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Noah Horowitz, Art of the Deal: Contemporary Art in a Global Financial Market, Princeton, 2011, 361pp, hardback, £27.95 (Amazon price £26.55)

Back in 1979, the art critic and theorist Rosalind Krauss offered a short inventory of “surprising things” that had somehow come to be considered as sculpture. They included: “”narrow corridors with TV monitors at the ends; large photographs documenting country hikes; mirrors placed at strange angles in ordinary rooms; temporary lines cut into the floor of the desert.” The category formerly known as sculpture, Krauss concluded, had become “almost infinitely malleable” and she went on to describe it as “Sculpture in the Expanded Field.”

In the decades since 1979, those “surprising things” have acquired the patina of normality as the field of sculpture has continued to expand to embrace a range of even more abstruse practices. These include an artist arranging to have sex with a collector and recording the encounter (Andrea Fraser); an artist setting up a temporary airport in the middle of the desert and chartering special flights in and out (eteam); and an artist preparing a Thai dinner for a series of invited guests (Rirkrit Tiravanija).

Although some of these activities produce tangible ‘takeaways’ in the form of collectable or ‘ownable’ objects and artefacts relating to the event, many do not. How, then, do they fit into the broader economics of the art market? In other words, how are they transacted and ‘collected’?

These questions have left many people in the conventional art economy utterly dumbfounded, particularly as most of them cannot comprehend how such practices could ever have been considered art in the first place.

Step forward art theorist and entrepreneur Noah Horowitz, whose new book, The Art of the Deal (cover pictured above left) seeks to illuminate the hermetic mysteries of this strange meta-world.

Given the apparent simplicity of many of these practices (engaging in videotaped sex or eating Thai food is not exactly intellectually demanding), it’s noteworthy that they have given birth to a complex body of art critical writing, at the centre of which is the voguish theory of ‘Relational Aesthetics’ devised by the ‘AlterModern’ pin-up boy, Nicholas Bourriaud.

Not so very long ago, intelligent books on the art market were about as plentiful as paintings by Vermeer. But over the last few years this publishing micro-sector has seen a minor explosion with economists, anthropologists, journalists and cultural commentators lining up to offer their take on this most opaque and elusive of markets.

One or two of these books have been genuinely insightful, offering an outsider’s cool analysis of the economic undercurrents and business networks driving an increasingly global trade. Others, breathlessly in thrall to the glamour of it all, and seemingly more concerned with the socks that dealers wear or what was on the menu at a Manhattan lunch, have been little more than a tiresome distraction.

Horowitz’s book belongs very much to the former category. He does a good job guiding us through the occasionally dense theoretical undergrowth, particularly as he seems as interested in the art as in the economics underpinning it.

Back in 1979, Rosalind Krauss could develop a line of thinking about sculpture and related practices without ever mentioning their market referents. Here in 2011, it seems that everything has to be framed within the discourse of market capital, investment strategies, and the economy of High Net Worth lifestyles. This, then, represents further confirmation, if any were needed, of art’s final subsumption into the great gaping maw of banking and high finance.

But given these considerations, Horowitz has written an intelligent and hugely interesting book. One caveat — because the art market has now been colonised by financiers and investment boffins any serious analysis of the art market must by necessity be written in finance-speak. So if you’re not happy with concepts of arbitrage, asset correlation, shorting and hedging, this may not be the book for you. But jargon notwithstanding, and given the highly specialised topics addressed, the book could not have been more clearly written.

Horowitz started out with the intention of writing a critical account of art investment. Instead, noting the speculative activity that had spread like a virus across the market during the last bull market (broadly from 2002-2008), he shifted his focus. The result is the first constructive attempt to explain the economic infrastructure underpinning the more outlandish examples of ‘cutting-edge’ contemporary art. But it doesn’t stop there. The book also addresses the market for video art, which is another category that seems to elude traditional concepts of “collectability” but which has nevertheless become a vital part of the contemporary art market. It then goes on to address two other topics that have generated interest and controversy in equal measure in art world circles in recent years — fine art investment funds, and art fairs.

Horowitz notes that in the decade from 1998 to 2008, “worldwide sales of contemporary art at auction swelled from just $48 million to over $1.3 billion, representing a more than eightfold rise in the sector’s market share, from 1.8 percent to 15.9 percent of the global fine art trade,” [Data from Artprice].

He goes on to note that during this same period, contemporary art overtook Impressionist and modern art as the most valuable sales category at the world’s leading auction houses, “an astonishing feat given the long-standing supremacy of these established categories and the sheer speed of its ascent.” This is interesting in the light of recent research conducted by Dr Clare McAndrew, whose report for the European Fine Art Foundation (TEFAF), published in early March, concluded that: “Modern and Contemporary Art represents 58 percent of the fine art market as a whole, with the Modern art market accounting for six times the value of the Contemporary art sector.”

This can perhaps be explained by the fact that Horowitz is referring to auction house business, while McAndrew’s research sought to embrace the trade as well as auctions. Furthermore, Horowitz is analysing the period from 1998 to 2008, while McAndrew’s research focused on the post-recessionary period from 2008 to 2010. Nevertheless, the contrast between their summary conclusions is noteworthy and exposes the difficulty in achieving a consistent and helpful analysis of the art market when there is no consensus on how its categories and departments are defined.

Take the ‘Contemporary’ and ‘Modern’ categories, for example. Artprice defines ‘Contemporary’ as art made by artists born after 1945, while for Horowitz, ‘Contemporary’ refers to art made after 1960 “with emphasis on art produced by living artists in the last two decades.”

Horowitz’s book fills an important gap in contemporary art market literature in striving to understand and communicate how the most outré forms of contemporary art — particularly those grounded in ephemeral experience and which resist being memorialised in tangible collectable objects — are transacted and ‘collected.’

He and there he touches on, but never properly explores, the issue of intellectual property and copyright as they pertain to the art movements of the 1960s and later, such as Minimalism, Conceptualism and ‘video’ art — a topic he explores with exhaustive rigour in the first chapter. It’s notable that Swiss artists Fischli and Weiss, (whose video work ‘How Things Go’ was re-phrased by Honda’s advertising agency), and British artists Tim Noble and Sue Webster, (whose shadow projection technique was colonised and sanitised by John Lewis for its Christmas TV ad), were both content merely to register symbolic objections to what they saw as the high-handed appropriation of their work by commercial organisations and yet stopped short of seeking legal redress.

While Horowitz’s chapters on Video Art and Conceptual Art are engaging and insightful, I was most drawn to his explorations of art fairs and art investment funds, both of which grew like topsy during the last boom. Art fairs continue to thrive, while most art investment funds have run aground.

Few art funds have had the staying power of the biggest player in the sector — the Fine Art Fund (FAF) run by Philip Hoffman. But then few art investment vehicles have the likes of Ivor Braka, Johnny Van Haeften, Charles Beddington and James Roundell sitting in the back seat. However, such deep expertise must come at a price and I’m not convinced by Horowitz’s conclusion that the world’s leading art experts are fully incentivized to support the fund with top quality art rather than transact the best objects themselves.

My instinct tells me that most art funds — the Fine Art Fund included — take advantage of the desire of High Net Worth individuals and other credulous outsiders to play in a game they don’t understand but to which they are almost fatally in thrall. Most of them are seduced by an equity story that is little more than a fairy tale. One suspects the real money-making deals are done elsewhere by the fund’s advisers and buyers dealing on their own account. Most of them have access to capital, or can saddle up with others who have. That way they enjoy all of the upside. As for the risk, well, if the recent meltdown was driven by anything it was driven by that old shibboleth: the greater the risk, the higher the reward.

But despite the false starts, fine art funds are still fuelled by bullish self-confidence. Horowitz quotes one typical investment wonk confidently predicting that art is “heading down the same road” as hedge funds and private equity investing as an opportunity that will be “to the eventual benefit of all investors.” However, the book’s Appendix, listing “the universe of art investment funds” as of December 2009, reveals that most of these planets are little more than black holes, having long since been dissolved or abandoned.

Horowitz is an optimist too (as a director of the recently launched VIP Art Fair, perhaps he needs to be). He breezily concludes that the rather gloomy landscape does “not diminish the potentially lucrative investment prospects of art funds. If they raise sufficient capital from investors, their large capital reserves and extensive market knowledge could certainly enable them to exploit informational and regional asymmetries arising in the marketplace.” Note the big “if” sitting right in the middle of that paragraph.

What seems more likely is that the relatively recent explosion of art investment funds was merely another concomitant of the casino capitalism that sent the banking sector into a death-star tailspin. Horowitz provides a succinct summary of the Wall Street debacle in his conclusion, which effectively ties the art market’s fate to that of the broader global economy.

As a balanced, beautifully written, and erudite analysis of the very recent art market, this book isn’t likely to bettered for the foreseeable future. Horowitz seems to have put his vested entrepreneurial interest in the art market to one side and has been more critical than most other recent commentators writing on this topic. But at the end of the day, he’s wise enough to hedge his bets. “Generalisations, of course, are never absolute,” he writes, “but prudence is sensible, moving forward.”

Amen to that.

Dr. Tom Flynn

(Dr. Tom Flynn is a London-based writer and Art historian and is frequently blogging about interesting issues in the Art business. He has published books and  written journalism at numerous magazines including The Art Newspaper, Art & Auction, ARTnews, Art Review, Art Quarterly, Apollo, The Spectator, Museums Journal, The Sculpture Journal, etc.)

Visit his blog