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Red Flags: Four Essays on Art and Economics
by Joe Scanlan
designed by Francesca Grassi
published by Paraguay Press, Paris
18 colors, 40 pages, Swiss binding
28 x 20 cm

The Artist’s Neighborhood
By Thorstein Veblen and Joe Scanlan

You thought first footstep? Something new? I am very sorry. We are discovered.
— Saul Bellow, Henderson the Rain King

The artist’s neighborhood of the great international urban center is the perfect flower of ambition and greed, standardized on the globalization plan. Its name may be Mitte or East London or Williamsburg, it may be Culver City or Factory 798 or Moganshan Lu. The pattern is substantially the same, and is repeated several thousand times with a faithful perfection that suggests there is no stopping it, that it is worked out by uniform circumstances that are beyond our control, and that it wholly falls in with the spirit of things and adheres to the enduring aspirations of the art world. The artist’s neighborhood is one of the great cultural institutions; perhaps the greatest, in the sense that it has had and continues to have a greater part than any other in shaping public sentiment about art and giving character to what artist’s do.

The location of any one artist’s neighborhood has commonly been determined by collusion between “interested parties” with a view to speculation in real estate, and it continues hitherto to be managed as a real estate “proposition.” Its cultural affairs, its civic pride, and press coverage of its real estate values are so invariably of a speculative nature that all its property owners are intent on “boosting”—that is to say, lifting property values still farther above the actual valuesas measured by the uses for which the properties have been renovated. The speculative values of artist’s studios consistently exceed their use value by at least 100 per cent, and they exceed their actual values by at least 200 per cent; likewise, the property owners never cease their endeavors to raise rents still farther out of touch with reality. An artist’s neighborhood that does not answer to these specifications is “a dead one,” one that has failed to “make good,” and need not be accounted for, except as a warning to the unwary “hipster”. Real estate is the one interest that binds the neighborhood with a common bond; and it is highly significant (perhaps pathetic, perhaps admirable) that artists who have no real estate holdingsand who never hope to have anywill nonetheless do their best to inflate the speculative values by adding the unpaid clamor of their comings and goings to the paid clamor of the developers and publicists, increasing their own cost of living so that their landlord’s costs can be met.

Real estate is an enterprise in “futures” designed to get something for nothing from unwary tenants; and as far as the ready supply of such clients is concerned, experienced real estate brokers believe “there is one born every minute.” Consequently, landlords and developers throughout the surrounding area are pilgrims of hope looking forward to the time when the neighborhood’s advancing needs will enable them to realize the inflated values of their property, or looking more immediately to the chance that one or another of those who are born every minute" may be so ill advised as to take them at their word and actually pay the amount they say their real estate is worth. The purpose of loft buildings and storefronts, and of multi-family dwellings to a lesser degree, is to profit from them. This is the common bond of exploitation and gullibility that animates the creative destruction of any artist’s neighborhood. In this enterprise there is concerted action and a spirit of solidarity, as well as a thriving business of everyone continually maneuvering to get the better of everyone else. Consequently, eternal salesmanship is the price of inhabiting an artist’s neighborhood, whether one wants to be “salesman” or not.

Because of this common contribution to inflated real estate, artists are engaged in a vigilant rivalry, competitors in the concentration of their own demographic. The neighborhood is a wholesale production district, where art is bought and art supplies are sold, and there are always many more producers than are necessary to supply the marketplace, so that every artist is looking to increase his or her share in the trade at the expense of their colleagues and neighbors. There is always more or less active competition, often underhand. But this does not hinder collusion between the competitors, nor their ability to maintain a collective hold on their mythical contributions to art and culture.

From an early point in the life history of such a neighborhood, be it Montparnasse or Soho, collusion habitually becomes the rule, and there are no ethical codes of conduct or competitive courtesies to restrain a reputable artist’s actions. In effect the competition among artists is kept well in hand by a common understanding, whereby artists direct their collective efforts to getting what can be got out of their landlords and gallery representation. It is on this dog-eat-dog trade—and on the increased volume of it, past and present—that the up-to-the-minute vitality of the neighborhood rests. As one consequence, the socio-economic value of the presence of artists is commonly overstated, with a view to enhancing the district’s trendiness. It is standard business practice, then, that the artist’s neighborhood arranges itself under such regulations and usages as to encourage competitionnot between the landlords themselves, but between long-time residents and artists, between local cafes and Starbucks. Quite as a matter of course, too, the number of artists making art in any one neighborhood greatly exceeds what is necessary to meet demand; with the result that while the total profits from the rents in any artist’s neighborhood are inordinately large for the work done, the profits of any given artist are likely to be modest enough. The more successful ones among them do extremely well and receive large returns on their outlay. But the average returns per artist are quite modest, and the less successful ones are habitually working within speaking-distance of bankruptcy. Failures are numerous, but they are habitually replaced by newly minted MFA graduates who still have something to lose. The habitual overstatement of hipness also continually draws tourists into the neighborhood, for the boutique and restaurant trade also gets its quota of such persons who are born every minute, persons who, by osmosis, become supernumerary ambassadors of the neighborhood as well. Many fortunes are made in the artist’s neighborhood, very respectable fortunes indeed. But many smaller fortunes are lost.


Neither the causes not the effects of this state of things have been expounded on by the economists, nor has it found a place in the many formulations of theory that have to do with the art world; presumably because it is all, under the circumstances, altogether unavoidable and “natural.” Exposing the obvious is a tedious employment, and reciting commonplaces usually does not hold the interest of readers. Nonetheless, it seems necessary to go a little farther into the details and reasoning for the peculiar arrangement of the artist’s neighborhood. However obvious and natural it may be, it is, after all, serious enough to warrant the attention of anyone interested in the current economic situation, or in finding a way out of it; which is just now (2009) quite perplexing, as the futile endeavors of the contemporary art market abundantly demonstrate.

However natural and legitimate the use of artists to gentrify derelict neighborhoods may be, the arrangement as it runs today imposes on artists an annual overhead charge that runs into ten or twelve figures, and all to the benefit of no one. This overhead charge of billions, due to duplication of work, personnel, equipment, and traffic in an artist’s neighborhood is, after all, simple and obvious waste. Which we might complain about except for the fact that it is the simple and obvious outcome of those democratic principles of ambition and greed on which the commonwealth is founded—and in which artists willingly participate. These principles are fundamentally right and good—so long as popular sentiment runs to that effect—and they are to be accepted gratefully, defects included. The whole arrangement is doubtless worth its cost; indeed it is of paramount interest for mayor’s offices the world over to cherish and maintain it.

In addition to this understanding of the artist’s neighborhood and its effect on the economy of art production, it should be noted that the landlords and shopkeepers in a given artist’s neighborhood have a virtual monopoly on the cost of living there. This monopoly is neither complete nor indisputable; nor does it cover all commerce equally or exclude competition from other neighborhoods. Nonetheless, the broad statement is quite sound: that within the domain of the artist’s neighborhood, the property owners and shopkeepers have a virtual monopoly on the business in which its residents are engaged. By crowding into the same narrowly prescribed streets and performing, on a daily basis, the look and feel of an artist’s neighborhood, artists ensure this virtual monopoly stays in place.

Under such a monopoly and quite as a matter of course, the cost of everything adjusts itself to what the traffic will bear. It has no other relation to the price or the use value of the real estate in question, be it a studio apartment or 5,000-square-foot loft. Instead, “what the traffic will bear” is something to be determined by experience and continually revised, with the effect of keeping the cost of living as unremittingly high as possible. Indeed, there is reason to believe that landlords are habitually driven by cupidity to push rents over the maximum; that is to say, beyond the prices that would cover their mortgage payments, their maintenance costs and property taxes. And since there are still too many derelict spaces, they all feel that they never make enough money no matter how much they gouge their tenants. And, should occupancy slack off due to their exorbitant prices, their response is to raise rents rather than lower them. What the traffic will bear is basically whatever artists will put up with, without breaking away and finding their studios elsewhere, in some other neighborhood, through itinerant wandering, by word of mouth, through illegal live/work arrangements, and the like. The two most dangerous outside appeals are adjacent, less-gentrified neighborhoods and inexpensive, far-away places; of these the cheap draw of Berlin, Beijing and Mexico City are more menacing and more dreaded. Indeed they are quite cordially detested by local landlords. The adjacent artist’s neighborhoods are not really a grave menace to their exorbitant rents, since they are all in the same position, and none of them fails to charge all comers the highest rents possible.

There is another limiting condition also to be considered in determining what people will pay to live in a trendy artist’s neighborhood, though it is less, or at least less visibly, operative. It is the point at which high rents cause artists to move elsewhere; that is to say, the point at which the livelihood of artists will be pinched so severely that they decide to give up and move out. This breaking point is rarely reached in ordinary commerce—groceries, bars, hardware—probably because there are enough grocers, bars and hardware stores nearby. In the business of studio spaces, however, and subletting by persons other than landlords, the breaking point is often reached and passed. Here the local monopoly is fairly complete and rigorous, which feeds the persistent impulse to overreach.

And then, too, the bars and restaurants deal in trendiness and trendiness is transient, at the same time that the fortunes of artists are subject to the vicissitudes of the art market. This competition drives both shopkeepers and artists to base their economic outlooks on the lucky chance of what might happen, not on what is likely to happen, barring a feature spread in Time Out. And the bar and restaurant owners are under the necessity— “inner necessity,” as the Hegelians would say—of getting all they can and securing themselves against all risk by stipulating whatever it takes to guarantee their profits, no matter whom it may concern. It follows, under the common sense of business as usual, self-help and greed, that those eager to do business on a good margin will continue to crowd into the artist’s neighborhood until the number of concerns among whom all profits are to be divided is so large as to leave each a barely “reasonable” net gain. So that while the underlying artist population continues to pay inordinately high costs, the bar and restaurant owners earn no more than the minimum necessary to encourage them to stay in business.

All artist’s neighborhoods, always and everywhere, run on very much the same plan of inordinately high prices and, consequently, the same extravagant multiplication of artists, bars, restaurants, condominiums, publicity, equipment, and credit. It is the same the world over. And to the extent that artists and art production can be seen as just another part of the consumer economy, making art is an integral part of any artist’s neighborhood, where something like three-fourths to nine-tenths is idle waste to be subtracted from “normal” commercial activity. And so long as the atmosphere of working artists is perceived as benefiting the local economy, then artists are welcome; when developers, blogs and other publicity agencies speak of the meritorious presence of artists, it is this sort of friction with business as usual that they are talking about. But as soon as that atmosphere can be provided by some more profitable equivalent, no matter how ersatz—an Urban Outfitters store, a cafť with exposed brick, some “funky” bistros—then the presence of artists becomes a hindrance.

The retail trade—in other words, the diluted and homogenized version of the artist’s neighborhoodhas been the breeding ground of American culture and the nerve center of public sentiment throughout the twentieth century, ever more securely and unequivocally as the century came to its close. In American parlance The Public," so far as it can be defined, has meant rank and file consumers and the people in trade who earn their income from them. The road to success has never run through the artist’s neighborhood, but rather its adulterated equivalent in Hollywood or on Madison Avenue, and the habits of thought engendered by the preoccupations of artists have never shaped popular sentiment and popular morals, nor have they dominated public policy in terms of what was to be done and what was to be left undone, locally and globally, in politics, government, society, religion, and education.

It is an unhappy circumstance that all this plain speaking about the artist’s neighborhood, its animating spirit and it’s traffic, its standards of merit and it’s transformation, unavoidably has an air of finding fault. This appearance is unavoidable, since no objective view of the facts can be content with anything short of plain speech. Plain speech has an air of disparagement because it is normally avoided at all costs, especially when it comes to talking about the role artists play in the rejuvenation and demise of their own neighborhoods and, in the course of this discussion, touching precisely on these substantial topics, the motives, aims, principles, ways and means and achievements of artists in relation to their ambitions and their fates. But for all that, these artists and their friends, in fact, are no less substantial and meritorious. Indeed one can scarcely appreciate the full measure of their stature, substance, and achievementsand more particularly the moral costs of their great work in developing the neighborhood and taking over its resources in the first place—without putting it all in plain, salesman-like terms, instead of the romantic parables that usually couch the make-believe of art.


Toward the close of the last decade, and increasingly during this one, the artist’s initiative as change-maker has been supplanted by the great chain brands that move into the artist’s neighborhood, with artists having fallen into the position of poster children for the distribution of their erstatz, cutting edge goods. Whether androgynous, gothic, funky, or trucker-capped, the communications and styles that were the domain of artists and musicians are more and more extensively attributed to Stella Artois and Urban Outfitters. Wittingly or not, artists increasingly represent “packaged goods” bearing the brand of a status maker, their primary connection with the brands being a kind of consumption “by association.” Whether an artist drinks Stella Artois or wears Urban Outfitters makes no difference, since their branding (and many others) gets reinforced every time an artist walks down the street. Content, and images, are made for the artists, which they can take or leave. But leaving, in this context, will commonly mean leaving the neighborhood. Should they choose to stay, the artists work by affiliation with and under surveillance of their peers, who are similarly under the influence of the creative directors in the great advertising agencies. Artists duly behave under the brand of “rebel” or “cynic,” or some such apocryphal token of merit.

All this reduction of the artist’s neighborhood to simpler terms has by no means lowered the overhead charges of the chain brands and rents as they bear upon the underlying artist population; rather the reverse. Nor has it hitherto lessened the duplication of hipsters, realtors, publicity and personnel that goes into promoting the neighborhood; rather the reverse. Nor has it abated the ancient spirit of self help and greed that has always animated the retail trade and the artist’s neighborhood; again, rather the reverse, inasmuch as their principals in the jungle of Big Business cut into the initiative of the artists with luxury brands, advertising and real estate agency contracts, which irritates the artists and provokes them to retaliate where they see an opening, that is, through their constant and open expression of contempt for the situation, or worse, through theft and vandalism. Even when the burdens that can be brought to bear on artists are negligible, there was never much generosity to be had there in the first place, so their contempt is just the same.

The best days of the artist and the artist’s neighborhood are past. The artist is dancing under the hand of Big Business and so is ceasing to be able to perform the look of independence, let alone take control of his own destiny and help to rule his corner of the world. Circumstances are prescribed for him and have been changing in such a way as to leave him no longer fit to do business on his own, even in collusion with his fellow artists. The retail trade and artistic production are each an enterprise in reproduction, of course, and reproduction is a matter of selecting from a low context and re-positioning in a high one; all of which is simple and obvious to any retailer, and holds true all around the neighborhood from artist to vintage store and back again. During the period when the artist’s neighborhood flourished and grew into the texture of a vibrant economy, the characteristics which made that possible was a matter of personality and skill that gave the artist an advantage in meeting his clients person to person. It was largely a matter of ingenuity, patience, and hubris; those qualities, in short, which have esteemed the rustic artist and cast an air of glamorous adventure over bohemian life. In this sense it is worth recalling that the persons engaged in the protean commerce of an artist’s neighborhood have in the main stepped forward from the artists themselves, predominantly from the more established sections of the neighborhood where the traditional animus of the struggling artist is older and less troubled.

The artist’s neighborhood, of course, still has its uses, and its use so far as it effects the daily life of artists is much the same as ever; but for the chain stores and for those remote landlords and classes who draw their profits from its tourists and residents, the neighborhood is no longer what it once was. It has been falling into the position of a way station in the global economy, instead of a local habitation where an artist of principle and ambition might reasonably hope to come in for a reliableway of life”—that is, a sustainable free livelihood—and bear his or her share in the control of local affairs without having to answer to any “higher ups” in the hierarchy of business. Barring accidents, Bolshevism—or acts of God or the United States Congress—such would appear to be the drift of things in the calculable future; that is to say, in the absence of some cataclysmic disturbance.

This does not mean that the artist’s neighborhood is on the decline in terms of its popularity, but only that the once pioneering artist has been sacrificed on the altar of commerce, and that the retail trade is being rebranded on behalf of the massive vested interests that move obscurely in the background. These vested interests now have first dibs on the “income stream” that flows from the artists through the artist’s neighborhood. Nor does it imply that that spirit of self-help and collective greed that made and animated the artist’s neighborhood at its best has faded away; rather, it has only moved upward and onward to higher duties and wider horizons. It is only that the same stock of men with the same traditions and ideals are doing Big Business on the same general plan on which the artist’s neighborhood was built. And these men, who know the artist’s neighborhood “from the ground up,” now find it ready to serve them, ready to be made profitable according to the methods and principles bred in their bones—or more accurately, bred into the ground up bones of artists. The mindset of business as usual is the same, whether the balance sheet runs in the thousands or the millions.

This is what is meant by democracy in the parlance of globalism, and it is this pattern of democracy through denial that inspires the WTO to make the world safe. In the meantime democracy, at least in America, has moved forward and upward to a higher business level, where larger vested interests dominate and bulkier profit margins are in peril. It has come to be recognized that the artist’s neighborhood of the twentieth century is now being left behind. It is now accepted wisdom to be acted upon that the salvation of twenty-first-century democracy is best worked out by making the world safe for Big Business and then letting Big Business take care of people in trade and the artists, together with much else. But it should not be overlooked that, in and through all this, the soul of the artist’s neighborhood marches on.