Thomas Piketty is a name on a lot of people’s lips at the moment. The French economist’s new book, “Capital in the Twenty-First Century,” is a historic survey of wealth concentration that has quickly become a go-to text for the gathering debate on income inequality.
In his book, published in English last month, Mr. Piketty argues that the rich are only going to get richer as a result of free-market capitalism. The reason, according to Mr. Piketty, is simple. Returns on invested capital are greater than rates of economic growth, and this, he says, has become a “fundamental force for divergence” in society.
Although art is one of the few subjects not mentioned in the index of Mr. Piketty’s 685-page opus, it is worth considering how the unprecedented amounts of money the wealthy have recently been spending on trophy artworks might be a natural extension of his argument.
Courtesy of the above-growth returns identified by Mr. Piketty, the rich are further increasing their wealth by buying art. Many millions have been made by a new breed of investor-collectors who buy Bacons, Warhols and Richters high, and sell even higher. Art by desirable investment-grade names makes the rich richer. And more and more wealthy individuals are now prepared to make bids of more than $100 million at auctions, while outside, beyond the shiny bubble of the art world, living standards in the rest of society stagnate or decline.
“This is well beyond the norms of inflation,” said Ivor Braka, a London dealer who has been buying and selling high-value art since 1978. “The art market has become an excuse for banking in public. People are displaying wealth in the most ostentatious way possible. It’s luxury goods shopping gone wild.”
Last year, worldwide auction sales of postwar and contemporary art climbed to a historic peak of 4.9 billion euros, or $6.8 billion, a massive increase over the €1.42 billion in auction sales in 2009, according to the 2014 Art Market Report published by the European Fine Art Foundation in March.
Using what he calls the “careless and piecemeal” data of wealth reports, Mr. Piketty calculates that today the richest 1 percent owns about half the planet’s wealth. “Global inequality of wealth in the early 2010s appears to be comparable in magnitude to that observed in Europe in 1900-1910,” he concludes.
Back then, the rich were also spending a lot of money on art. Exactly 100 years ago, the czar of Russia, Nicholas II, clearly mindful of the unrest being fomented by his downtrodden subjects, bought Leonardo da Vinci’s “Benois Madonna” in a private transaction for $1.5 million. That Leonardo, priced at three times the record $500,000 paid by J. Pierpont Morgan for Raphael’s “Colonna” altarpiece in 1901, was cited by the late Gerald Reitlinger in “The Economics of Taste” (1961) as probably the most expensive art sale in history, factoring in inflation.
In those days, heads of state and industrialists were throwing their money at art. In the 2010s, it’s financiers and those who inherit wealth through death and divorce who dominate the market. For example, Elaine P. Wynn, the former wife of the American casino magnate Stephen A. Wynn and a co-founder of the Wynn Casino Empire, has been identified as the buyer of Francis Bacon’s 1969 “Three Studies of Lucian Freud,” which sold for $142.4 million — a record for any artwork at auction — in New York in November.
“Wealthy people have extra money at the moment,” said Tania Buckrell Pos, an art adviser in London. “They’re cash buyers. And it’s a truly international market. If the Brazilians drop out, there’s still the Middle East, and then you’ve got the Russians and the Chinese, and they’re all chasing the same things.”
As during the so-called Belle Époque, certain living artists, whose longevity is still unproven, find they have a cult following. Christopher Wool (born 1955) is the high priest of American painting at the moment, particularly after the record $26.5 million paid for his 1988 work “Apocalypse Now” at the $1.3-billion series of contemporary art auctions in New York in November. Private museums, packed with works by Mr. Wool, Wade Guyton, Mark Grotjahn and other must-have names, are sprouting up across the world.
“People are spending millions on works by artists who have questionable long-term value,” Mr. Braka said.
“Do they have taste?” he added. “I don’t know. That’s capitalism. You can spend money on what you want.”
Back in 1882, the British businessman-cum-art speculator Thomas Holloway, using the best art advice that money could buy, splurged £6,615 on “The Babylonian Marriage Market” by Edwin Long, an auction record at the time for any living English artist. The painter and the painting are now forgotten.
So was the art market then, and is it now, a potent signifier of income inequality? Attempts to question how the eight- and nine-figure prices now being paid by billionaires for rectangles of painted canvas might relate to a wider economic and social context tend to be dismissed by many working in the art world as the “politics of envy.”
As Mr. Piketty points out in his conclusion to “Capital in the Twenty-First Century,” those who have a lot of money “never fail to defend their interests.” Those interests are also staunchly defended by those hoping to make money.
According to Mr. Piketty’s calculations, the immutable dynamic of returns on capital being greater than the rate of economic growth will concentrate half the planet’s wealth in the hands of the richest 0.1 percent within 30 years, impoverishing not only the middle, but also the upper-middle classes. This would have profound repercussions for the art trade, which is already seeing a decline in activity from its traditional “professional” base.
“Back in the 1990s we had lawyers, doctors, dentists buying paintings,” said Offer Waterman, a London dealer who specializes in modern and contemporary British art. “The professionals have now been priced out of the market and it’s shifted more toward investment bankers.”
This might be the point at which inequality becomes a problem not just for art buyers, but for art itself.
A version of this article appears in print on April 21, 2014, in The International New York Times. Order Reprints|Today’s Paper|Subscribe