With a subscription to the website artrank.com, I can get quarterly updates, grouped into price categories, listing which artists to buy, which ones to sell because they’ve peaked, and which artists to liquidate because they’re not investment grade. Too vulgar? I can always switch to artfacts.net where I’ll get rankings that reflect the value of the cultural chatter associated with over 30,000 artists. Importantly, I’ll know if they’re moving up or down in ranking over time. In his essay, “Financialization of Art”, Mark Taylor claims art has lost its way. If an important social role of art is connected to its critical distance from governing and economic structures, when the investment strategies used by finance professionals are applied to art and its markets, rather than fulfil a critical function, art ends up reinforcing the structures that it traditionally questioned.
Finance has equally faced criticism that it has lost its way in recent years. Activities such as proprietary trading, where banks take risky positions with the bank’s own capital, are seen as a significant departure from banking’s traditional role of intermediary between lenders and borrowers of capital. If we can separate two concepts – what we want art and finance to be, and the role that art and finance actually fulfil – then what such commentators are really saying is that art and finance fail because they don’t fulfil a social role that we think they ought to fulfil.
Art and finance have not stopped participating in the traditional critical and intermediary roles described above, just as they continue to fulfil other social roles. But importantly, both fields have begun to mirror one another in the fulfilment of an emerging social role – a platform for speculative acts. In contrast to more generalised tendencies impacting post-industrial societies such as immaterial labour, cognitive capitalism and financialisation, what sets art and finance apart is that they are uniquely positioned to fulfil demand for speculative acts. Central to art and finance’s ability to act as ideal site for speculation are the semi-autonomous and abstract qualities that increasingly define both fields.
Speculation and the pay-off
Speculation must be understood as more than an attempt to make money by placing other sums of money at risk. It occurs where anyone sacrifices time, money, labour, or reputation with the aim of a possible future pay-off. The pay-off needn’t be monetary in nature, nor be an individualistic return. Pay-offs can be in diverse forms such as recognition, personal or moral satisfaction, or other forms of cultural or social capital that accrue individually or in a group context. However, essential to the speculative act are the dual concepts of uncertainty and risk. A person cannot speculate if they already “know” the outcome, nor can they speculate without placing a minimum level of resources at risk. In this way, young adults can speculate when they take an art education, a gallery intern can speculate when they take a low paying gallery job, and an art buyer can speculate when she buys an artwork that cannot be justified by its broad “use value”. Of course we can speculate in many social fields – we can do it in science, just as we can it in software design – but I will argue that art and finance have become ideal sites for speculation.
As a way to better understanding the qualities and function of speculation, it is useful to look to the characteristics of the closely related concept, belief. By showing that the concepts of speculation and belief can intersect, and illustrating that a particular type of belief requires acting beyond knowledge, it can be argued that speculative acts often require us to act beyond what we know. It is here that art and finance have a role to play. The first step, then, is to link speculation to belief.
Relation between belief and speculation
In 1896, the philosopher William James set out some core principles necessary for someone to enact belief: An act of belief must involve a live hypothesis in the sense that the actor feels the outcome connected to the act has a possibility of occurring. We can’t believe in something we feel has no chance of being true. Secondly, acts must be forced in that no third option or way to avoid the act is possible. If someone chooses to follow Christian traditions, but holds open the prospect that Hinduism may in fact be the “correct” spiritual doctrine, they cannot be said to enact belief with respect to Christianity. Finally, the act must be non-trivial, meaning there must be an appropriate degree of risk associated with the act.
Speculation isn’t the same as belief. In particular, a speculative act needn’t be forced. However, when all other options but one are effectively “dead” to the actor, the speculative decision takes on a forced quality. So when speculation involves a live hypothesis, the act is forced and is non trivial, speculation and belief coincide. Speculative acts that embody belief are fundamental to contemporary art and finance fulfilling a speculative role.
Belief-based speculation as an act beyond knowledge
Even though speculation can coincide with belief, not all beliefs involve a level of uncertainty that requires us to act without knowing. Maurizio Lazzarato sets out three distinct types of belief. Belief-habits describe the beliefs we hold through pre-established taste. For example, a person’s moral beliefs often result from their cultural environment and upbringing. Belief-prejudices describe the meanings we assign to things that make us think and act in a way that is already pre-determined. For example, we process both verbal and body language according to an existing structure of meaning. Acting on both these types of belief is to follow habit-based cliché. Finally, belief-confidence describes a belief that avoids confirming to pre-defined patterns of belief and therefore implies a person acts in a genuinely new direction.
Belief-confidence is closer to James’ definition of belief since it implies that we must move beyond knowledge and what we can already perceive, and it forces us to take on a degree of risk. For the speculative act to coincide with belief-confidence, the speculator requires a site where knowledge is sufficiently unstable such that there is a possibility of acts that avoid habit-based cliché. I will refer to these acts as belief-speculation.
Semi-autonomous and abstract social fields require us to act beyond knowledge
Semi-autonomous social fields offer possible sites for acts of belief-speculation, whereas autonomous or heteronomous fields struggle to move beyond pre-defined taste and meaning. If the autonomous social field can be thought of as one that is free from external constraints and determines its own internal logic, the heteronomous field is completely dominated by economic and political forces external to it. While it may be tempting to associate autonomy with freedom from pre-defined taste and meaning, the perceived benefits of autonomy typically result in the autonomous social field using clearly defined opposition practices to maintain its position. For example, religion can be argued to maintain opaque language and practices to avoid comparability and accountability. Likewise, many artists adopt a distinct anti-market ethic in their language and practice to define an independent position.
By being characterised by a certainty associated with the rules of how each operates, autonomous and heteronomous acts of belief have a tendency to reduce to a series of clichés. In contrast to autonomy and heteronomy, the in-between space of the semi-autonomous zone can offer emptiness in the sense that we cease to know the rules of the field, and the concept of knowledge is undermined. In the distinctly semi-autonomous zone, we are required to demonstrate belief-confidence in order to act.
Abstraction is another way that social fields can offer opportunities for belief-speculation. Abstraction is a loaded term in art, but I propose an understanding of abstraction that neither implies a reduction to “essence”, nor the evolution from pictorial to informatic. Instead it refers to the process whereby informational meaning is sufficiently degraded due to self-valorisation so that it becomes problematic to rely on knowledge in acts of belief. Not all abstraction is sufficient to result in a loss of meaning. Wages can be considered an abstraction of the value of labour, but wages still carry economic, social and moral meaning. So how to we know the point where information is rendered meaningless?
Jean-Joseph Goux suggests that once modes of production have evolved from fetish, to symbol, and finally to sign, exchange becomes self-valorising and ceases to have meaning external to itself. To see how this might work, we can look at the example of money. Gold became a fetish object once the desire for it obstructed the value of social relationships it was meant to represent. The movement to paper money as symbol for gold represents money’s abstraction to the symbolic. Finally, once the symbolic form of money shifts from paper money to other traded financial assets, and value begins to be determined from the exchange process itself rather the thing it is meant to reference, money (in the form of financial assets) begins functioning as sign. Here, exchange becomes self-valorising and ceases to have meaning external to itself.
In general then, once a particular exchange form begins functioning as sign, the more participants require belief-confidence to act since reliance on pre-defined meanings external to the exchange are rendered meaningless.
The semi-autonomous and highly abstract properties of contemporary art and finance
Both art and finance have evolved into semi-autonomous fields that operate at a distinct distance from the poles of autonomy and heteronomy. The case for the semi-autonomy of financial markets is most easily made by showing that financial asset prices detach from their “real world” reference points. A number of theories have been developed to explain how and why financial market detachment is likely to occur. One of these, “noise trader theory”, argues that we tend to make financial market decisions according to how we assume others will react, not based on our own estimates of value. If we assume the presence of irrational investors, regardless of whether or not they exist, we will be prepared to act in line with what we think the market will do rather than our own estimate of value. Anyone trying to profit from this mis-pricing needs price to return to it’s fair value level. Since this is never guaranteed to happen, everyone, including the arbitrageur, is forced to consider “others”‘ valuations rather than their own. The outcome is that prices on stock markets have both the potential and likelihood to detach from what they are meant to represent. By operating in a semi-autonomous zone, finance often ceases to follow pre-defined patterns of meaning. We simply cease to know.
Given the dominant rhetoric of art’s autonomous social position, demonstrating the semi-autonomous quality of art is most easily done by arguing the improbability of art’s autonomy. Much of the rhetoric of art’s autonomy can be traced to the Romantic tradition and Immanuel Kant’s influence, so Kant is often the focus of critics who wish to dismantle the idea of art’s autonomy. Peter Bürger points out that art cannot be separated from the social conditions under which it arises. Pierre Bourdieu claims that any notion of universal aesthetics, something that Kant argued was important to art’s social detachment, is a misconception since aesthetics are linked to particular interests that are determined by social and economic differences. What is common to these and many others who reject art’s autonomy is the fact that the human subject, with its competing set of social interests, is placed at the centre of this definition of art, underlining the improbability of detachment. When art fights for a degree of independence, as it does, it can only ever achieve semi-autonomy. Operating in the in-between space of semi-autonomy, participants of art cannot rely on pre-defined rules for generating meaning.
In addition to being semi-autonomous, contemporary art and finance are highly abstract forms that enable self-valorisation. Warren Buffet famously described derivatives as “financial weapons of mass destruction” due to their complexity and abstraction. While abstraction of financial assets is most evident in the growth of traded derivative products since the late 1980s, it is also at the core of the most basic financial product, company shares. The contemporary listed company requires a degree of market and product diversification to manage global risk and it therefore engages in numerous derivative-based hedging strategies. The valuation of the free-floating currencies that underlie revenue streams are themselves increasingly abstracted as currency trades become subject to a broader and more complex set of public and private currency strategies. The end result is that market participants, even finance professionals, have little hope of fully understanding the products they trade. With the abstraction of finance, we again cease to know.
The art historian Sven Lütticken argues we should not mistake contemporary art’s visual and physical characteristics as art bucking the broader trend towards greater abstraction of exchange relations. Art is a highly abstracted form of exchange. One way of understanding art’s highly abstracted nature is via Niklas Luhmann’s argument that art is the product of layered observation. If a first order observation is what we observe, art is a higher order observation because it is an observation of an observation. Contemporary art tends to be even higher order observation because it tends to be an an observation of other earlier art – something that is already a high order observation. The progressive abstraction that occurs as one moves from lower order to higher order observations makes art increasingly self-referential, and progressively undermines meaning external to itself.
When art and finance is semi-autonomous and abstract, participants can neither rely on existing knowledge nor can they hope to derive meaning from the information they obtain. In choosing to engage with art or financial markets with the aim of a pay-off, participant’s actions are pushed towards belief-speculation.
Ideal sites for speculation… And so what?
The semi-autonomous and abstract qualities of art and finance just make them candidates for abstraction. So what makes art and finance special? One factor that sets art and finance apart from other social fields is that they are simply more abstract than other fields. The higher order observational quality of art described earlier equally applies to finance. Even the most basic financial asset, the company share, is a derivative of the currency measure of an underlying asset. From their inception then, financial assets are a derivative of a derivative, and are therefore susceptible to self-valorisation (detachment from the underlying “thing” they are meant to reference) occurring in both the money form and the financial trading process.
A second important factor is the consumability of art and finance. In contrast to a field such as science, where there are significant time and intellectual barriers to participation, art and finance have low barriers to entry. This is perhaps evident in finance with the growth of online brokerages since the 1990s. But one equally sees evidence of art’s consumability in the growth of arts-based education among young adults in many developed economies, just as it is evident in the number of new museums and other cultural institutions that have been established in the last 20 years.
If an emerging social role of art and finance is their ability to enable speculation, an obvious question is: What is driving demand for a speculative outlet? What’s the pay-off? I would argue that speculative demand cannot be justified on the basis of expected pay-off in most conventional terms. Even taking into account pay-offs as diverse as cultural capital, the production of subjectivity through creativity, innovation, or “psychic return”, the expected rewards on speculative acts in art appear too low to justify the acts in these terms alone. In finance, differences in technology, speed, information and skill suggest the amateur short-term speculator will on average lose out to professional market participants. Like art, the average speculator (not investor) in finance cannot justify her actions in terms of the expected monetary pay-off.
In contrast to these notions of pay-off, I propose that the speculative demand that drives people to engage with art and finance is the product of a desire to carry-out belief based acts to fill the absence that otherwise characterizes secular societies. Acts of belief defy a scepticism towards the future because the pay-off, however abstract or improbable, requires a future for its enjoyment.
This is an abridged version of the article, “The Speculative Social Role of Art and Finance“, published in European Journal of Cultural Studies.
