Wednesday, 2 August 2017

The Art Market’s Informal Economy

In an interesting text which paints some of the background to the 'ancient art' and antiquities trade, Prof. John Zarobell describes 'What Actually Happens in the Art Market’s Informal Economy' (Artsy editorial August 2nd 2017). The term is used to describe economic transactions that are unrecorded, literally off the books.
I use the term “informal economy” here to refer to any transaction that is unrecorded, untaxed, and unregulated but not explicitly illegal. This is also described as the “gray market” to distinguish these economic activities from the explicitly illegal “black market.” The number of synonyms alone testifies to the prevalence and diversity of this economic sphere, but the question that everyone wants to answer is: How big is it? [...]  estimates can mask the interpenetration of the formal and informal domains of the economy: it is impossible to entirely pull these two domains apart. But one can consider a number of characteristics of the informal economy when assessing the size and the nature of the global art market, which blends the black and gray markets with legitimate, if less regulated, art market. Given present offshore financial mechanisms employed by high-net-worth individuals who invest in art, it would be difficult for a seller of a work of art to determine whether the money transferred to cover the artwork was “clean,” because money launderers are known to employ the tactic of “layering” to hide the origins of assets and blend “dirty” money with legitimate investments. Artists, too, are the perfect example of an unregulated labor pool, performing work at home and thereby evading workplace regulations, consigning and sometimes selling it without a formal contract, and working on the margins of the formal economy.
The same would go for artefact hunters.
Spotted by Emiline Smith‏

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