer assisted by volunteers or appropriately qualified officers seconded from the state's arts secretariat. In total, it would entail appointing only half a dozen additional staff to Artbank and Artbank's local office accommodation could by supplied by the state organizations.

In addition, Artbank should establish a gallery in each state capital in which the acquried works would be shown and, possibly, offered for sale at gallery prices. This would cover some of Artbank's expenses and also give valuable publicity to artists.

The cost of implementing such a scheme would not be as high as for some schemes the government already supports. Apparently, primary producers, who receive many thousands of dollars in drought relief and other loans - amounting to $200,000,000 in 2002 - hardly ever pay the money back! And The Australian reported on 30 April, 2003, that the government has paid the textile industry the equivalent of $13,000 for each of its workers.

And government could consider redirecting some of the money it currently invests in sport and athletics now that we have well and truly achieved world status in these fields.

Taxation
Taxation is another area in which art is disadvantaged by the current 'industrial' system.
Whereas it is, of course, equitable for artists to pay income-tax, the Goods and Services Tax is both an abomination to art and actually counter-productive for the government (although the ATO seems not to realize this). Firstly, it places an inequitable burden on the art market because commission on sales is usually only 33 1/3% or, at the most, 50%, whereas generally retail mark-up is 100%. In turn, it is also unfair to artists who are not really in control of the prices for their works and cannot raise them to cover the GST.

But, further, artists who are registered as businesses and for the GST, and who operate their finances diligently, operate at a loss for many months on end and - because they are able to claim refunds of GST paid on materials they use, studio rental etc - are usually in a credit relationship with the ATO. So, the government gains nothing from artists, and artists have the burden of keeping account of the small items of material they purchase. This is a stupid and unfair situation and should be discontinued.


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