Sooon after finishing art school in 2011 Lucien Smith, an American artist, started to get rave reviews. By February 2014 there was such a buzz that when “Feet in the Water” came up for sale Phillips, an auction house, thought it would sell for £40,000-60,000 ($63,000-95,000). Instead it went for £194,500. Two days later another painting with a £60,000 upper estimate sold at Sotheby’s for £224,500. By March Christie’s had re-evaluated Smith’s prices: “Love Story, a Woman Under the Influence”, now had a top-end estimate of $150,000. The painting sold for $233,000. Smith was on fire.
Two years on things are different. On June 28th, “TBT”, a work from a series of “rain paintings” – abstracts gesturing towards precipitation – that were selling for close to $90,000 (then around £56,000) in New York in 2014, went for a little over £30,000 in London, a drop of almost 45%. But this was a good result. Smith’s paintings now tend to be estimated at £10,000-15,000 ($12,350-18,500), and go at the lower end.
Smith is not the only young artist whose work has been subject to this sort of volatility. In 2012 the prices of work by a group of painters, mostly men under the age of 35, started to rocket. By 2014, they were superstars: paintings by David Ostrowski, Parker Ito, Dan Rees, Jacob Kassay and Hugh Scott-Douglas reached prices of between $100,000 and $245,000. In 2016 none hit six figures, with most pieces selling for under $30,000.
Many in the art world are worried about bubbles. The market, they say, is becoming too fast, and too short term. They have reason to fret. The price swings for these artists – rises and falls of 500% or more in less than two years – make this market more volatile than even the most turbulent financial ones. Mini-crashes are becoming more common. They risk doing both financial and creative damage to the art world – financial, because it could put off serious, long-term investors; creative, because artists burn out before they really get started.
The blame for this is directed at a new breed of art dealer, known as “flippers”. In contrast to a traditional dealer, who may stay with an artist for a lifetime and keeps tight control over who buys his work, flippers buy low and sell high to anybody who will buy. They treat art as though it were a financial instrument.
The man accused of leading the charge is Stefan Simchowitz. He was the first buyer of a Lucien Smith rain painting, snapped up early works by Parker Ito for less than $750 and was an early champion of Oscar Murillo, a current superstar.
If Simchowitz’s nose for success is impressive, so is the hatred he inspires. He has been likened to Michael Milken, an inventor of junk bonds and convicted fraudster; he has been called a Sith Lord and Satan. The complaint is that he is a short-termist, prioritising quick profits over sustainable sales. He is accused of buying too greedily: cornering the market early by snapping up much of a young artist’s catalogue (he bought lots of work by Murillo early and cheap) before flipping the work to collectors who are themselves seeking profit rather than good art.
Simchowitz has been a Hollywood producer (his films include “Requiem for a Dream”) and has started and sold a tech company (MediaVast, a photography site, was bought by Getty Images for around $200m in 2007). He studied economics at Stanford, lives in Los Angeles and his partner is an ex-model. His clients include the young and famous, such as Orlando Bloom and Sean Parker. A South African by origin – he was born in Johannesburg and moved to America as a boy – Simchowitz is as Californian as they come.
He does not try to fit in. The standard art-world look is three parts Mayfair financier, one part literary agent: close-cut blue suit, crisp white shirt, brogues or moccasins, horn-rimmed spectacles for a hint of bookishness. When Simchowitz wears a suit it has a French-smock-style jacket; his camera is always around his neck, a lopsided beanie hat on his head. At a Christie’s evening auction where I saw him in action, he wore a long grey cardigan, half-mast harem pants, and far-from-fresh running shoes that started life orange. He wants to stand out, and he does.
The criticisms of him, he maintains, are “bullshit – not an exaggeration of what I do but a complete misunderstanding of what I do”. As he talks – quickly on the phone, and even faster in person – his world view pours out. It is clear, clever and controversial. To understand both the failings of the art market and how he wants to change it, he says it is helpful to look at the writings of his two favourite economists.
The first problem, he says, is elucidated in “Four Quadrants of Stupidity”, an essay by Carlo Cipolla. “Stupidity”, for Cipolla, has nothing to do with education: it is about the effect you have on yourself and others. People who make both themselves and others better off Cipolla calls “intelligent”. Those who enrich themselves by impoverishing others are “bandits”; people who endure losses to help others profit are “helpless”. There is logic to all of these forms of behaviour, Cipolla argues. But the final group is the biggest, and makes no sense: most people make both themselves and others worse off. They are plain “stupid”.