tomflynn: Fancy a game of cards? The stake is 250 million

Fancy a game of cards? The stake is $250 million

Februray 11, 2012

Cézanne’s Card Players — an acknowledged masterpiece of post-Impressionist painting (left) — has demolished all previous art market records by selling to the Qatari royal family for a reported $250 million in a private treaty sale. The price reveals the extent to which the art market now occupies a parallel universe entirely out of synch with normal economic reality.

Cézanne’s two rustic workmen are shown playing cards, but a game of dice might have been more appropriate for the price of this picture is the most graphic illustration to date of the random nature of art market pricing. (Where better to start on this than the American economist William Baumol’s 1986 paper — ‘Unnatural Value: Or Art Investment as Floating Crap Game’, American Economic Review, 76, 1986, pp10-14).

Drawing on the classical economic theory of Adam Smith, Baumol was one of the first to explain how the art market lacks the mechanisms that govern other forms economic activity in which market prices for commodities are always propelled back towards a “natural price” by the equilibrating forces of supply and demand, etc. As a non-fungible asset, art does not respond to that gravitational pull, resulting in off-the-scale prices like the Qatari Cézanne purchase.

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tomflynn: Fancy a game of cards? The stake is 250 million.

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