Tuesday, July 22, 2014

A Little Help From My Friends...

As you may know, I am the author of the book How to Start and Run a Commercial Art Gallery. My publisher, Allworth Press, has asked for a follow-up book (tentatively titled Selling Contemporary Art: How to Navigate the Evolving Market), which is designed to explore how art sellers are strategizing through a range of shifts in the contemporary art market since the first book was written (back in 2008). Some of these developments include: The Rise of the Mega-Gallery; The Rise of the Art Fair; Selling Art via Online Channels; The Increasing Globalization of the Art Market, etc.

The bulk of the book is based on interviews with other dealers, art fair directors, and collectors. It is organized into three sections: outside factors (things beyond any dealer's control); inside factors (things dealers can individually do in response to the developments); and a section written in conjunction with an attorney on how changes to existing (or new) contract models might help address some of these challenges. It is important to me, though, to have the book reflect the needs and goals of all parties involved in the art market.

Toward that end, I am reaching out to artists, collectors and gallerists, and asking if you would please consider completing a quick survey about specific topics that relate to themes in the book. None of these surveys is comprehensive, nor designed to be...they're designed to hopefully provide some insights into some stubbornly hazy concepts within the shifting art market. In short, there's a method to my madness in how each is formulated.

  Your participation in the quick survey below that applies to you will be entirely anonymous. I cannot tell who submitted which answers. Even if I can guess, no names will be recorded or published.
Feel free to browse any of the surveys below if you like, but I ask (please) only submit your answers if you are actively engaged as an artist, or a collector of contemporary art, or a dealer of contemporary art, respectively. And only submit your answers once, please.

Because of this open call, we will of course need to cull through the submissions and delete any that feel mischievous. I would like to include your opinions on these matters, though, so I'll encourage you to be frank, but don't vent so colorfully that we'd need to exclude your answers. Again, your responses will be entirely anonymous.

Thank you in advance for your time and consideration! I truly appreciate it.

Artists Survey

Collectors Survey

Gallerists Survey

Friday, July 11, 2014

Announcing “The Borusan Contemporary Art Collection Prize” for Moving Image Istanbul

Moving Image art fair is very pleased to announce the creation of The Borusan Contemporary Art Collection Prize. Funding the acquisition of an artwork exhibited at Moving Image Istanbul for The Borusan Contemporary Art Collection, the prize grants $10,000 to purchase new work for their esteemed collection.

Moving Image co-founders Murat Orozobekov and Edward Winkleman noted, “The international reputation of the Borusan Contemporary Art collection was one of the major considerations in our choosing Istanbul for the third location of the Moving Image art fair. Few collections anywhere have the depth, adventurous spirit, or energy of this carefully considered anthology of important contemporary new media artwork, and we are so honored and delighted that they are sponsoring this prize. We are extremely grateful to The Borusan Contemporary Art Collection for their very generous support of our first edition of Moving Image Istanbul.”

Kathleen Forde added, "As the Artistic Director of Borusan Contemporary, the exhibiting institution grounded in shows presenting, relating to or inspired by the collection, and having a long standing enthusiasm for the unique and important mission of the Moving Image Art Fair . . . I'm delighted and proud that the collection will be supporting this venture."

Founded in 2010, Borusan Contemporary is the leading platform for media arts in Turkey. Housed in the historic Perili Köşk mansion on the European shore of the upper Bosphorous, it consists of two gallery spaces for temporary exhibitions and new commissions as well as an extensive ‘Office Museum’ for the display of curated selections from the Borusan Contemporary Art Collection. The Borusan Contemporary art collection includes nearly 600 artworks encompassing such diverse media as oil paintings, sculpture, video art, installations, new media, print editions, light art and photography. It contains print editions by Jim Dine, Donald Judd and Sol LeWitt; light art installations by Brigitte Kowanz, Keith Sonnier, François Morellet and Doug Aitken; paintings by Peter Zimmermann, Gerwald Rockenschaub and Markus Linnenbrink; as well as sculptures by Liam Gillick, Manfred Wakolbinger and Ernest Trova. Artists such as Zimoun, Rafael Lozano-Hemmer, U-Ram Choe, Daniel Rozin and Daniel Canogar are featured in the Collection's new media segment, and Monika Bravo, Marina Zurkow, Kutluğ Ataman and Manfred Mohr are standout names in the video art section.

Moving Image was conceived to offer a viewing experience with the excitement and vitality of a fair, while allowing moving image-based artworks to be understood and appreciated on their own terms. Participation is by invitation only by the Moving Image Curatorial Advisory Committee, who invite a selection of international commercial galleries and non-profit institutions to present single-channel videos, single-channel projections, video sculptures, and other larger video installations. Moving Image was founded by Murat Orozobekov and Edward Winkleman of New York's Winkleman Gallery.

For more information, contact Murat Orozobekov at (1) 212.643.3152 (USA) or email us at contact@moving-image.info.

Moving Image Istanbul
September 25-28, 2014

Kuleli Building Haliç Congress Centre
Sütlüce Mah. Karaagaç Cad. No.19 34445
Beyoglu, Istanbul / TURKEY

  Twitter: https://twitter.com/movingimageinfo
Facebook: https://www.facebook.com/pages/Moving- Image/100614893348265

Instagram: http://instagram.com/movingimageartfair


Moving Image Istanbul:  Online exclusively at Artsy.net      

Thursday, July 10, 2014

Deadhead Sticker on a Cadillac

It's problematic on many levels, I know, but the more I hear artists justify selling out via their art, the more I realize that art has become my religion. Which explains why such justifications offend me on a practically spiritual level.

I'm increasingly agnostic with regard to the traditional concept of a deity, and all but hostile to most forms of organized religion, except where they provide social rituals that help celebrate / comfort people through various stages of life (yes, I know, it's unfair for me to expect that side of it without also agreeing to the the often silly and more often offensive subjugation sides of most of them), but I've been OK with not having religion in my life because I've substituted the Evangelical teachings I grew up on with a firm belief in the evidence of humankind's innate capacity to self-regulate on an ethical and moral level that the creation and appreciation of art can provide.

Which isn't to say I like moralizing art, or art that avoids the messier aspects of difficult human issues (on the contrary, the best of organized religion actually delves deeply into these as well). But rather that there's no need to accept that unless people conform to the interpretation of some "god"'s will that the geographical and socio-economic circumstances of their birth randomly coerce them to follow that people will automatically behave any less morally than anyone else. Most humans instinctively feel what's the right or wrong way to behave in almost any situation. Knowing ethical from unethical behavior is actually extremely easy as a concept: ethical behavior is almost universally the way you'd prefer other people to act toward you.

It's very likely just the ability of social media to expose us to opinions we previously may have gone an entire life without hearing, but I actually believe it's something more than that. It feels like a cultural shift. Increasingly I'm reading online this or that artist's opinion that cheating the system or scheming within the system to get ahead, through the creation/promotion/sale of their art is not only OK with them, but their due, because of how difficult they feel their life has been.

I suspect this perceived "right" to get ahead at any cost is fairly common across any industry in this country (after all, we are the children of a generation who saw Gordon Gekko as a role model), but for me (and apparently the artists, collectors, and other dealers I've surrounded myself with) art had always been a sanctuary from such attitudes. Art had been the last bastion for professionals who believed in higher ideals than just getting what I can.

And yet, when I express such ideas on Facebook, the types of responses I get are (these are real):
"There 's nothing wrong with making money through these buying, selling, sneaking in unknowns, collectives, first opens, corporate Ponzi schemes"
"Ethics are something I might exchange since I am a victim of my parents' ethics, not a trustfund baby..."
and justifying such positions for
"those of us who were artists, yet had to work as service workers with the bridge and tunnel people, the rednecks from Staten Island, Bronx, etc. and raise families without proper food, etc."
I have tried to look at such positions from an objective point of view. In particular, I realize that many artists are sold a bill of goods by art schools and graduate with more debt than their dream of earning a living from their art will likely even cover the interest on. This puts tremendous pressure on them and their families. I also realize that when artists who intentionally game the market system as part of their practice are celebrated as among the best artists of their generation, the lines here can get a bit blurry unless you really pay attention. But most often, I read such things and think "who the hell are you, and what did you do with the actual human artist whose body you're inhabiting?"

Artists should emerge from their thorough explorations in looking/seeing and in particular their education in the humanities as, well, better humans. In my experience, most do. But specifically, within my concept of the role of art as a form of religion, artists are the leaders...the perceptive ones able to see and communicate sincerely with the rest of us the more important or at least interesting aspects of what it means to be a human here and now. That position comes with certain responsibilities, though. If they're not at least attempting to be good humans (and that is incompatible with willingly scheming or cheating others), then they're just hucksters demanding attention for wholly narcissistic reasons.

I know these are very high expectations to have of another human.... So?

More than just my admittedly perhaps warped sense of art as a religion, though, comments like this are particularly troublesome in an arena that purports to trade in concepts involving our better selves:
"There 's nothing wrong with making money through these buying, selling, sneaking in unknowns, collectives, first opens, corporate Ponzi schemes"
Actually, the law says otherwise. Some of these activities are quite specifically illegal, and therefore, socially at least, the very definition of "wrong."  If you can't be an ethical "artist," the rest of us can at least insist you behave as an ethical citizen.
Now here I should clarify that my sense of what makes an artist ethical or not is entirely unrelated to their personal life (my concern is only with a professional ethics). Indeed, I use the term "ethics" here wholly within the context of a strict adherence to the integrity of their work and (because we accept that "art" is important to humankind) honesty in how that work is traded. Moreover, the license society gives artists to behave in ways that are unacceptable for the rest of us (dressing down for formal functions, spending days just "thinking" about their work, essentially having total control over their workplace and hours, actually being invited to speak truth to power, etc.) is given in part because we expect something quite simple back in return. We expect artists themselves to lead the way in treating art like the cultural treasure they're asking the rest of us to view it as...in other words, to take "art" seriously. Suggesting it's ok to cheat or scheme with one's art is not taking it seriously as a cultural treasure.

Monday, July 07, 2014

Last Week's Auctions Report: Part I

It's been almost a week since the Christie's evening auction of Post-War/contemporary art in London, perhaps too short a period to reflect fully on the importance of the art in the event, but the pulse of today's news cycle demands quicker-than-ideal reporting, so.... The 75 works of art auctioned last Tuesday had been on view at Christie’s King Street location from 28 June – 1 July 2014, providing a short but impressive survey of works by some of the most influential Post-War and Contemporary artists, along with a few newcomers we'll be watching to see how they develop.

Among the highlights of the exhibition was Untitled (Concave and Convex Beds) (1992; by a British artist, 1963-present), a work its seller had only owned since 1993, suggesting perhaps an urgent emergency of sorts had led to its inclusion in the corresponding evening sale, but a relatively collectible work compared with this particular artist's well-known monumental public sculptures. The influential development popularized by this artist in the early 1990s was to use traditional casting methods and materials that are more commonly used in the preparation of sculptures rather than for the finished object, such as plaster, rubber and resin. This artist is known for creating sculptures of the spaces around (under or in or on) ordinary objects, such as chairs or, in this case, mattresses, surprising the viewer with their often revealing physicality of formal relationships in forms that were right there in front of us all the time, but unnoticed because of their object's ordinariness. Blending formal methods developed by Minimalist artists with concerns more associated with Conceptual art, this artist's work, by removing the actual objects and presenting only the space that had been around them, tends to convey profound notions of absence and loss.

Another standout in the exhibition was Untitled (1998; by a German artist, 1941-2010), a painting created using artificial resin, acrylic, spray enamel and fabric mesh on polyester fabric, in artist’s frame. This complex composition of unusual materials, with its mysterious imagery of what looks like a computerized framing of a woman's body, next to a column of women's faces (perhaps as options for the full figure that the artist leaves to the viewer to complete), was apparently owned by a remarkable collector who had somehow absorbed enough of its formal and conceptual intrigues to let it go after only 8 years of ownership. This is all the more astonishing given how the semi-translucency of the painting's ground plays with light in a way that the work changes quite a bit in different types of lighting, leaving us to imagine its owner frantically moving it from location to location in order to study and fully appreciate it so quickly. How influential this artist's work has been for literally thousands of other artists around the world, many of whom are even now returning again and again to view the major retrospective of this innovative, some would say genius, master up at a major New York museum, again, makes one imagine the seller
unfortunately must have had some horrific tragedy occur in their life to ever need to part with such a treasure.

Another painting that caught our eye in the exhibition was Loving Love (by an American artist, 1912-2004). Painted in 2000, this wonderfully rhythmic working of broad horizontal bands in subtly alternating hues of blue and pink was rendered in acrylic and graphite on canvas. Known for how they evoke the sublime, this artist's paintings require the most careful study, but reward the patient viewer with gorgeous, illuminating, seemingly endless variations within what at first seems a uniform field of geometric simplicity. Described best perhaps as "meditative," this artist's paintings stand out among contemporary works for how commandingly they slow down the viewer, making the fact that this particular painting had been sold at Christie's in New York as recently as 2007 a somewhat stupefying evolution in its provenance.

Painted in 1991-1992, the smaller oil on panel titled Waterfall (by a British painter, 1932-present) is an excellent example of this artist's "semi-abstract" works. While its title loosely confirms the subject matter, whose rendering in bold blue gestures threatens to cascade out and over the orangish-red rectangular border that defines the picture space, it is the masterful interplay of color and form that confound any conclusions about the otherwise seemingly swift production of this painting. Owned by its seller for only 20 years, this clear and brightly colored gem brushes up against Pop Art, while also harkening back and updating the innovations of Matisse, and stands perhaps as a solid link between the artist's simpler and more complex, later compositions. 

A lack of print space and time will unfortunately force me to end my summary here, so I'll conclude by noting that of the 75 works of art in the evening sale, some sold to new owners, whereas some were "bought in," as they say, and returned to their current owners. Still, the overall business outcome of the event was reportedly satisfactory enough that Christie's auction house remains committed to their Post-War/contemporary art exhibitions, which, even as short as they are, is welcome news.

Tuesday, June 24, 2014

Losing Control over Perceptions

It's funny how long it can take something you do every day to reveal itself as perhaps unusual. Even more so for it to reveal the wider impact such a habit has and lead you to consider that it might be something you want to change.

For example, for many years now I have participated in the shorthand common among art world insiders of indicating the perception of a gallery's rank in the system by noting which art fairs it participates in. It has become perhaps the quickest way to communicate not only where in the pecking order a gallery stands in one's estimation, but perhaps even how ambitious and likely successful that gallery will be in promoting its artists and securing long-lasting value for the artworks it sells. This in turn translates into shorthand when talking with collectors as to how comfortably they might rely on any acquisition from that gallery being a "good buy," which is of course a valid consideration in any context.

It's a much more finely calibrated tool than one might at first realize, especially when incorporating multiple art fairs into the calculus. In much the way the police can identify the exact location of your Android through the triangulation of signals picked up by cell phone towers, using three art fairs to position any gallery is highly effective: "They do the Armory Show, NADA in Miami, and Volta in Basel." Indeed, with some triangulations, it's possible to often identify the exact gallery from that information alone (which reveals far too much attention being paid to who's doing which fairs, I'll admit).

I have always been somewhat conscious of those implications in using the shorthand, but it had never dawned on me how that eventually contributes to a weakening of the power of galleries themselves until I heard Clare McAndrew note in the video in the previous post that "buyers' loyalty has shifted to the fairs itself, rather than to the gallery" [see the 36:35 minute point]. 

Then it clicked: not only are the galleries essentially letting the fairs brand them and their artists, but in doing so they're forfeiting some of their power to brand themselves outside the fair system. What does it say about a gallery that doesn't do any art fairs, within the context of this shorthand? It might convey they're successful enough or simply adverse to the fairs, but it might also suggest a lack of ambition or even a lack of quality in their program (no fair would have them). 

None of this is the fairs' fault, mind you. Some of the power fairs have absorbed from galleries was willingly handed over; in fact, the fairs didn't originally seek to have it (this is something I delve into a bit more deeply in my upcoming book). Much of it though is a result of how successful the fairs are (or are not). I know collectors, for example, who have a short list of fairs in Miami they will visit and those they either won't visit or will only go to if they find they have extra time. 

Also, fairs can lose their ranking in the overall system as well. Galleries that invest heavily in this or that fair, perhaps joining their selection committees or otherwise being strongly identified with them, can suffer if that fair's seen to lose its way or lose prestige to a newcomer. Galleries jump ship as a result, of course, but how closely they're associated with another fair may make that more difficult.

Now none of this has a hard-and-fast impact on galleries or artists. It's not like if you don't get into the top fair, you're doomed. Some artists will have work in more than one fair, and that's fine for attracting a wider range of collectors. Some collectors know very well, that it can take artists and galleries time to climb through the ranks, and so by not visiting the "lesser" fairs, they're possibly missing out on a chance to discover something really interesting before everyone else does.

But it does all make me wonder how galleries can take back this power. Like I said, some of it was power the fairs didn't even want. It's in each gallery's interest to have collectors' loyalty shift back to the galleries. I can't help but suspect some part of that may require using other metrics to discuss the perceived rankings within the gallery system.

Monday, June 16, 2014

A Few Thoughts on Data-Driven Art Dealing

A great deal can be learned about the art dealing world from the presentation of statistical data. There's nothing extraordinarily useful that can be learned from the currently available data itself (I'll get back to that), mind you, but the presentation of that data is truly quite revealing indeed.

Consider the video below in which Clare McAndrew, perhaps the best-recognized economist presenting data on the art market today, shares the findings from her 2013 TEFAF Art Market Report (and other sources, I believe) with art world insiders at the Talking Galleries symposium held last fall in Barcelona. It's a long video, so if you're short on time you might want to skip forward to the 58:00 minute mark where the Q&A begins (although I do recommend watching the entire thing for insights into how the global art market is being discussed, what we think we understand about that, and what we clearly don't

Earlier in the video, McAndrew discusses the challenges of getting art sellers to share their own sales results or even complete an anonymous survey. In that context, the Q&A reveals for me a striking paradox: the same industry that seemingly goes out of its way to obscure its sales and expenditures data has unrealistically high expectations for what the data that can be collected is supposed to communicate and verify.

Mind you, the one audience member who questioned the methodology of the report has a valid point. Even if it presents the very best data anyone can realistically gather at this time, the way McAndrew's report is discussed in the press suggests it needs to be presented with far stronger caveats. The industry as a whole doesn't yet seem savvy enough to know how to make use of what McAndrew clearly works very hard to assemble. What I note below about dealers interpreting the data goes doubly for journalists, imo.

Then again, I do feel McAndrew's is the very best data available today, and I believe it's up to the reader of her data to learn how best to use it. Oversimplified conclusions are not demanded by the limited nature of the data, nor are knee-jerk business decisions based on those conclusions.

For example, it's irrational to decide that just because the art market in China has soared over the past decade that it's a reasonable use of your gallery's resources to participate in an art fair in Hong Kong next year with an eye on breaking into that market. A decision like that should also consider (before you apply to that fair) what kind of art has been selling in Hong Kong? Is that the kind of art you sell or can bring to Hong Kong? How much of a commitment to servicing new clients in Asia are you willing/able to make? Do you know what that will entail (i.e., how often would such clients expect you to fly back to Asia...is that feasible for you)? How long are you willing to invest in China if the immediate results are not promising? What's the realistic potential profit you're looking at, even if you do make headway in that market (i.e., what are your shipping or other costs to continue to have a presence there)? Are you aware that some experts suggest you had better be willing to invest for 8 years, and if you're not, it's foolish to even start?

None of that is communicated in the data that the market in China is now the 2nd or 3rd largest (depending on the year) in the world. Therefore it's naive to interpret that data alone as a reason for doing a fair in China.  

I know all that seems obvious to many dealers, but let's look at another less obvious example of the irrationality with which many approach such data. At about the 1:16:30 mark in the video, someone I assume is a German dealer seems rather emotionally upset that McAndrew's report indicates that France (by one measure) or the UK (by another measure) has a more important art market than Germany. His argument seems to boil down to his feeling that "important" should be measured by the quality of the art in the galleries, which I empathize with, but which is, again, entirely irrational to expect a market report to incorporate into such data. I mean, I understand why he would object to such hierarchies being misunderstood by the buying public, but the data isn't demanding that it be misunderstood. That's being done by people not limiting their own conclusions to the carefully worded descriptions of the data.

Given the reluctance of dealers to share more of their sales data openly (and by "openly" I mean via anonymous surveys or other non-public-disclosure means), I'd say we're a long way off from any such report being able to tell dealers the kinds of things they'd love the collective data to tell them. It's a classic Catch-22.That's not to say such reports as they exist are not interesting or useful within a carefully considered context, mind you. Just that I think the more exposure dealers have to such data and how it could help them strategize on where to invest in their businesses, the more they'll appreciate the role they personally could/should play in enabling better data to be gathered. Like any analytical system, how useful the information is that you get out of it is entirely dependent on the quality of the information everyone is willing to put into it.

Wednesday, June 11, 2014

Applying the Rules of all Markets to Art

There's a sentiment afloat in this frothy art market that rampant flipping and other practices among the creators, buyers, and sellers of art that were perhaps previously considered questionable are in fact entirely ethically neutral. It's a temporally convenient sentiment, and not one I would expect to see continue should the art market crash. But it's fairly widespread at the moment.

The sentiment that ethics don't come into this relies heavily on the assertion that such practices are entirely in line with the well-established rules of any market, and that art is no different from any other commodity and never has been. Dealers are in essence art brokers, and there is no ethical implication one way or the other for art investors turning any level of profit they can, especially given the level of risk they take on. The "law of supply and demand" justifies any resale price a seller can get.  

This sentiment has recently extended into the dialog among artists, as well. On social media today, you'll see artists arguing that the "law of supply and demand" justifies mass production or accelerated output and whatever marketing effort it requires to strike while the art market is hot. In market terms, the assertion is that there is no ethical implication one way or the other for manufacturers putting any product they can produce and that consumers will pay for into the market.

To suggest any of this is ethically problematic is to be accused of everything from sour grapes to rhetorically denying one a decent living (seriously, I've seen that). Most often it's to be accused of being "naive" or "overly romantic" or even "puritanical."

I believe the opposite is true. The naive or romantic notion at play here is that free market theory in any supportable way aligns with the practices of the current booming art market. The truth is that the art market is a highly protected cocoon posing as a typical market when that suits the objectives of its players and completely ignoring standard market rules when they don't suit the subjective objectives of its players. As it currently operates, the art market would break apart at the seams should it be forced to follow the rules of other markets. Indeed, applying the rules of all markets to art, as many of those involved in flipping art know all too well (and any artists making the arguments above should know too), would very likely result in an extremely different art market and art-making climate from the one we have today. More than that, if the "law of supply and demand" were truly applied to the art market, it would change the very nature of what it means to "be an artist."

Let's go to the grand poohbah of market rules here, Adam Smith, to see just how differently the current art market actually operates from other markets. From An Inquiry into the Nature and Causes of the Wealth of Nations : Book 1, Chapter 7: Of the Natural and Market Price of Commodities:

When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less the competition of the sellers, or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess in the importation of perishable, will occasion a much greater competition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron.
In free markets, then, even durable commodities, like iron (or [some] art) must be sold to those willing to pay less when there is more supply than demand. That means, if an artist's new body of, say, paintings doesn't sell out through an exhibition or a year or two's worth of art fairs (i.e., within the standard period in which it's expected the artist will have created a new body of work), market rules say their previous paintings' prices should be lowered. Sellers of other goods do this through means such as a publicly announced "clearance sale." Now you might say that happens in the art market via discounts, but here's where those pesky ethical questions begin to creep in. Smith notes that "the low price which they give for it must reduce the price of the whole." In other words, if discounts are given, the "price of the whole" (that is all other similar artwork) must be similarly reduced. That currently does not happen in the primary art market, and so we have our first example of where "the rules of all markets" are not being applied.

The rationale behind not lowering the prices for paintings that don't sell in such time frames is twofold: 1) works of art by emerging artists are priced at speculative levels to start off with (if you doubt that, have any work by a relatively unknown artist without an auction record appraised by a major auction house...you may be in for a rude surprise), which you'll note is another difference between the art market and most other markets; and 2) speculative prices make sense because we assert that the "value" of a work of art is determined in part by its cultural significance, which demands a longer-term selling period than other commodities to verify or dismiss. But even if we cling to rationale number 2, what Smith also notes about supply exceeding demand is often entirely violated quite consciously by the art market:
If at any time [supply] exceeds the effectual demand, some of the component parts of its price must be paid below their natural rate. If it is rent, the interest of the landlords will immediately prompt them to withdraw a part of their land; and if it is wages or profit, the interest of the labourers in the one case, and of their employers in the other, will prompt them to withdraw a part of their labour or stock from this employment. The quantity brought to market will soon be no more than sufficient to supply the effectual demand. All the different parts of its price will rise to their natural rate, and the whole price to its natural price.
In other words, if an artist's recent body of work doesn't sell, normal market rules would expect that artist to stop making more work until demand resumes again. In some instances, of course, this does happen. Artists who can't earn a living from their work stop making art and turn to other pursuits. But the current contemporary art market makes a great deal of allowances for artists whose output exceeds demand. Based on agreement from their dealers and/or pressure from their existing collectors or simply through their own determination, many artists simply push ahead into their next series, and their next series, supporting their practice as best they can from other sources of income, hoping some awareness among consumers will emerge about the value of their inventory. Their dealers too, often choose to keep them within the gallery program, still give them exhibitions, and promote them as best they can from other sources of income based on faith in their work and its future potential. This is entirely illogical by other market standards. Not only does producing more artwork increase the already over-abundant supply, which market rules insist will only make matters worse, but it clearly consumes capital that could (arguably, should) be put to work toward promoting other products. And so we have our second example of where "the rules of all markets" are not being applied to art.

But this particular matter isn't over. Smith then tells us
The whole quantity of industry annually employed in order to bring any commodity to market naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply, and no more than supply, that demand.
This is another way of saying production in the studio should stop until which point demand resumes. Here's generally where arguments about practice and personal needs/drives to create art enter the reasoning for not complying with the rules of all other markets. This dovetails into arguments that art-making is not only the production of objects...it's a process...a calling, even. A studio isn't just a manufacturing plant, but a sanctum. So slowly any adherence to the rules of all markets are already giving way to romantic notions.

But lets not assume it's only artists and dealers who are invested in this market anomaly. Would-be flippers too have a motivation for the artist to remain productive (or at least appear to be) in this situation. Unlike other markets where consumers who are interested in a particular product might welcome a dip in demand (a resulting stoppage in production is of no real consequence to them outside how it helps them purchase this commodity at reduced prices), the end consumer in the art market doesn't want the artist to turn to other pursuits or even necessarily to make very different work. Up to a point (and usually well past capacity for a few years anyway), a steady supply of similar product is in the flipper's best interest, regardless of effectual demand. It's pointless to have the only work of its kind in a market where one is counting on brand recognition to command higher resale prices, at least hopefully some day.

And so a pattern emerges that points to how the art market has built-in protections, contrary to the rules of other markets, designed to extend how long any product has a chance to sell at a speculative price and how long an artist can continue to create art even in the absence of demonstrable demand. I personally have no problem with this. To me, the time required for the cultural value of an artwork to be verified justifies these protections. But let's not pretend then that all behaviors based on the rules of other markets are natural or ethically neutral in such an artificially protected market context.

The fact of the matter is, classical free market theory points to how flipping art doesn't necessarily help the artists being flipped and, more than that, actually harms other artists. Flippers who've studied Smith must know this. Still, flipping apologists will argue that regardless of how distasteful the practice is, it's not unethical because art is not a zero sum game. This may be true in a limited, perhaps macro sense, but it's far from true in a practical, individual-artist sense.

Again turning to Smith we find a clear parallel to the effects of the artificial focus on a smaller group of artists that flipping art brings about and an illustration of how it not only doesn't benefit the artists whose art is being flipped, but indeed harms other artists:

A public mourning raises the price of black cloth (with which the market is almost always understocked upon such occasions), and augments the profits of the merchants who possess any considerable quantity of it. It has no effect upon the wages of the weavers. The market is understocked with commodities, not with labour; with work done, not with work to be done.
In other words, flipping takes advantages of a temporary spike in demand for a particular product, but that spike doesn't necessarily trickle back into the studio...into the money the artist who created the work will necessarily see. Moreover, once the temporary demand has been exhausted, there's no guarantee of any continued demand (the market is understocked with current artwork, not with artwork yet to be created). Smith continues:
[A public mourning] raises the wages of journeymen tailors [i.e, auction houses]. .... It sinks the price of coloured silks and cloths, and thereby reduces the profits of the merchants who have any considerable quantity of them upon hand. It sinks, too, the wages of the workmen employed in preparing such commodities, for which all demand is stopped for six months, perhaps for a twelvemonth. The market is here over-stocked both with commodities and with labour.
Because of the temporary focus on black cloth (i.e., a small group of hot flippable artists), the demand and hence price of colored cloths (i.e., other artists' works) sinks. That focus sinks too the wages of those other artists and their dealers. Through this example, the potential impact on other players of spikes in flipping  becomes more apparent. But as we know, although demand does, the prices of other artists' work don't actually sink. According to the rules of all other markets, though, they should.

And so, we see that any argument that the art market is simply following the rules of all markets is untrue. There are un-ignorable exceptions to the rules within the contemporary art market, set up specifically because the true value of art (its cultural significance plus its financial worth) requires a much longer time to discern than is typical of other commodities. More than that, we see that classical market theory predicts there will be significant consequences on the rest of the contemporary art market when spikes in flipping art occur.  All of which, to my mind, makes any defense of previously questionable behavior based on free market theory either naive or willfully duplicitous. 

In other words, if you want to flip art for fun and profit, letting the collateral damage fall where it may, or you wish to sell out to that system as an artist, by all means, go ahead...just don't hide behind the rules of the typical market as your excuse. They don't actually provide you cover.