Monday, January 14, 2013

I've joked twice already that at some point an earnest art critic was going to attack the economic elite for not upholding the standards of the Medici.
Take, for example, fifteenth-century Florence, where the Medici banking family held sway. At that time, bankers worked in long-term partnerships with one another, and painters had workshops that were passed down from master to apprentice. Ongoing relationships with men of standing were very valuable. The exchange between, say, Lorenzo the Magnificent and Botticelli took the form of an enduring patronage relationship with large-scale commissions for churches and palazzi. Much of the value exchanged was not monetary but religious or reputational. Both the banker and the painter were understood to be more pious and significant men as a result of their relationship.
It's still common to hear Cubism described as a parallel to the theory of relativity, but this is the first time I've heard it related to the rise of modern banking.
In the period when Cézanne, whose father was a banker, was at work on this painting, French financial life was wracked by a series of spectacular failures that bankrupted many hundreds of thousands of households. Finance had discovered that to leverage funds for large projects, like the building of the railroads or the Panama Canal, the Rothschilds and the Warburgs had insufficient capital. New schemes involved the investment, in many small increments, of giant numbers of households. Many of these initial schemes were ill-founded or corrupt, and soon bankers found that they were having trouble persuading investors to have confidence in the future of stock offerings. Nothing that the bankers presented could distract investors from their conviction that, if companies were going to go belly-up, they wanted to be sure that they would get paid back. They expected the value of a company to be based on its present value alone, the sum of its graspable parts, its inventory or its physical plant, things that could be resold. But this produced a very limited idea of the value of a company and did not generate the kind of liquidity to which the bankers aspired. 
In 1906, Philip Lehman, then the head of Lehman Brothers, joined together with Goldman Sachs, where Paul Sachs was then a partner, and the two banks instigated a small revolution. They made an initial public offering of the Sears Roebuck company that changed the way the value of a corporation was represented: based not on its total assets but on its price-to-earnings ratio. The relationship between a corporation’s stock price and its annual earnings was

one that allowed time, and changes over time, to be incorporated into the valuation. The level of this ratio is still part of what allows bankers to make predictions about future earnings and growth. Both large- and small-scale investors could see that this new method produced, as the painters had done, a convincing representation of the present and future together. Vast amounts of new liquidity were generated, and one of the things that the new financiers had money to buy was paintings.
From Maneker, who catches some of the silliness but misses what isn't.

Experience shapes the forms of our awareness. It doesn't change the world but it changes how we see it.  The Cubism/relativity argument has been laughed off for a long time; that both were the product of imaginations shaped by capitalist culture seems almost unremarkable.

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