Market Structure and Innovation: The Case of Modern Art

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INTRODUCTION

From the Renaissance through the mid-nineteenth century, nearly all artists faced markets for their work that were dominated by powerful institutions or individuals. The rise of a competitive market for advanced art in the late nineteenth century freed artists from the constraint of having to satisfy patrons. This gave artists an unprecedented freedom to innovate, and a succession of young conceptual artists responded not only by creating radical new forms of art, but also by engaging in novel forms of behavior. A change in market structure, from monopsony to competition, thus explains why the advanced art of the past century has been completely different from that of all earlier times.

I. THE REVOLUTION IN MODERN ART

[T]he only thing that counts for Modern Art is that a work shall be NEW ....

Harold Rosenberg (1)

In the introduction to his excellent history of modern art, George Heard Hamilton observed that:

   In the half-century between 1886, the date of the last
   Impressionist exhibition, and the beginning of the Second World
   War, a change took place in the theory and practice of art which
   was as radical and momentous as any that had occurred in human
   history. It was based on the belief that works of art need not
   imitate or represent natural objects and events. (2)

Later Hamilton remarked that the most radical element of this change was Cubism, which "embodied for the first time in Western art the principle that a work of art ... need not be restricted to the phenomenal appearance of the object for which it stands." (3) He noted that one painting, Picasso's Les Demoiselles d'Avignon of 1907, "has been recognized as a watershed between the old pictorial world and the new." (4)

In view of the importance of the change Hamilton described, we might assume that art scholars would have devoted extensive study to its timing: why did this radical transformation begin in the 1880s, and reach its peak in 1907? Surprisingly, however, few art scholars have even raised this question. One who has is the philosopher and critic Arthur Danto, who described this change as a series of "subtractions ... making it possible for something to be art which resembled as little as one pleased the great art of the past." (5) Yet Danto pleaded ignorance concerning the causes of the timing of this shift: "Why the history of erasures began to take place in ... the late nineteenth century I have no clear idea, any more than I have a clear idea of why, in the early fourteenth century, the Vasarian conquest of visual appearances should have begun." (6) Remarkably, Danto thus contended that an event that occurred barely 100 years ago was as incomprehensible as one that had occurred fully five centuries earlier. The claim is startling, for we have dramatically more information about the art world of Paris in 1900 than about that of Florence in 1400. And in fact Danto's conclusion is mistaken, for what we know about the development of modern art is sufficient to explain the timing of the transformation of modern art quite precisely.

The failure of Danto and other art scholars to explain why a revolution occurred in modern art at the turn of the twentieth century stems not from a lack of evidence, but rather from their inability to analyze existing evidence with two basic tools of social science, economic theory and systematic generalization. With elementary application of these tools, this Article will explain the twentieth-century revolution in modern art, and examine its consequences. The interest of the analysis goes beyond its contribution to art history, for this constitutes a case study of the relationship between market structure and the rate of innovation. Kirk Varnedoe recently observed that in art, "[e]arly modern society created--and we have inherited--that paradoxical thing: a tradition of radical innovation." (7) The early history of modern art offers a laboratory in which we can study how conspicuous radical innovation came to be established as a central value for an important intellectual activity. …