Nathan Eisenberg

Abstracting Art


It’s a bull market. In 2014, global art sales reached their highest-ever recorded levels, totaling over $77.6 billion. The records broken were set the previous year. The prices garnered for individual sales, in certain high-profile segments of the market, are increasing and breaking records too. The collective worth of the world’s top ten most valuable artworks is $1.29 billion. There is talk of an art bubble; speculators are almost certainly valuing art at unsustainable levels and prices will inevitably bottom out. But then again, “beauty is in the eye of the beholder” and we live in a time of profound wealth concentration. The top-tier may just continue inflating indefinitely, departing from the world where actual art producers struggle to create and survive. Whatever the long-term pattern, it’s clear that many are making a quick buck in the interim.

More paintings by young artists are being sold at auction than ever before; the number of works three years or younger sold per year went from 4,023 in 2007 to 7,300 in 2013. Investors act fast, sweeping up artists’ entire bodies of work before they are widely known, then flipping works at major auction houses for huge profit margins. Entrepreneur Stefan Simchowitz bought 34 works by 28-year-old Oscar Murillo for a total of $50,000 and recently sold one (bought originally at $7000) for $401,000, a 5600% profit. Despite the interest in purchasing many works from single artists, amassing a collection is usually not the long-term goal for investors. “A picture can change hands five or six times within a year,” Simchowitz told Bloomberg Business. Each sale creates hype to drive the next one even higher. An investor who had built a sizeable collection by buying bulk can gain a lot by exploiting the resulting price surge. This pattern seems to be an emerging speculative technique, hedging on the higher volatility of a market in artists whose reputations are not set. “There are people out there pushing these artists like IPOs,” says art advisor Mia Romanik. The influx of speculators deploying techniques like this emerge from a long series of transformations within the art market, a process which sociologists Olav Velthuis and Erica Coslor describe as the financialization of art. Though art has long been considered a luxury-good investment (“During economic downturns, buy S.W.A.G. - Silver, Wine, Art and Gold!”), it wasn’t until the 1960s that it began to be treated as a speculative instrument. Since then, in tandem with capital’s neoliberal shift towards “flexible accumulation,” art has become a full-fledged financial asset, with a professionalized industry of consultants, economists, mutual funds and data services to enable investment. This has increased liquidity in the art market and tightened investment turnaround, driving up prices in the highest end of the market to astronomical. Commenting on recent New York auctions collectively moving $1 billion, Asher Edelman, founder of art financing company ArtAssure, said with apparent exasperation, “I don’t know what money means anymore.”

The proliferation of secondary services has reorganized the art market to more closely resemble those for financial assets, through successive rationalizations that standardize and quantify the investment decision-making process. Insider networks, which characterize large parts of the market, have been opened up to buyers without a background in art through the advent of comprehensive art pricing indexes. Various informatic devices function to make artworks more fluid and commensurable with other commodities in a diversified portfolio. These processes have abstracted from the work itself, making it theoretically possible to make a financially informed purchase of an artwork without ever viewing the piece.

Art investment funds, as models of data-driven “collections,” have become more prominent over the years of financialization. One of the first private investment clubs with an interest in art was Peau de L’Ours (Bearskin), started in 1904 by financier and collector André Level. The club pooled money from 12 investors to purchase more than 100 works of art, which were liquidated eight years later at an average of quadruple the acquisition price. In 1968, another group of investors formed the Sovereign-American Arts Corporation, which bought works of modern art based on the advice of salaried consultants. SAAC was a publicly traded company, so one could own stocks in a business whose only asset was an art collection. SAAC folded after an art market bust in the 1970s, along with many other art-based mutual funds that had emerged. Starting in the 1990s, major banks and firms started offering art investment funds that were structured as private equity funds, indicating that art is considered a more liquid (and risky) asset. In addition, private equity funds are marketed towards individuals with higher net worth than the usual clientele of mutual funds. These funds are informed by a growing matrix of professional market analysis companies that examine trends and publish official forecasts and outlook reports.

The evolving operations of art investment funds reveal a tendency, present throughout the financial sector, for human traders with a developed sense of intuition to be phased out and replaced with statistical models. This tendency is symptomatic of the process of ‘real abstraction,’ in Marxian terms, that seeks to systematically uproot a wide variety of things from their historical context through the aggregation of metadata and launch them all into a common orbit of exchange. Under this epistemic regime, the corporeal existence of commodities is incidental, and even an impediment, to the smooth accretion of exchange value. This presents something of a paradox, inherent in the movement of capital between fixed and liquid forms, but especially pronounced in the case of art: capital accumulation insistently denies its basis in materiality while fully depending on it. Real abstraction is not a withdrawal from substance into pure virtuality, but a material reconfiguration of production and circulation to make a wide variety of particular things commensurable under the same system of value. Art indexes and portfolio performance reports construct artworks as fluctuating variables, amenable to the relatively dimensionless lexicon of stocks and bonds. Artworks, despite the conceptual turn, derive their value within the traditional art market from the aura cultivated around their status as unique objects. The concrete form of art objects, as sensuous and peculiar things, drives the market in dialectical tension with the abstracting apparatus of financialization. Since art’s social and material embeddedness is unavoidable, ontologically speaking, financialization deploys a number of tactics, from price indexes to specialized warehousing, which obscure, disavow or reorganize the conditions of art’s pesky objecthood.

This unresolvable dialectic between abstraction and concreteness characterizes all conditions of production under capitalism. The way that this contradiction is mediated has shifted with the transition from early to late capitalism. There are two competing and coexisting epistemes structuring the art market at the moment: one based on taste and aesthetic value and the other on indices and speculative interests. Hence, people like André Level, who can read as well as influence taste trends, are now working alongside and in competition with teams of data analysts at Bloomberg. Pierre Bourdieu argued that taste is a historically produced category that consolidates class alignment, rather than reflecting a detached Kantian aesthetic judgment. In this regime, the value of collecting and engaging with art was derived from the accrual of cultural capital and the performance of connoisseurship. Financialization, on the other hand, places a premium not on taste, but on the ability to accurately predict what tastes will be. The function of art as a cultural gatekeeper is less relevant than the ability to see a profitable return on investment. This is perhaps said better by Justin Williams, founder of Art Trading Fund, who opined in an interview, “For me, art is just a commodity, it’s a cold thing. I have collected well, but I see art as a P&L [profit and loss statement] on the wall.”

The regime of taste imagines art to be autonomous from its historical conditions and the bourgeois viewer of art to be in touch with the transcendent due to their keen aesthetic awareness and cultivation. This dissimulates the class hierarchy underneath social distinction, replacing the contingent political contest of wealth and dispossession with a moral phenomenology of beauty. Thus, specific practices of looking seek to obscure the vagaries of social war that shape visual culture behind the neutral, white walls of an overlit gallery. This ideology is still in place, but it is being subsumed into an apparatus that no longer needs to look. The abstraction emanates from the eye, but it is also up there on the wall, and behind it too. It is spatial, parametric and logistical, reconstituting the concrete ground that determines art’s value and place.


Illustration by Rebecca Rau

Parametric Criticism

In a 1986 paper, economist William J. Baumol argued that art could not serve as a profitable investment. Using centuries of data, he demonstrated that the average rate of return for art was practically zero. He claimed that the prices of visual art float aimlessly and are “inherently rudderless;” the price of art is incapable of signaling any actionable information, and that the market exhibits random behavior. This paper settled the debate over art investing for a number of years, cooling the activity of art speculators. Then, in 2002, Jiangping Mei and Michael Moses cast doubt on Baumol’s claims by analyzing a newly assembled dataset of repeated sales from 1875 to 2000 in New York and using a new regression technique to determine the risk-return characteristics. Mei and Moses found that paintings outperform some traditional financial assets, like fixed income securities, and exhibit lower volatility and lower correlation with other assets, making art investment a desirable candidate for portfolio diversification. This finding sent waves through the finance world, and the pair developed the Mei Moses Art Index, which became the first rigorous and respected price data index specifically for art, and started their own consultancy, Beautiful Asset Advisors. According to their website (, their index is the most quoted art-market index in the media.

Mei and Moses are among the professional stratum of economists and financial analysts that develop and use parametric devices to make the value of art legible within the data-driven epistemology of finance. The Mei Moses index addressed an aporia that has long stood in the way of lucrative art investment: the uniqueness of art objects and the infrequency with which they are traded make it hard to find systematic trends. Using the repeat sales regression technique, which analyses recurrent sales of the same work to control for the heterogeneity of individual artworks, Mei and Moses were able to minimize these confounding factors and produce supposedly useful data. They traffic in the notion that with a robust enough dataset and advanced statistical methods of inference, indexes can be used to project and calculate a successful investment strategy with higher certainty. They derived a different result from Baumol, but they assumed a different attitude as well: confidence in the efficacy of predictive analysis.

Art investment benefitted from a revolution in the financial world as a whole, starting in the late 1990s. The “scientization” of finance, with the widespread raiding of academic physics and math departments and the advent of high-frequency algorithmic trading, allowed for an expanded, automated rationality to dominate the markets, which, along with near-total deregulation, produced unprecedented super-profits. This set of new techniques allowed for the development of rigorous indexes and trend analysis in the art world, making the previously opaque and subjective art market legible to investors in a standard lexicon. The signaling capacity of prices was obstructed by the lack of transparency in sales and the heterogeneity of individual artworks. Proprietary databases that seek to aggregate metadata about trends in an artists career and predictive analyses adapted from regular commodities trading aspire to transcend art’s rarefied condition, translating the world of aesthetic discourse into one of demand projections and portfolio growth opportunities. This regime actively displaces the older network of appraisal professionals, allowing considerations of artworks’ formal and art-historical qualities to be bypassed in the calculation of pure exchange value.

This proliferation of indexes introduces the interesting possibility of algorithms advising purchases based on market patterns alone. Eduard Pomeranz, an Austrian hedge fund manager and big-name collector, openly boasted about using an algorithm developed for futures trading to help him decide to purchase two works by Paul Chan, which he planned on flipping when the price was right. Sophisticated, multivariable art indexes facilitated an epistemic coup in the collecting world, displacing the role of criticism and incorporating it as one among several data streams.


Inside the Dark Web

No one really knows how much art is stored inside the Geneva Freeport. Simon Studer, a former worker there, can attest that thousands of original works by Picasso reside in one of its climate-controlled rooms. “That’s the Freeport,” he told the New York Times, “You have no idea what is next door and then you happen to be there when they open the door and, poof, you see.” He says it casually, but he is one of the few afforded the chance to see anything. The Freeport is a warehousing complex that offers discreet, secure, high-end storage for a variety of luxury goods, among other things. There is little documentation about what resides there, and its security protocols are strict. A Free Trade Zone (FTZ) - an extraterritorial jurisdiction, usually with tax exemptions and other investing incentives, that technically is not part of the polity that abuts it - criss-crosses the building, occupying the yard and fourth floor. The other floors are Swiss.

The Geneva Freeport is a node in a growing constellation of premier art storage facilities, a dark web of no-questions-asked fortresses where an increasing number of the world’s most valuable artworks are being sequestered. Capital is intrinsically vulnerable when concreted in some fixed form and art presents a particularly acute liability, as its value is (usually) contingent upon it remaining preserved in some exact state. The problem of what to do with physical art objects in between sales opportunities is apparently enough of a headache for concerned speculators that a booming art logistics industry has sprung up across the globe.

Logistics is the material counterpart to high finance, doing the dirty work of real abstraction on the ground while high-frequency transactions travel the world’s undersea cables. The two sectors are co-constitutive. Advances in 19th-century warehousing and elevator technology, for example, allowed for a higher volume of grain to pass through Chicago’s shipping yards, spurring the development of futures contracts to assemble large enough bundles of credit to keep the grain flowing. The advent of modular containers for commodities that can be tracked along increasingly elaborate intermodal trade networks allows for more flexibility in the purchase of goods on the global market, increasing the need for complex financial instruments and the chances to siphon off capital. Insofar as finance organizes the flow of physical commodities, logistical infrastructure is necessary to reduce friction. Finance structures transactions according to a logic which eschews considerations of time and space. Logistics compresses time and space accordingly. Transportation strives to make distances shorter. Warehousing attempts to overcome duration by keeping commodities in stasis.

Art logistics services embody the logic of a financialized market. Speculation concerns itself with a series of discontinuous moments when buying and selling occurs, reserving the times in between for uninhibited value appreciation. This idealized timeline is offered as a logistical package: digital inventory systems, specialized transport arrangements, on-site gallery display rooms, consulting and deal brokering, expedited customs formalities and custom storage and packing all ensure that the full lifetime of an artwork, from acquisition to resale, occurs in a managed and safe environment that is optimized to preserve its value. Often times, artworks change hands without ever leaving the facility, maybe just moving over the next shelf. The design of new freeports are also including appropriate services for trading itself. Many luxury storage spaces are located within an FTZ, meaning that no taxes are paid on it while it’s there or for any sales that occur there, further incentivizing owners to keep their assets stored indefinitely. It’s no wonder then that more and more art is being concentrated in freeports, so much so that insurance companies are beginning to worry about having it all in one place. Hito Steyerl, musing about the great cultural wealth amassed within, referred to the Geneva Freeport as an “offshore museum.”

This industry has grown in tandem with the advance of financialization. Yves Bouvier, the “king of freeports”, and his company Natural Le Coultre, which is one of the largest fine art and luxury good logistics company in the world, have opened massive, high-tech freeport complexes in Singapore and Luxembourg in the last five years, in addition to the Geneva Freeport. A company called Uovo just finished building a $70 million facility in New York City. Tom Hale, the executive vice president of sales and business development for Uovo, described in an online interview the “post-redbrick gallery future” whose vacuum he felt Uovo filled:

We’re in an era that is being driven by wealth funds, agent advisory, private views, and ultra-discreet sales. Traditional forms of art logistics are ill equipped to meet the increasingly complex needs of both the art and the client.

Hale registered a shift in the economic circumstances and collecting behavior of the primary actors within the art market, a shift requiring updated logistics. As art develops into a reserve for more of the world’s private wealth, works are being transferred to streamlined circuits of handling and exchange, optimized to keep artworks safely out of proximity with any kind of public. This leads to some obvious consequences: Bouvier was accused earlier this year of price manipulation and, separately, concealed theft of several Picasso paintings.

Sophisticated logistics capable of diminishing the burden of a commodity’s presence and standardizing the circumstances of its circulation is crucial for a speculative market to emerge around that commodity. Art is not so different from grain, at least from the perspective of investors: the Geneva Freeport was originally built in 1888 to store grain - and there is still 45 tons of grain stored in a silo on the premises.



The status of art as a financial asset is not a given and so must be made through concerted logistical efforts. When the prerequisites are met, and art works can properly function as assets, then other more abstract and flexible instruments can be built on this foundation.

The photographer Sarah Meyohas, embracing this paradigm, has introduced a clever innovation that has the potential to substantially extend financialization. Her project BitchCoin uses a specially-created crypto-currency to act as an asset-backed security, collateralized by her current and future artistic output. The initial price for BitchCoin was set at $100 each, and was backed by a fixed rate of one BitchCoin for 25 square inches of photographic print. The release of a number of BitchCoins is matched with the placement of a corresponding set of prints, as per the exchange rate, into a safety deposit box for safekeeping. Since they are asset-backed, the total number of BitchCoins will always correspond to the total number (and size) of prints available for purchase.

With the purchase of a BitchCoin, the buyer receives a physical certificate with two unique strings of numbers, which are keys to access an encrypted account online. The BitchCoin launch party took place on February 18, 2015 at Trinity Place Bar and Restaurant, which is located in a converted bank vault. Two hundred BitchCoins were made available, all of which were sold during the launch party. Eight prints of a photograph entitled Speculations (each 21 ⅝ x 28 ⅞ inches, or roughly 25 BitchCoins) were placed in safety deposit box #138 at HSBC, 110 William St., New York, NY 10038, to serve as collateral. These coins are now in circulation and the dollar-value of each will float according to the market volume of BitchCoins and the demand for work by Meyohas.

BitchCoins are redeemable in perpetuity for any unframed photographic prints or can be converted into other currencies. This means that, when buying BitchCoin, the investor would be buying a credit for work Meyohas has yet to produce. It also means that an investor could potentially trade or sell the BitchCoins on a secondary market. This securitized market is open to speculation and could theoretically cause fluctuations in the price of BitchCoins, as well as affect the excitement and demand for her work. As she pointed out during a phone interview, the launch of BitchCoin itself garnered her a lot of attention.

It is clear that BitchCoin, as much a sincere funding model as it is an artwork itself, introduces a higher order of financial abstraction than exists for most other art on the market. The speculative instrument in circulation is abstracted from any specific product of artistic labor (unless you count the BitchCoin concept), able to exist primarily in the form of electronic transfers and brand appreciation and only occasionally translating to the sale of a physical print. Through the fixed square inch exchange rate, Meyohas introduces the possibility of fractional ownership, with the possessor of a single BitchCoin having the power to purchase only a portion of any single print. This divisibility is pure abstraction, unrealizable except through the cooperation of BitchCoin owners into shareholders of single prints.

BitchCoin approaches a resolution of the dialectic between abstraction and materiality, forcing the prints and the currency to divide the labor, so to speak, between substance and speculation. The artwork-turned-asset sits unperturbed in a vault, without the elaborate logistical infrastructure in place in the art warehousing industry to enable the works to concretely embody their value during occasional visitations to the commodity stage. Meanwhile, BitchCoins are out in circulation, being used to play the market. Of course, this seemingly immaterial state is a fiction as well: if there is no print material in the safety deposit boxes or anywhere that are of equivalent quantity at the exchange rate, then the value of the BitchCoin effectively disappears.

"Speculations," by Sarah Meyohas

Though, formally speaking, BitchCoin is unrelated and indifferent to the content of the photographic prints, Speculations, the photograph released to back the first and only BitchCoin batch, provides a rich visual metaphor for the process of financialization. In the prints, a nude figure with flowers covering her torso crouches in front of a yellow background. Her head and upper torso are placed out of frame and a mirror is placed in the center of the composition, covering the middle part of her body. Just her knees and part of her torso are actually visible. A mirror behind the camera reflects this image into the visible mirror, causing an infinite number of iterations to recede into an artificial vanishing point in center of the photo, an endless exchange of the light that ultimately forms the image. The figure, nude and adorned with flowers to seemingly play on traditional visual tropes of the canon, is obscured through this repetition of the frame, so that rather than constituting a whole body, she is segmented and incomplete, disrupting the citation of past portraiture.

The primary frame, the first order of abstraction, isn’t quite stable ground, as her head extends beyond the top, suggesting the possibility that this too is an iteration of a prior image. The succession of frames also visually divides the piece in a manner compatible with the free-floating abstraction of BitchCoin: one could imagine using 20 BitchCoins to purchase all but the outermost part, or 10 BitchCoins for the composition two iterations down, and so on. Finally, with each doubling of the frame, the image gets smaller and less detailed, but no more complete. In fact, the particulars of the image are abstracted away, becoming less distinct until the frame contains only a single color, not even yellow anymore, but dark green.

BitchCoin, and the careful compositions of the collateralized prints, elegantly incorporate the material conditions of financialization into their form. The project is certainly readable as an immanent critique of the speculative paradigm, but Meyohas, who has a BS in Economics from the Wharton School of Business and an MFA from Yale, seems to intend it as a straightforward acceleration of these trends. As she pointed out to me in an interview, the art market is illiquid, opening it up to manipulation. Despite the ongoing rationalization, well-connected and powerful brokers can still set prices. She echoes a sentiment expressed by those, usually with a background in finance, who welcome financialization, namely that publicly available pricing indexes can make the market more transparent to outsiders. She has also argued that BitchCoin gives her “a stake in the supply, demand and price of her own work.” She added that there is a feminist aspect, as BitchCoin allows her photographs, products of her labor that depict her body (she models for her own photographs), to be under her direct control with little mediation. While she couldn’t imagine exactly how her BitchCoin model could be scaled up for general use by other artists, at least without a large amount of capital in the beginning, she was confident that this was possible, imagining a “securitization movement” that could change how artists market themselves. It might even be capable of providing a liquid market for artworks in the so-called “expanded field” of contemporary art, from performance to installation, whose eschewing of permanence and tangibility typically resist direct ownership and commodification.

It is perhaps indicative of the shifts in the fundamental dynamic of capital accumulation that have occurred in the last fifty years, foregrounding speculation over production, that, while Andy Warhol opened a Factory in the 1962, Sarah Meyohas designed a financial instrument in 2015. The financialization of art is part of a larger deterritorialization of global production and exchange, something brutally glimpsed in the 2008 recession. The art market is currently a hybrid of several value regimes that antagonize and intermingle with each other, shaping the material conditions of artistic production and circulation. Meyohas distilled this emerging dynamic into a conceptual piece that is engaging and embodies the contemporary moment. Buy now!

BitchCoin seems to be an early sign of a new threshold of abstraction on the horizon. The systematic hypervaluation of artworks in the auction market, as attested by the acquisition of a Gauguin painting for a record-setting $300 million earlier this year, might have reached bubble proportions, as many speculate. Capital devoted to art speculation, which is increasing due to the heightened global demand for art, may have exhausted existing avenues for investment, resulting in a classic crisis of overaccumulation. Speculative strategies like that devised by Meyohas may provide an innovative opportunity for market growth, the blueprint for a “spatial fix” in which capital can find and extract profits from art’s “expanded field.”

The Hypocrite Reader is free, but we publish some of the most fascinating writing on the internet. Our editors are volunteers and, until recently, so were our writers. During the 2020 coronavirus pandemic, we decided we needed to find a way to pay contributors for their work.

Help us pay writers (and our server bills) so we can keep this stuff coming. At that link, you can become a recurring backer on Patreon, where we offer thrilling rewards to our supporters. If you can't swing a monthly donation, you can also make a 1-time donation through our Ko-fi; even a few dollars helps!

The Hypocrite Reader operates without any kind of institutional support, and for the foreseeable future we plan to keep it that way. Your contributions are the only way we are able to keep doing what we do!

And if you'd like to read more of our useful, unexpected content, you can join our mailing list so that you'll hear from us when we publish.