It’s because works were treated like commodities that the market has become illogical, says gallery owner Arne Glimcher.

Question: What was wrong with the American art market before the crash?

Arne Glimcher: The market crash is a cross-industrial, cross-cultural market crash; it's not an art market crash. It's just a world correction, is what we're seeing. What was wrong with it was really unscrupulous trading, and a new group of collectors coming onto the scene who actually were traders for the most part. And so it became like the Chinese, like in China, in Hong Kong; it became a commodity. And it was betting on the next artist. Who was the next Warhol? Who was the next Rauschenberg? Who was the next Jasper Johns? It doesn't work like that; art reveals itself slowly. But each -- it's not like there's a new model every year, like there used to be from Detroit. Art has to have a period of time to develop. But consider a young artist having an exhibition in a gallery in Chelsea, and it sells out, and there are 15 paintings. And now there are 40 people that want those paintings because they're betting on this artist. Can that artist then go back to the studio and say, this is an interesting group of pictures I made; it doesn't really satisfy me. I'm going to take it in a different direction? Or is the lure of $2 million for the next show too much for that artist to refuse? Now, I think great artists say, the hell with it, and I'm making what I want to make. But I think dealers were also really unscrupulous at that time, in that they would change their artists' prices weekly or monthly or by demand, so if you bought a painting for $20,000 and the artist got really hot, by the end of the year he was $250,000. That is not how it happens.

Or an artist -- to name names, like Richard Prince, who did extraordinary photographic work in the '80s, became very hot, and his nurse paintings became a collectible, very fashionable. And they went from about $250,000 to $8 million in a period of two years. Is there any logic? I'm not talking about the quality or the value of the work. I'm just talking about is there any logic? Can that be supported? We used to, and I still do, look at the career of an artist as an arc. What we do is manage artists, manage careers. And if you're bringing, in your fifties, $8 million a painting, and you have to keep going up, and you have a fertile life and you're 70, what? Are they $1 billion at 70? And who's there to buy them? How many people are there with $1 billion to buy them? And how many people are there with $8 million to buy them? So you have this whole insular thing happening, with groups of collectors deciding to support artists. I was at a dinner at the Guggenheim Museum, and a young trader, a hedge fund guy, was sitting next to me. And I was saying, what are you collecting? What are you interested in? He said, I’ve taken a position in these artists. I've taken a position in these artists? What does that mean? You're sitting down?

Art is not an investment. Art is something that is the grace by which we live. It is the flowering of the culture, and if you are lucky enough to be affluent enough to have these great things in your home, do it. And if you want to invest money in a commodity, go to the stock market.

Question: Which artists suffered most from the crash?

Arne Glimcher: I think it hurt the young artists more than anything else. And I don't want to really name artists. I mean, they're very obvious. I think that's cruel, and I'm not a cruel person. But there are certainly major figures whose works were millions of dollars that are right now in freefall and actually deserve to be. The overproduction of art has been just nauseating, and you know, like the government subsidizing farmers to plow under their crops to maintain the price of wheat, I think the government should subsidize a lot of artists to clean out their studios and not make art.

Recorded on October 1, 2009