Pyramid scheme meets bubble

NFTs are the least of art’s problems, but the crisis of value has no end in sight

If you are bored with lockdown and you happen to own an iPhone, chances are that you spent a few minutes on Clubhouse. And if you did, you heard at least one endorsement of NFTs delivered with the zeal of a televangelist on a fundraising drive. NFTs will change art, the gospel goes. Or they will at least change the market for digital art. And even if they won’t, you should be buying, or selling, right now.

Let’s gloss over the technical descriptions: NFTs are both staggeringly complex and stupidly simple. In essence, an NFT is no different from a certificate of authenticity traditionally issued by an art gallery as part of a sale. This certificate named the author of the artwork, confirmed that it was unique and that the certificate was the agreed means of verifying those assertions. NFTs do bring some new features to this already perfectly-functioning system: they can be verified publicly, guaranteed to be unique, and they can contain additional contractual conditions. They are also algorithmically attached to the digital artworks they describe. An NFT, in short, is a fancy, forgery-proof certificate of authenticity embedded in a piece of digital art, which makes it a perfect companion to items that may have previously been uncertifiable, like GIFs, videos, or Tweets, whether these art or not.

If that is all, why has the art world gone NFT-crazy? With even Christie’s in on the game, there must be something to it. Well, perhaps. The rise of NFTs may do something to establish internet memes as a commodifiable art form. It may move significant amounts of money between a certain type of collector and a certain type of artist. It may even start a new trend that will keep multiplying like Yayoi Kusama’s dots. But contrary to all the hype, NFTs are not a new paradigm that will make art better, more democratic, or fairer for artists. They won’t do that because the fundamental idea behind them brings together the worst aspects of the art world with the parts of the financial markets: a pyramid scheme and a speculative bubble. In fact, the art market – if not art itself – has long displayed those tendencies and the arrival of NFTs simply brings them into sharper focus. The centrality of speculation and the mirage of the asset stability is so ingrained in art’s practices that these terms make little sense to anyone not involved in the blue-chip end of the market. 

Not the best foundation to grow an economy from. Photo: joiseyshowaa/flickr

The Dutch tulip bulb craze was the original asset bubble and deserves space on the art school syllabus. In 17thcentury Amsterdam, it was the consensus that some tulips were vastly more desirable than others. The supply of bulbs was limited by unspoken agreement, but the bulbs themselves had negligible use value. How, then, could the bulb trade get so out of hand that it made and destroyed fortunes? The trick was, in fact, incredibly simple and relied on only a few small manipulations. Some market participants were able to influence the discourses on quality far more than others. Bulbs could appear scarce if a market participant hoarded a collection, or used their influence to discredit the value of other bulbs. And when a few speculators paid over the odds, they seeded a trend that increased bulb prices for everyone, turning future traders into de-facto speculators.

How much does the art market resemble the tulip bulb trade? Certainly, art markets have displayed bubble behaviours in the past, a habit that becomes apparent whenever demand dries up, as it did after the 2008 financial crisis, for example. Left to its own devices, art constantly pushes at the bubble wall: what is and what isn’t good art is subject of debate in which power and money play no small role, art isn’t scarce, but good art is scarce by definition, and the carefully manufactured confusion between use value, exchange value and price turns even the most amateur collector into a speculator.

The cardinal difference between a tulip bulb and an artwork is that while most tulip bulbs are more-or-less the same, art can take many forms. If the art bubble does something that that Dutch horticulturalists didn’t, it is that in art production, all artworks can appear to be commodities, even if most are not. Every artist, whether they paint or produce community events, does so in a system that suggests that demands that their art has a symbolic exchange value that is distinct from its price.

How the symbolic value relates to the economic value or to the cost of labour required to produce the work is the market’s will. Jeff Koons’ balloon dogs are higher in economic value than in any symbolic aesthetic attributes – and it is the existence of a buoyant market for them that in turn imbues them with cultural value. By contrast, the prices paid for most video art, social practice, or art activism are far lower than the symbolic value that is vested in them by artists, curators, museums, and critics. To date, the intellectual and critical efforts behind the intangible art market orphans, have done little to boost the economic value of those practices to a level that would facilitate a true market.

All the same, it would be naïve to assume that this symbolic value of non-market art is not subject to the same inflationary bubble mechanisms that the exchange value of traditionally traded art forms experience. It is precisely because symbolic values are hardly ever exchanged for cash that this mechanism plays itself out: any artwork can claim ever greater intellectual value than the last. This is why art can claim to be essential, world-changing, or life-saving and imply that these attributes should translate into hard currency, even if they never have. Arguably then, it is artists that are the greatest speculators, each art school graduate hoping that either the monetary or the symbolic value of their work will pay off their investment. 

bitcoin
Image: Jernej Furman/flickr

If the symbolic value of non-tangible art seems abstract, it is the cryptocurrency world that elucidates it. Mainstream blockchain innovations such as Bitcoin share much with art practices: both have values that relate to the cost of their production (in the case of cryptocurrencies, that is the energy cost of performing algorithmic transactions), and both are exchanged at a very different value in the open markets. The value of Bitcoin, like with the tulips, rises because more people are willing to buy it than to create and sell it. This happens to be the case with most goods and their prices, except that with Bitcoin, £38900 turns into no physical asset and no contractual promise of value. In the eyes of many, this makes cryptocurrencies a classic pyramid scheme: only those investors who got in at the beginning gain, and only so if latecomers also lose. Back in the art market, to pick just one example, the endless parade of Damien Hirst’s spot paintings would have rendered them worthless by the fiftieth version if not sooner. But however many spots Hirst made, it remained in the early collectors’ interests to coerce others to join the investment bubble. Judging when to sell and how quietly is the pyramid builder’s art.

For now, there’s no shortage of believers, but the chorus of “this time it’s different” that usually accompanies a bubble is part of all cryptocurrencies’ marketing strategies. Some aspects are indeed different: crypto coins are genuinely scarce and the consensus is algorithmic, not speculative. The lack of a stable guarantee, however, is just as obvious as in tulip garden: a Bitcoin represents nothing other than itself, its value is not fixed to any other commodity, nor is it backed by a state bank that can overcome those problems by fiat.

But what if cryptocurrency did represent something, preferably something exciting and confusing whose value is difficult to ascertain? Here comes art! If NFTs render crypto dealing more palatable by attaching an ‘asset’ to the coins, art, or whatever the Bitcoin community could get their hands on easily, is the asset of choice. The deceptive magic of NFTs is that the items they represent – memes, animations, screenshots – can be claimed to be collectable and therefore valuable.

Nyan Cat, a record-breaking NFT feline.

In truth, even if there is some aesthetic or symbolic value in a Nyan Cat screen grab, it has no characteristics of an asset unless an ecosystem that supports the exchange and exploitation of the item is in place. Most NFTs, therefore, are about as collectable as those porcelain figurines found advertised in weekend newspaper supplements. And even then, it is hard to discern whether it is the artwork or the marketing jargon of the blockchain that is of any use. Certainly, NFTs can guarantee scarcity, but when they do that in a pool of ‘assets’ that is limitless in supply, this only morphs a sphere into a pyramid.

But the issue is not just the subjectively limited quality of NFT art. Rather, it is that art can claim to create value from nothing and never be called to show its hand. On the blockchain, art is willingly being used to con market participants by underwriting financial investments with an asset value to which art has no access. In a sense, all of the art market is based on this deception: for some artworks to act as commodities at the auction house, many other works have to trade their symbolic value on even more opaque markets. Maybe none of this matters: gullible investors in NFTs will either love their meme art or be disappointed when their bargain collections fail to appreciate. Some artists may burn their fingers, but no more than they already do in trying to enter the mainstream art market. 

Art’s tendency to trade claims of value outside of its own field without check is, however, profoundly worrying, and it has caused material damage already. In the past three decades, for example, certain socially-engaged art practices undertook to replace aspects of the welfare state, offering symbolic value in place of previously available economic value. In the UK, as a tiny proportion of the diminishing state funding for social work was diverted into community art commissioning, art has continued to make claims about its tangible values that are based on symbolic value alone, arguably leaving its communities short-changed. The Bitcoin bros may or may not be less deserving of sympathy, but if art continues to operate within this illiquid system of value, it has to prepare for the inevitable crash.

Cover image: CPallier/Pixabay

At the limits of representation

Social practice – a prominent and growing aspect of contemporary visual art engaged in social and political realities – has claimed a significant role in bolstering cohesion, empowering communities, and encouraging solidarity between social groups in past decades. It has therefore been a disappointment that in the chaos of pandemic lockdowns, many museums and galleries suspended their social practice programmes, just when their communities needed them the most. With few exceptions, contemporary art’s civic consciousness and the ethos of engagement and inclusion took a step back from more pressing, prosaic concerns of art and artists’ own survival.

While one can hardly blame artists for failing to single-handedly defeat a deadly virus or its economic and social challenges, the pandemic has brought some old questions to the fore again. How do artists, museums and galleries decide whom to support with the resources and skills at their disposal? Why do certain social causes become the causes of art? 

In The Rules of Art, Bourdieu[1]Bourdieu, Pierre. 1996. The Rules of Art: Genesis and Structure of the Literary Field. Stanford University Press. offers an unflattering view of cultural reproduction. He argues that it is in art’s interest to join social struggles because these create a demand for art: making social art is profitable whether one believes in the cause or not. This model may help to understand some of the most misguided aspects of socially-motivated art practice, for example, Marc Quinn’s intervention that replaced the statue of Edward Colston toppled by BLM protesters in Bristol with a work of his own. Quinn was widely condemned for seeking cultural profit from the suffering of others.

However, Bourdieu’s analysis looks dangerously out of date in light of the armies of artists who until recently took on roles traditionally reserved for social workers, often with little reward. But if art’s social functions are today necessary to the functioning of society, they remain a somehow optional and voluntary aspect of artistic practice. It is then even more important to understand who is and who isn’t included in art’s social remit, and how the priorities of artists themselves shape the priorities of social practices.


A potted history of social art and its relationship to the policy-mandated drive for access and inclusion may help in answering some of these questions. The rise and rise of social art practice begun with the post-1997 cultural policies that charged museums and galleries with finding and nurturing previously unengaged audiences.[2]See for example, Hewitt, Andy. 2011. “Privatizing the Public: Three Rhetorics of Art’s Public Good in ‘Third Way’ Cultural Policy.” Art & the Public Sphere 1 (1): 19–36. To deliver these audiences, institutions hired a generation of freshly-trained artist-facilitators supplied by the ever-expanding and increasingly diverse art schools. In times of plentiful arts funding, this was art’s success story: more art was being made by more (and more diverse) artists for larger (and more diverse) audiences.[3]This is, of course, a simplified account. The argument which follows is concerned with the perceptions of these phenomena, rather than their empirical successes.

In a moment of intoxication with its new mission and unprecedented access to funding, the early 2000s art industry believed that it could tackle social ills at large, not to mention its own internal inequities. In other words, art’s promise of inclusion was not only of empowerment through art that was heralded by social practice. For many audiences, inclusion turned out to be an enticement into the art world workforce itself. 

Here lies a profound paradox: the unintended effect of this expansion of artistic activity is that it created a quasi-class of artists whose political ambitions and professional experience made them acutely critical of their own industry’s failings. Contemporary art’s drive to become more inclusive for its audiences ultimately contributed to the inequalities experienced by its workforce. In transitioning from a modestly sized, relatively homogenous industry of the 1980s in which the number of arts graduates tracked the number of job openings, to an explosive, diverse ‘creative economy’ free-for-all of the 2000s, the cultural workforce grew at a pace even greater than the demand for its labour.

The increased competition for opportunities exacerbates inequalities: if a larger (and more diverse) workforce is competing for more (but not so many more and not necessarily fairer) jobs, any asymmetry in the distribution of advantage becomes more visible. At the same time, long-term trends in the entire UK workforce create the appearance of industries like art becoming more inaccessible when in fact it is the pool of people who experience barriers to success that is changing.[4]For a nuanced discussion of these factors, see Brook, O, D O’Brien, and M Taylor. 2020. Culture Is Bad for You: Inequality in the Cultural and Creative Industries. Manchester University Press. This means that as certain markers of disadvantage in elite professions have diminished in their effect (class, for example), others may have become more prominent. In intersectional analysis, for those parts of the workforce who came to art seeking empowerment, the disappointment of finding an industry unable to dispense it fairly has been palpable. 

Nothing of this, of course, is an argument against diversity. The ideals of access and inclusion, whether instrumental or genuinely felt, are not at fault. A long perspective on their side-effects, however, should prompt a re-examination of art’s continued claims of representation in respect of its stated social justice commitments. The pandemic has illustrated the dangers of relying on loose definitions of who is and who is not included in art’s social remit. In a curious turn, we are seeing artists demanding that they themselves be welcomed again. 


Early on in the pandemic, the Instagram-based #artistsupportpledge initiative saw artists pledge a proportion of their sale takings for buying other artists’ art. In what was an innocent peer-to-peer marketing campaign masquerading as democracy and mutual aid, it’s mission was clear: the artists’ priority is to support artists.

A more striking example came during last Summer’s strikes by a group of some 300 retail, catering, and commercial workers risking redundancy at Tate. The regrettable and all too familiar situation was distinguished by the arguments that the strikers put to management. They reasoned that because many of them were artists by training (despite being employed by Tate in non-art capacities) and because many of them were from underprivileged social backgrounds (which are overrepresented in low-wage sectors like retail), Tate owed them a double duty of care. The implication is profound: being an artist is synonymous with experiencing acute disadvantage aking to racism, sexism, or classism. If artists are by definition underprivileged and the boundaries between their own identities and those of the subjects of social practices are blurred, who is including whom? 

Read in Bourdieu’s tone, art’s principled stand with itself reflects the fact that the industry can stimulate the demand for art without reference to external factors. Having so effortlessly expanded its purview to include the material conditions and aspirations of any community (and therefore of artists), art has little need to include or represent anything other than itself. And since art is also able to adjudicate on the relative merits of any candidate for such inclusion on its own terms, it can continue to make unverifiable claims about its emancipatory power.

This is a version of a text originally published in The Sociological Review.
It is part of a series that continues in Art in Solidarity with Itself.

Main photo: Paul Campbell/Flickr.

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