Principales resultados

Statements by early economists referring directly to the economics of art are rare. In the sixteenth and seventeenth century the Mercantilists, who expressed the interests of merchants against landed privilege and artisan producers, including the defence of tariffs and state taxes on foreign trade, said very little about artisanal production and nothing about art. Since ‘the problem of value could only be posed once the guild handicrafts had begun to give way to capi- talist economy’, the Mercantilists argued that wealth was produced through trade.1 Merchants traded art during this period, but the production and circu- lation of art was still governed by guilds, academies, salons and patrons, not by trade. Marginal to the economy as a whole, and not corresponding to the dominant economic issues of the day, the Mercantilists had nothing specific to say about art. The Physiocrats, who in the eighteenth century developed an economic theory of agriculture as the source of rent and therefore wealth, regarded the production of goods as ‘sterile’. Conflating industrial production with artisanal production and capitalist farming, the Physiocrats rejected them all as producing nothing new since, according to François Quesnay, industry is only a combining of raw material already in existence, and therefore is ‘simply production of forms, and not a real production of wealth’.2 At the end of the eighteenth century, however, art begins to be drawn into economic debates, albeit parenthetically or incidentally. Before the advent of political economy, it was well known that the prices of artworks, antiques and other rare goods bore little or no relation to costs of production, and that the price of a work could vary enormously over its lifetime. Only with classical economics does art begin to occupy a consistent, if necessarily marginal, place within economic thought. In fact, the theory of art’s prices in classical economics is a theory of art’s marginal place within economic doctrine and market forces. Classical price theory is not designed to explain how an artwork which cost the artist little or nothing to produce could sell for a king’s ransom; consequently the classical economists developed a supplementary theory for these anomalous goods. That is to say, from Adam Smith to J.S. Mill, all economists made an exception within their theory of price for those goods, such as artworks and rare wines, which consistently fetched prices much higher than their costs

1  Rubin 1979, p. 64.

of production. ‘The single most consistent interest displayed by economists across the centuries’, De Marchi tells us, ‘has been in pricing, and the valua- tion of art has generally been considered problematic for economic analysis’.3 It should not be assumed that economic laws are first established and that, later, exceptions to the laws are identified. That is to say, there is no time lag between the birth of economics and the acknowledgement of exceptions to economic laws. Cases of production and consumption that are not susceptible to the laws of supply and demand bring clarity to the account of the typical. Smith and others establish economic laws, in part, by showing what is exempt from them, and art is one of the key exceptions. Art’s economic exceptionalism helps to define the field of economics as a social science.

Smith, like all the classical economists, identified a class of goods that can- not be brought under the standard price pattern of commodities produced for and exchanged in the self-regulated market. Ordinarily, supply is adjusted to meet demand in a self-regulated market economy, Smith says, through anony- mous mechanisms that reward supply for expanding to existing demand and penalises suppliers for overproduction. The exchange value of a thing is a reflection of its ‘real price’,4 according to Smith, which is ‘the toil and trouble of acquiring it’.5 Goods reach what Smith calls their ‘natural price’6 when the supply and demand are in equilibrium and therefore the commodity is sold ‘precisely for what it is worth, or for what it really costs the person who brings it to market’). ‘The natural price’, Smith says, is ‘the central price, to which the prices of all commodities are continually gravitating’.7 Retailers attempting to sell commodities above their natural price in a free competitive market will, in principle, lose out as customers purchase the same goods from competitors selling the goods cheaper. However, natural prices are not actual prices. They are induced through market disciplines, hence prices are unnatural whenever market forces do not or cannot prevail. Smith identified a variety of anomalies, limits and manipulations of market forces, pointing out that prices can be kept above their natural price through ‘accidents . . . natural causes, and sometimes particular regulations of policy’.8

3  De Marchi and Goodwin 1999, p. 1.

4  Smith 2007, p. 20. The concept of ‘real price’ was coined by Quesnay, the leading Physiocrat economist.

5  Ibid.

6  Smith 2007, p. 36. The concept of ‘natural price’ was coined by Petty, the Mercantilist economist.

7  Smith 2007, p. 38. 8  Smith 2007, p. 39.

Smith lays out the foundation for his theory of economic exceptionalism during his exploration of the various circumstances in which market forces confront an artificial or natural limit.

When the quantity of any commodity which is brought to market falls short of the effectual demand, all 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, cannot be supplied with the quantity which they want. Rather than want it altogether, some of them will be willing to give more. A com- petition will immediately begin among them, and the market price will rise more or less above the natural price, according to either the greatness of the deficiency, or the wealth and wanton luxury of the competitors.9 Smith points out that high prices result from the granting of monopolies, to the anomalous prices that result from natural disasters, and to profitable secrets in manufacturing and trade as leading to or sustaining unnaturally high prices. By and large, according to Smith, the increased demand of scarce goods due to accidental circumstances is a temporary blip, and the artificially high prices due to the withholding of information can never be sustained for very long, while the benefits of monopoly can be sustained for as long as the regula- tion remains in place. Significantly, however, the prices of economically excep- tional goods due to natural causes are permanently at odds with their natural value. There are some goods, Smith says, that must always be supplied below the level of demand. Smith gives the example of ‘some vineyards in France of a peculiarly happy soil and situation’ that routinely ‘fall short of the effectual demand’10 and which therefore yield prices well above their natural price. ‘Such commodities may continue for whole centuries together to be sold at this high price’.11 These unnaturally high prices are permanent because they are the result of a natural scarcity or natural monopoly. That is to say, if the supply of the commodity cannot be increased to fit to demand then there is no way of supply and demand bringing about an equilibrium in price, and rather than the price reflecting the costs of production, the price will soar as high as the purchasers can bear.

A monopoly, Smith says, ‘has the same effect as a secret in trade or manufactures’,12 and is therefore temporary, but ‘may last as long as the

9  Smith 2007, p. 37. 10  Smith 2007, p. 38. 11  Smith 2007, p. 40. 12  Ibid.

regulations of policy which give occasion to them’.13 Monopolies elevate prices indefinitely but not permanently. As to the level that monopoly prices reach, Smith restates the formula for exceptionalism generally: ‘The price of monop- oly is upon every occasion the highest which can be got’.14 While accidents, monopolies and secrets can bring about unnaturally high prices, it is only the effects of natural limitations on increasing the quantity of supply to meet demand that Smith regards as absolute, hence lasting forever. Not all wine prices are exceptional. Wine per se is not economically exceptional. A bottle of Vin de France is generic and therefore can be supplied by any region, which means that the market can price it in the standard way. Those vineyards that supply such ‘good common wine’, as Smith says, do not command extraordi- nary prices or high levels of rent. ‘It is with such vineyards only, that the com- mon land of the country can be brought into competition’.15 The highest-grade wines from the best vineyards, however, are limited because of the specific qualities of the soil, drainage, climate and fertility. Smith is aware that the vested interests of established wine growers can be protected by laws ‘to pre- vent the planting of new ones’16 and thereby reduce the competition among suppliers so as to increase the competition among buyers, but he regards this anomaly as minor since ‘this superior profit can last no longer than the laws which at present restrain the free cultivation of the vine’.17 Nevertheless, Smith insists that a completely unregulated competition among wine growers can- not prevent differences of terroirs from which derive differences of flavour and quality ‘peculiar to the produce of a few vineyards’.18 Economic exceptionalism is observed and interpreted by Smith as an anomaly akin to but not identical with monopoly in which the mechanisms of supply and demand fail to bring about a natural price, because limited supply leads to competition among buyers resulting in prices limited only by the wealth and desire of individual consumers. Aggregate demand does not determine the prices of economically exceptional goods since there is no aggregate supply. Prices are determined in a fashion closer to an auction than a self-regulated market, with goods going to the highest bidders rather than finding an equilibrium price at which the goods can be supplied according to demand. The ‘usual and natural propor- tion’ of the ‘rent and profit of wine’ can ‘take place only with regard to those

13  Ibid. 14  Ibid. 15  Smith 2007, p. 101. 16  Smith 2007, p. 100. 17  Smith 2007, p. 101. 18  Ibid.

vineyards which produce nothing but good common wine’,19 he says. But the prices of the best wines are not regulated by supply and demand in the stan- dard way and their ‘fashionableness and scarcity’ as well as the ‘extraordinary labour bestowed upon their cultivation’ creates eager competition among the buyers, which ‘raises their price above that of common wine’.20 The example of wines from precious vineyards in France, therefore, is to be contrasted with ‘the exorbitant price of the necessaries of life during the blockade of a town, or in a famine’,21 and the temporary competitive advantages obtained through ‘secrets in manufactures’ and ‘secrets in trade’ which ‘can seldom be long kept’,22 because the high prices of economically exceptional goods are not based on the award of monopoly rights and cannot be corrected by the free reign of supply and demand. ‘Such enhancements of the market price are evidently the effect of natural causes, which may hinder the effectual demand from ever being fully supplied, and which may continue, therefore, to operate for ever’,23 he says. Economic exceptionalism is not an example of monopoly, even if its high prices resemble those of monopolies, because exceptional goods cannot be brought under the laws of supply and demand by legislating against monopoly.

Smith’s example of the French vineyard is the original motif that triggers and shapes the classical theory of economic exceptionalism. It recurs through- out the literature for over two hundred years. Smith returns to it himself when he says the ‘sugar colonies possessed by European nations in the West Indies may be compared to those precious vineyards’.24 Smith does not include art within his theory of economically exceptional goods. He refers to art, sepa- rately, when he discusses the distinction between productive and unproductive labour. ‘There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour’, Smith writes. ‘A man grows rich by employing a multitude of manufacturers: he grows poor, by maintaining a multitude of menial servants’, he explains. There is a dual meaning to the word ‘productive’, one meaning productive of an outcome, and the other meaning productive of value, which Smith com- bines by observing that the costly menial servant fails to produce an outcome, while the labour of the industrial worker produces both commodities and

19  Ibid. 20  Smith 2007, p. 102. 21  Smith 2007, p. 37. 22  Smith 2007, p. 39. 23  Smith 2007, p. 40. 24  Smith 2007, p. 102.

profit. Hence, Smith says, ‘the labour of the manufacturer fixes and realizes itself in some particular subject or vendible commodity’.25 Smith associates menial servants with the head of state, under the same heading of unproduc- tive labour, as well as ‘all the officers both of justice and war’ administering and executing state power, and adds, ‘the whole army and navy, are unproduc- tive labourers’.26 Artists of various kinds are brought under the same heading as the professional middle classes: ‘In the same class must be ranked, some both of the gravest and most important, and some of the most frivolous profes- sions: churchmen, lawyers, physicians, men of letters of all kinds; players, buf- foons, musicians, opera singers, opera dancers, &c’.27 Absent from this list are painters, sculptors and printmakers, who produce vendible products. If Smith wishes to suggest that a profit cannot be made in hiring labourers who do not produce a commodity that outlives the labour, then he is mistaken. Partners in a legal firm certainly profit from the lawyers who work for them, and musicians, actors, singers and dancers certainly produce profits for theatre owners, pro- moters and impresarios. At the same time, those wage labourers who produce a vendible commodity, such as the gardener of a great estate, is unproductive (in the sense of not producing a profit) so long as the employer is the con- sumer of the product of labour. In art the two different inflections of produc- tive labour do not coalesce, as Smith suggests, but split apart, as actors, singers, dancers and so forth are typically wage labourers who produce a profit for capi- talists, whereas visual artists, even when they produce vendible products, are typically not paid wages at all and, when capitalists do profit from visual art, they do not produce profit through productive labour but through the sale of artistic products. Although Smith separates the two, issues connected to the theory of productive and unproductive labour will resurface periodically in the discussion of art’s economic exceptionalism.

Jean-Baptiste Say in his Treatise of 1803 spells out Smith’s theory of excep- tionalism with reference to the natural limitations of the special vineyard: ‘If the soil, capable of growing good wine, be very limited in extent, and the demand for such wine very brisk, the profit of the soil itself will be extrava- gantly high’.28 Say extends Smith’s conception of economic exceptionalism by including manufactured goods alongside those products limited by natural causes, but he also dilutes the theory by conflating exceptionalism with the super profits of monopolies, saying

25  Smith 1993, p. 212. 26  Ibid.

27  Smith 1993, p. 213. 28  Say 2007, p. 364.

there are some particular products, which nature or human institutions have subjected to monopoly, and thus prevented from being supplied in equal abundance with those of a similar description. Of this kind are the wines of particular and celebrated vineyards, the soil of which cannot be extended by the extended demand. So the postage of letters is, in most countries, charged at a monopoly rate.29

Say describes the high prices of sought after wines in terms of the same facts or observations as Smith but he explains the anomaly within a different frame- work, that of monopoly prices. Say’s concern with monopoly and the high prices it obtains is connected to his campaign against all forms of artificially elevating prices above value. When a government imposes a wine tax ‘which raises to 15 cents the bottle that would otherwise be sold for 10 cents’, no value or utility is added to the wine and therefore all that takes place is the ‘transfer of 5 cents per bottle from the hands of the producers or consumers of wine to those of the tax-gatherer’.30 Mugging is of the same order, according to Say, who explains that no matter how hard or skilfully the mugger works to take ownership of goods belonging to another person, ‘there results no production, but only a forcible transfer of wealth from one individual to another’.31 Import duty, he argues, is a premium paid to the home manufacturer ‘out of the con- sumer’s pocket’.32 In all these cases, and others besides,33 Say concludes that the prices of goods are ‘raised without any accession to their utility or intrinsic value’.34 In this limited taxonomy of prices, therefore, the trade in fine wine and the high prices of sought after artworks count among ‘the serious mischief of raising prices upon the consumers’.35

Say reduces Smith’s acknowledgement of a range of limits to market forces to the unmodulated binary pair of competition and monopoly, in which the latter merely produces unproductive super profits through the imposition of monopoly prices, but he also lends what appears to be the concept of

29  Say 2007, p. 241. 30  Say 2007, p. 63. 31  Say 2007, p. 85. 32  Say 2007, p. 161.

33  Another two examples: first, when ‘legislation is too complicated’, he says, this ‘holds out a great encouragement to fraud, by multiplying the chances of evasion, and very rarely adds to the solidity of title or of right’ (Say 2007, p. 121); and second, ‘chartered companies and incorporated trades’, he says, are an ‘exclusive privilege, a species of monopoly . . .  which the consumer pays for, and of which the privileged persons derive all the benefit’ (Say 2007, p. 176).

34  Say 2007, p. 63. 35  Say 2007, p. 162.

economic exceptionalism to another cause. He wants to argue that natural forces and land contribute to the production of value. Hence, he uses Smith’s example of the vineyard as an illustration of an ‘invariable maxim’, namely, ‘that the productive agency of land is possessed of value’.36 Smith’s argument that a vineyard will sell wine at a higher price if supply cannot be increased to meet demand has been relayed, here, as an argument that land, the wind and the sea, in addition to capital and labour, adds to wealth. Insofar as Say insists that natural agents contribute to the value of all products, then the claim that the soil contributes to the value of fine wine would render the appar- ently exceptional case of the vineyard as merely an outstanding example of the standard case of the production of value. This is why, in his formula, he speaks of ‘the profit of the soil’. Whereas the wind or the sea can add value,