The Invisible Economy: Autonomy

By Beatriz Ramos and Yehudit Mam

Part 6 of 12


Part 5: Validation

Autonomy is defined as the ability to make informed, uncoerced decisions. In the Invisible Economy, where art is separated from its market, autonomy means the freedom for people to self-direct and follow their curiosity, hone their skills, experiment with others, get feedback, have a community that values what they do, and realize their full potential. A guaranteed basic income allows artists to make art irrespective of the market.

Behavioral economics has shown that we are not always rational calculators. People often make decisions with limited information, limited rationality, and little time. In his influential book Predictably Irrational, Dan Ariely explains how the reasoning behind our decisions is often flawed because it is influenced by emotions, expectations, social and market norms, and other factors that impact our psychology. Market mechanisms, online platforms, and corporate marketing all rely heavily on exploiting people’s psychological shortcuts to manipulate and change our behaviors, subverting our individual autonomy.

Emmanuel Kant argued that people voluntarily subject themselves to be ruled by external entities like the Church and the State. For him, enlightenment is the process by which people can bypass this obedience to external authority and attain autonomy. Today, we are subject to free-market norms, and in order to achieve real autonomy, we need to understand their impact on our behavior.

In the art-on-blockchain community, decentralization is often understood as radical disintermediation: as the power artists have to control and promote their work, set prices, negotiate directly with collectors without gatekeepers, launch their own currencies, and be able to take their work across platforms without depending on any particular platform. While these empowering gains are made possible by blockchain technology, this notion of artistic autonomy is still performed under market norms.

Artists just want to make art.

They want to be artists, not creative entrepreneurs. After all, in a free-market system, 99% of artists can’t make ends meet, and disintermediation won’t change this fact as long as it relies on free-market models. In fact, many artists don’t want to have to deal with the market, which may be the reason for common fantasies artists have of being discovered by powerful gallerists or wealthy patrons or “whales”, or better yet, finding a business muse that finances their career, like Yves Saint Laurent and Pierre Bergé. Selling and self-promotion are drudgeries for most artists. They take away precious time from the act of creating.

This begs the question: does autonomy mean being able to make art that satisfies a market, having to decide where to sell it, promote it, set a price, and negotiate directly with the buyer? Or is autonomy the freedom to explore artistic self-expression without constraints of any kind other than our own?

Let’s frame these questions within a broader context, beyond market norms.

Imagine that you haven’t seen your close friends in years. You invite them to dinner. You spend all day buying food at the farmer’s market and cooking for hours while listening to music. You buy flowers and light candles. Your friends arrive. The meal is splendid, the wine is superb; the conversation, delightful. It’s an amazing night. But as your friends are getting ready to leave, they pull out their wallets and ask: “How much do we owe you?”

We behave differently and have different expectations when a friend cooks a meal for us than when we go to a restaurant. Our mindset changes from social norms to market norms, from ethical considerations to economic ones.

In the case of art, social norms and market norms collide.

Artists make art of unquantifiable value yet they still need to sell their art to make a living. But how do you put a price on a labor of love, dedication, and genuine feeling? This is how many artists feel when they have to price their work. Price is not about the amount of time spent, the cost of the materials, or whether the artwork is any good. The ineffable aspects of art-making like self-expression, creativity, and your own creative sense of self cannot really be quantified. People behave differently and have different expectations when they make art just because they enjoy it, or when they collect art because they love it rather than when they make art with the intention to sell it or buy art with the goal to make a profit.

Dan Ariely’s research shows that under market norms, where money is involved, people behave more selfishly, less cooperatively, and less altruistically. Ariely explains that social norms “include the friendly requests that people make of one another. Could you help me move this couch? Could you help me change this tire? Social norms are wrapped in our social nature and our need for community. They are usually warm and fuzzy. Instant paybacks are not required. It’s like opening a door for someone: it provides pleasure for both of you, and reciprocity is not immediately required.”

In contrast, market norms “are very different. The exchanges are sharp-edged: wages, prices, rents, interest, and cost-and-benefits. Such market relationships are not necessarily evil or mean, in fact, they also include self-reliance, inventiveness, and individualism, but they do imply comparable benefits and prompt payments.”

“Art in today’s market fascinates by performing like money itself.” wrote art critic Peter Schjeldahl in The New Yorker . “Any price — many millions, a buck fifty — paid for any work of art is absurd. Or call it fiduciary poetry. People keep noting that the value of art is strictly subjective, but that truth sinks in only so far, if at all… The present art market plainly won’t quit until it hits the end of the line. So it has our attention.”

In 2017, Leonardo da Vinci’s painting “Salvator Mundi” was sold for $450 million at Christie’s, making it the most expensive painting in the world. But its authenticity and provenance have been disputed and it has also elicited concerns about being over-restored. In today’s art market this is irrelevant, art is just another vehicle for the wealthy to move capital around. In today’s economy, art has become financialized and it’s just another asset class that generates capital gains, much like stocks or real estate. Hence the astronomical sums paid by collectors for art at auctions, and the proliferation of freeports — tax havens in which the world’s most expensive art changes hands without ever seeing the light of day.

Treating art like financial assets degrades both art and artists.

It artificially inflates prices and creates bubbles. When the market corrects, this devalues the artist’s work. “When those speculators realize that there is no end-user at a higher price, then they scramble to sell the work before they lose everything,” says art advisor Todd Levin. “The demand is driven by greed, the selloff by fear. It’s Economics 101.” Art dealer Niels Kantor paid $100,000 for an abstract canvas by an emerging artist with the idea of quickly reselling it for a tidy profit. Instead, he returned it to the market at an 80 percent loss. “I feel like it can go to zero. It’s like a stock that crashed”, said Kantor.

Some art gallerists try to counter the toxic impact speculation has on artists by thinking about their careers in a long-term way, explains art gallerist Stefania Palumbo, “What we try to do with both our collectors and our artists is to create sustainable growth and relationships. We found working this way decreases the pressure to be hot, which can fade very quickly.”

We may be quick to assume that most art collectors behave under market norms and artists under social norms. Researcher Erica Coslor conducted a study to explore the conflicting views of collectors and art professionals about the value of art. She found that many art collectors had sincere and relevant concerns about the transcendental nature of art. “But I was surprised to find that this was less of a concern than I had imagined for those in professional roles — artists, gallery directors, and curators — people who dealt with the art market in their everyday work.” she writes.

As art consultant Alan Bamberger says, “People who love art and know something about it generally tolerate the declarations, corroborations, and prognostications, take them in stride, but ultimately buy based on how the art impacts them personally. In other words, they concoct their own rationales as to why it’s art, why it’s significant, how much it’s worth, why it’s worth it, and why it’s worth owning. And if they can afford it, they buy it. Why? Because it enriches their lives, they intend to keep it forever, and they could care less what other people think or say or claim or declare. They buy it now because they love it now; what may or may not happen in the future is irrelevant.”

Currently, the emerging art and blockchain ecosystem is replicating the free-market norms of the existing art world.

Our aim is to create a healthy digital art economy but as a principle, we don’t want to incentivize speculative behaviors in our art collectors. Therefore, we won’t rely on negative mechanics that drive gambling-like behavior, like the English style of auction favored by auction houses. We find this kind of auction deleterious to art and artists alike, since its focus is to drive the price up as much and as fast as possible, like betting at the racetrack. This type of auction is not about the art or the artists, but about sheer speculation. Its game mechanics also imperil the autonomy people exercise when deciding what and how much to bid for.

We have been conducting experiments in order to understand how different mechanics influence the mindset of collectors and audiences. At the RadicalXChange conference in Detroit last year, we experimented with the Channel auction, a new auction dynamic devised by Glen Weyl, David Pennock, and others. The Channel auction combines a Dutch descending auction with an English ascending auction and it’s designed for the sale of projects that change over time. This was the first time it was ever attempted. We auctioned “Sight Unseen”, a visual conversation that was being created in real time by a group of artists from around the world as people were bidding. We capped the descending price at $20,000 and set the ascending opening bid to $20. Over the course of two hours, 12 artists in different countries had 15 minutes each to draw a panel.

Sight Unseen

By the end, the descending price had come down to over $3000 and two bidders were competing at around $1500 each. To everyone’s surprise, one of the bidders proposed to split the high price between them and pool the money to give it to the artists, who got $3125. This creative bidder felt that watching art being made in real time by artists in different countries was priceless. The other collector was also touched by the experience but he made a calculation of the amount of time and effort the artists had spent and felt that the final price was fair. We believe that this unusual co-ownership may not have come about had the auction not been a hybrid, and the artwork not been collaborative. Its collaborative nature inspired the bidders to join forces as well and created a new alternative for co-ownership.

To sell DADA art we plan to use the Vickrey auction or second price auction.

In the second price auction, bids are blind so no one knows what price or bidder they are competing against. The highest bidder wins, but they pay the price of the second-highest bid. This reduces speculation because people bid more judiciously. They will not overpay according to their own estimations since they will still pay the second-highest price if they win. This mechanism encourages bidders to think about the true value the artwork has for them instead of focusing on the other bids. It makes people engage with their own experience with the art and what it means to them. It concentrates on the subjective value of art.

Real artistic autonomy means having the freedom to create without any externally imposed demands. In the case of collectors, autonomy means to be free of manipulative, speculative games, and engage with art in a more meaningful way. Giving up control of marketing and sales in exchange for a guaranteed basic income may or may not be an enticing proposition for artists, depending on how successful they are in navigating the market. But in a community like DADA, where people create collaborative art and value playfulness, intimacy and free exploration, freedom from the market is vital.

Part 7: Self-Expression




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