Can an Economist’s Theory Apply to Art?

Thomas Piketty is a name on a lot of people’s lips at the moment. The French economist’s new book, “Capital in the Twenty-First Century,” is a historic survey of wealth concentration that has quickly become a go-to text for the gathering debate on income inequality.

In his book, published in English last month, Mr. Piketty argues that the rich are only going to get richer as a result of free-market capitalism. The reason, according to Mr. Piketty, is simple. Returns on invested capital are greater than rates of economic growth, and this, he says, has become a “fundamental force for divergence” in society.

Although art is one of the few subjects not mentioned in the index of Mr. Piketty’s 685-page opus, it is worth considering how the unprecedented amounts of money the wealthy have recently been spending on trophy artworks might be a natural extension of his argument.

Courtesy of the above-growth returns identified by Mr. Piketty, the rich are further increasing their wealth by buying art. Many millions have been made by a new breed of investor-collectors who buy Bacons, Warhols and Richters high, and sell even higher. Art by desirable investment-grade names makes the rich richer. And more and more wealthy individuals are now prepared to make bids of more than $100 million at auctions, while outside, beyond the shiny bubble of the art world, living standards in the rest of society stagnate or decline.

“This is well beyond the norms of inflation,” said Ivor Braka, a London dealer who has been buying and selling high-value art since 1978. “The art market has become an excuse for banking in public. People are displaying wealth in the most ostentatious way possible. It’s luxury goods shopping gone wild.”

Last year, worldwide auction sales of postwar and contemporary art climbed to a historic peak of 4.9 billion euros, or $6.8 billion, a massive increase over the €1.42 billion in auction sales in 2009, according to the 2014 Art Market Report published by the European Fine Art Foundation in March.