A Market Without a Market
Architectural Absence in the Global Art Economy
What is an Architectural Diagnosis?
Unlike deep dives that examine successful regenerative organisations, diagnoses analyse sectors where market architecture has not emerged. This is not a critique of participants—it is a structural analysis of why certain institutional configurations remain stable even when they appear suboptimal.
The global art market is often described as opaque, unregulated, or dysfunctional. But these descriptions frame as failure what is better understood as absence. The art market lacks the institutional infrastructure that characterises functional markets in other asset classes. It is not broken—it was never built.
This diagnosis argues that what appears as market pathology is better described as pre-institutional stability: a structural equilibrium in which opacity is not incidental but architecturally embedded. This matters because reform assumes something to reform; constitution builds what never existed.
“Opacity in the art market is structurally stable rather than culturally incidental. Participants act rationally within the constraints of the system they inhabit.”
Core thesis of this diagnosis
The Bifurcated Market
Understanding the art market requires recognising that it is not one market but two, operating under different structural logics.
The Institutional Tier
A small, enclosed market where major galleries, auction houses, museums, and established collectors operate with long-term relationships and shared conventions.
The Public-Facing Tier
A larger, public-facing market where occasional buyers, emerging artists, and retail galleries operate with minimal institutional infrastructure.
Key insight: The institutional tier has developed informal coordination mechanisms that work for its participants. But these mechanisms do not extend to the public-facing market, where most participants operate. The “art market problem” is primarily a public-market problem.
Structural Absences
Functional markets have infrastructure that we take for granted. The public-facing art market operates without most of it. These are not failures but absences—the architecture was never built.
1. No Price Discovery Mechanism
AbsentIn stock markets, prices emerge from visible order books. In the art market, prices emerge from private negotiations, with significant variation by venue, timing, and buyer information. Without a price discovery mechanism, fair value is structurally unknowable.
Structural consequence: Price inconsistency; same work can transact at widely different prices
2. Fragmented Verification
FragmentedAuthentication relies on individual expert opinion, with no standardised protocol. Experts can disagree, and provenance can be incomplete. This is a coordination problem, not a competence problem—there is no institutional structure for verification.
Structural consequence: Attribution uncertainty; significant portion of works have provenance gaps
3. Minimal Regulatory Framework
MinimalArt transactions operate largely outside securities and consumer protection frameworks. This reflects historical development—art markets predate modern financial regulation—and jurisdictional complexity, as art crosses borders constantly.
Structural consequence: Limited legal recourse; buyer protection depends on contract negotiation
4. Information Asymmetry
StructuralSellers typically possess more information than buyers about provenance, condition, and comparable sales. This is not deception but structural—without disclosure requirements or public records, information naturally accumulates with repeat participants.
Structural consequence: Experienced participants have systematic advantages over occasional buyers
5. Limited Exit Liquidity
ConstrainedThere is no secondary market infrastructure for most works. Resale depends on finding a willing buyer through the same channels. For the vast majority of art purchases, the work is effectively illiquid.
Structural consequence: Art is better understood as consumption than investment for most buyers
6. No Stakeholder Coordination
AbsentArtists have no structural representation in market governance. Most living artists receive nothing from secondary sales. Collectors, museums, and scholars operate without formal coordination mechanisms.
Structural consequence: No mechanism exists to align diverse stakeholder interests
A Note on Framing
Importantly, none of this requires malign intent. Participants in the art market act rationally within the constraints of the system they inhabit. Galleries maintain relationships that benefit their artists. Auction houses provide liquidity services. Collectors pursue works they value.
The diagnosis is structural, not moral. The absence of market architecture creates an equilibrium where opacity is rational for each participant, even if the aggregate outcome is suboptimal for the public-facing tier as a whole.
RCA Framework Analysis
Applying IRSA’s Regenerative Capital Architecture framework reveals why institutional architecture has not emerged in the public-facing art market.
Delta (Δ) — Decoupling
AbsentIn regenerative systems, Delta decouples value from extraction cycles. In the public-facing art market, value remains tightly coupled to relational access and information position.
Lambda (Λ) — Alignment
AbsentIn regenerative systems, Lambda aligns participant incentives with system health. The public-facing art market has no mechanism to coordinate diverse stakeholder interests.
Why Architecture Has Not Emerged
The absence of market architecture reflects structural conditions, not a collective failure to act.
Historical Path Dependence
Art dealing evolved from patronage and private collection, predating modern market infrastructure. The relational model persists because it preceded institutional alternatives.
Coordination Costs
Building market infrastructure requires coordination across diverse stakeholders with different interests. Without a central authority, this coordination is costly to achieve.
Jurisdictional Fragmentation
Art crosses borders constantly. No single regulator has authority; international coordination adds complexity to any institutional solution.
Cultural Resistance
Treating art “like stocks” faces aesthetic objection. This resistance is genuine, not merely instrumental, and shapes what institutional forms are considered legitimate.
Comparative Architecture
Comparing with functional capital markets reveals the scope of architectural absence.
| Infrastructure Element | Securities Markets | Public Art Market |
|---|---|---|
| Price Formation | Visible order book; trades at posted prices | Private negotiation; prices not systematically recorded |
| Verification | Central registry; standardised settlement | Expert opinion; no standardised protocol |
| Settlement Risk | Clearinghouses guarantee settlement | Counterparty risk with each transaction |
| Disclosure | Mandatory; material events reported | Voluntary; selective disclosure |
| Regulatory Oversight | Comprehensive (SEC, FCA, etc.) | Minimal; self-regulation |
Theoretical Contribution
“Some sectors are not in need of reform—they are in need of constitution. The public-facing art market has never had the institutional infrastructure that makes a market a market.”
This diagnosis contributes to regenerative systems theory by demonstrating:
- Architectural absence is distinct from architectural failure, requiring different analytical tools.
- Pre-institutional stability can persist indefinitely when coordination costs exceed individual incentives to change.
- Bifurcated markets may require bifurcated solutions: the institutional tier functions; the public tier needs constitution.
A Stress Test of This Diagnosis
NFTs: Formalising Value Without Institutions
NFTs attempted to solve the art market’s architectural absence through technical means—standardised representation, persistent provenance, transparent pricing, and frictionless exchange. They succeeded at the technical layer, yet the market collapsed.
This companion diagnosis examines what happens when you build the infrastructure but not the institutional authority. The result: formalisation without authority cannot constitute durable markets for symbolic goods.
Related Content
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