// This was published in the exhibition booklet for tender spots and hard code at Arebyte //
Notes on Contemporary Art, ‘Capital as Power’, and Blockchain
Colm Guo-Lin Peare
This text employs a fragmentary and partial account of Suhail Malik’s explication of Jonathan Nitzan and Shimshon Bichler’s Capital as Power framework. I will draw from other texts by Malik and his contemporaries that use the contemporary art market’s political economy as exemplary of this theoretical armature. The result is a reductive sketch that hopes to offer an entry point for rethinking the presuppositions of neoclassical economics, contributing to tender spots in hard code’s various explorations of value systems in decentralised and distributed networks.
The hegemonic formation of contemporary art has its origins in Western modernity’s individualising ethos. Through a constitutive centring of aesthetic experience, art has been defined in distinction from other forms of social production by its autonomy from use. It is art’s independence from the social whole that distances it from the instrumentalisation of modernist rationality. Historically, contemporary art is temporally demarcated as emerging in the late 1950s after the mass violence of the first half of the twentieth century. Crucially, its distance from the social whole allowed a critique of this horror and, informed in part by poststructuralism, continued a liberalisation of what could count as art. The linear progressivism of art, manifest in the centrality of formal material development, was transfigured by a critique of objective determination. In this framework, which importantly maintains art’s ethical and political virtue and reinforces its inherent ability to be critical of the social whole, every reading must be individual and meaning can only be constructed as a correlate of experience. To be perceived, distributed, or judged as contemporary art, an artwork does not have to be constituted by a specific medium, politics, geographical origin, or conceptual definition. In order for it to be ultimately plural and heterogenous, contemporary art must be semantically indeterminate so it can be constituted by each receiving individual’s interpretation.
As such, contemporary art must innately reject any form of regulation or standardisation to maintain its plurality. This is necessary in order to maintain its ethical and political virtue which, to the signal frustration of many artists, is a condition that is antithetical to coordinated and systemic change. What becomes apparent is that the inherent criticality of the representational endeavour, which affords the artwork its validation, cannot be effectively transformative of contemporary art’s institutional milieu on a systemic level precisely because there can be no collective infrastructure to allow for ethical and political coordination. This condition is symptomatic of a wider malaise: the fear that poststructuralist accounts of universality have not provided substantive enough grounds for the constitution of a Left subject within our politics has been a long held concern in social theory.
The crux of this text is the claim that this condition justifies contemporary art’s valorisation process in particular which reveals the truth of the price-setting mechanism in general and dispels neoclassical liberal presuppositions about the market’s ability to provide maximum efficiency through competition. This in turn exposes the phantasms underlying our current economic ideologies and, with regard to the themes surrounding tender spots in hard code, allows us to be aware of such presuppositions when formulating alternatives using decentralised and distributed networks. Neoclassical economics assumes that the most efficient allocation of scarce resources can be achieved through free-markets. If all individual actors operating in a free-market act rationally with full access to market information, the equilibrium output and price will be reached as determined by the intersection of the independent market supply and demand curves. Therefore, free-markets prefer assets to be highly liquid, market information to be transparent, and transaction costs to be low. Due to contemporary art’s primacy of the individual interpretive moment, it is averse to any sort of standardised criteria for the valorisation of artworks. When judged by the standards of neoclassical economics, the consequent pricing system is ‘weak’ with the contemporary art market unable to provide any of the listed preferences. It is this condition that allows the contemporary art market to explicitly demonstrate flaws in the logic of neoclassical economics.
Art dealers can strengthen their financial position by utilising, not reducing, the frictions to free- trade. For instance, monopolistic control over the pricing mechanism of contemporary art can be gained by keeping commodities within an inventory and selling directly to collectors, consequently keeping market information opaque and accessible only to private interests. Nitzan and Bichler would position this monopolistic price-setting mechanism not as an aberration but as normative. They employ Thorstein Veblen’s definition of industry as generalised social production whose productivity is measured by its effects within society. This is in contradistinction to business which is the organisation of power through private ownership and thus the control of productivity. Private ownership generates earnings relatively: business profits from gaining advantage over industry it does not own and it can do this through damaging said industry. As such, it often works to decrease industry overall rather than profiting from its increase and therefore tends towards oligopoly and ultimately monopoly. The complete control over the market by a monopoly and the mutual interdependence of firms in an oligopoly both cause supply and demand to become dependant on one another, which undermines the neoclassical assumption that their independent curves result in equilibrium quantity and price. So, the counterproductive nature of private ownership tends towards monopoly and monopoly causes administered prices that are not responsive to the market.
Art investors have no way to determine the future returns on their purchases supposedly unlike, for instance, investors in the real estate market. However, in neoclassical economics the value of an asset is quantified by capitalising it. The rate of return of an investment is understood as the profit made divided by the capital invested. Following this formula, the value of an asset, its capital worth, is equal to the investment’s profit divided by its rate of return. The profit is meant to be determined by how productive the capital is and the quantitive capital is determined by its productivity. This is cyclical because in order to quantify capital we must know the profit. The profit is essentially unknowable because it is based on future earnings. Even though this price calculation can be justified by trends in historic data, it is essentially purely speculative even in markets like real estate. The flaw in this logic is explicit in the contemporary art market because the semantic indeterminacy of contemporary art allows price-setting to be purely speculative without the hindsight justification of earnings based on consumption. Moreover, this semantic indeterminacy morally protects the monopolistic condition of the contemporary art market because of the aforementioned ethical and political virtue it can claim due to this inherency. The proposition employed here has been argued on a theoretical basis and is as follows: the semantic indeterminacy that defines contemporary art allows its market to explicitly demonstrate price- setting without the obfuscation of attempts to rationalise valorisation through consumption.
This all too briefly and partially presented theoretical understanding necessitates a rethinking of the neoclassical liberal tenets that are often uncritically employed in the formulation of technological innovations. For instance, blockchain technology offers the possibility of decentralised, distributed and autonomous economies that do not need to be authorised by centralised institutions: cryptography secures ledger authentication which allows a consensus on history; peer-to-peer technology allows direct transactions between users; and code is executed as law. Disintermediating users from centralised institutions could help bypass regulation and increase accessibility to market information, as well as allowing the free communication and exchange of this information between peers. Decentralisation thus offers the promise of a ‘true’ free-market that is ordered by meritocracy and delivers maximum economic efficiency. However, if we draw from the theoretical armature sketched above, private ownership can maximise profit through damaging competing industry and thus leads to oligopoly and eventually monopoly. Additionally, the capitalisation of qualitatively different entities into a singular quantity requires knowing the unknowable value of future expected earnings. More control over the terms of this speculation allows more control over the valorisation of the asset. If capital’s purposive desire is the maximisation of profits, the infinite accumulation of capital, and the reproduction of capitalist class power, then monopoly is well placed to provide this aggregation of needs. Capitalists will work towards the certainty and immutability achievable in non-competitive monopolies because it is profitable. Capitalism therefore inherently tends towards a centralisation and consolidation of power. Any innovation that allows this economic reason to operate internally within it will be folded back into its system and coerced into delivering its desires. Even though the infrastructure of blockchain is decentralised, the distribution of power within one can demonstrably tend towards inegalitarian centralisation. It proves more dangerous because the decentralisation ethos that is axiomatic to blockchain ideology can help obfuscate such an operation.