Few concrete examples of the informal economy in the art world are more visible than the gift economy, which in some cases is clearly a graft economy.
Through this system, prices and auction markets, regional or international, can be manipulated and other purposes can be served through a gift of works of art. Gift exchanges in a market context solidify social relationships, and these “social relationships have instrumental economic value and enhance rather than [impeding] efficiency [as neoclassical economists would claim],” according to sociologist Olav Velthuis. In discussing the relationship between artists, dealers, and collectors, Velthuis points out the various ways in which the market for contemporary art in New York and Amsterdam can serve itself more efficiently by not being a free market open to the highest bidder.
This author has proposed that the art market is not free, but a modified market that unevenly distributes information and transactions resulting in advantages for insiders. In other words, simply by believing in an emerging artist or favoring a client, dealers make gifts that facilitate their business in the particular domain of the market that they inhabit. As a sociologist, Velthuis sees social relationships at the core of the market for contemporary art, and the gift economy, in which the commercial nature of exchanges is marginalized in favor of “trust relationships” cemented through generosity, is central to this development.
The gift economy works differently in distinct cultures, and a couple of recent episodes will illuminate how it produces informal art economies in Russia, China, and Brazil. All of these countries have an established tradition of gift giving.
An investigation by the London Sunday Times of two gifts of art by Russia in connection with its bid to host the 2018 World Cup shed much light on what nations will do in order to gain such high-profile sports events for themselves, including two reported bribes involving paintings given as gifts to voting members of the FIFA committee. According to CNN, a painting believed to be a
was offered to the European Football Association’s Michel Platini, a claim Platini has denied.
In a related case, another FIFA voting member, Michel d’Hooghe has admitted to accepting a landscape painting as a gift from Viacheslav Kolokosov, a former Russian executive committee member looking to secure Russia’s hosting of the 2018 tournament. D’Hooghe has described this painting as “ugly,” said that he believed it had no value, and protested that he had not voted for the Russian bid. Nevertheless, his case is one of the rare instances when malfeasance of this sort comes to light, and it indicates how works of art can be employed as gifts in order to secure favors (or not, in this case) that have nothing to do with the market for art.
One allegation suggests that the Picasso work offered to Platini came from the collection of the State Hermitage Museum
in St. Petersburg. If this turned out to be true, the raiding of a national art collection to secure a World Cup bid would be a scandal of unimaginable proportion in the art world. While this claim cannot be substantiated at this time (and perhaps never will be), it exemplifies how the gift economy can transmute into a graft economy.
Art exchanges also played a role in the unfolding of the Petrobras scandal in Brazil, which involved deals that began as far back as 2004 as a huge kickback scheme, but erupted into public consciousness in 2015. This has had enormous economic and political consequences and led to the resignation of numerous cabinet ministers and even the impeachment and removal from office of President Dilma Rousseff, who headed the board of Petrobras before becoming president in 2011. More than $2 billion in bribes was paid. The New York Times reported
“Prosecutors and the federal police have been seizing cash and assets, including fine art. Because storing expensive paintings and photographs is not a law enforcement specialty, the entire haul has been handed over to the
Museum in Curitiba. Since April, the works, mostly by Latin American masters such as Heitor dos Prazeres and
, have starred in an exhibit called ‘Art in the Custody of the Museum.’”
The fact that so much art has been seized as evidence in this scandal demonstrates that either art was being given as bribes or the recipients were using cash from bribes to purchase art. Either way, the Petrobras scandal demonstrates how illicit capital flows are entangled with the art market. The fact that these seizures have led to an art exhibition demonstrates that art institutions are capable of making the best of this situation and have also been involved in making such practices public.
An exposé of the Chinese art market
also published in The New York Times
introduces more complexity and more systemic risk into the art market as a whole. According to the authors, “the [Chinese art] market...has become a breeding ground for corruption, as business executives curry favor with officials by bribing them with art” (Barboza et al. 2013, n.p.). Such bribery schemes have involved public officials, such as Wen Chiang, an official in the city of Chongqing whose country house contained more than a hundred works of art when it was raided by the authorities in 2009. The authors describe how these bribery schemes can operate: “In some cases, an official will receive a work of art with instructions to put it up for auction; a businessman will use it as the currency for a bribe, purchasing the art at an inflated price and giving the official a tidy profit”. This is termed yahui
, which translates as “elegant bribery.” The Chinese example demonstrates not only how art works can be used as luxury currency but further how this currency can be laundered through the art auction market.