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<nettime> In Art we Trust
d.garcia on Fri, 25 Apr 2014 22:42:57 +0200 (CEST)

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<nettime> In Art we Trust

In Art We Trust

The Kunst Reserve Bank was one of a number of projects presented at MoneyLab 
a conference held last month in Amsterdam that launched the latest research 
thread from the Institute of Network Cultures.  which is addressing "digital experiments 
with revenue models, payment systems and currencies..." But not everyone who 
presented was on (digital) message among those who took a defiantly tangible 
approach to the money question was Ron Peperkamp, artist and CEO and brain-lord 
behind the Kunst Reserve Bank.

As so often Warhol paved the way long ago for a knowingly cynical take on 
the special status attributed to art when he declared that "Making money is 
art, and working is art and good business is the best art." In the 1962 
Warhol took the art of making money, literally, with the Dollar Bill series 
of silk screes prints on canvas entitled 200 One Dollar Bills. Forty-seven 
years later, in November 2009, the same piece was expected to fetch between 
$8 million and $12 million, in the event it reached a record $43.8 million

Not many artists have been able to trump Warhol's position of 
uber-capitalist and cynical realist of contemporary art though many have 
tried. Just maybe Kunst Reserve Bank might be an unwitting contender for the 
crown. One of the real achievements of this art Bank is that it is not immediately 
obvious whether it is a genuinely radical experiment, a brilliantly 
conceived  Ponzi scheme or an interesting but conceptually flawed piece of 
conceptual art. Even if it is (as I suspect the last of the three) it is still a 
remarkable achievement in part because unlike most artistic experiments the 
artists have created the possibility of failure (bankruptcy) as the core of the project. 
It is thus a genuine experiment. It benefits from its fatal flaw and thus has the 
qualities of its defects.

To begin with the bank actually exists as a physical entity with the three 
basic components required for some of the economic first principles of 
primitive accumulation or hoarding of value. They have a teller, a safe, and 
a mint. With this mint they create the coins. It is a fairly basic but well 
thought through and rigerous process. Every month an artist, some well known 
others less Every month an artist, are selected to design 4 coins. and every 
coin is issued for one week only in exactly one hundred copies. The offer is 
only available for one week. The Art Reserve bank thus creates coins which 
have an artistic value and are issued in a limited amount.

As this is not legal tender (in other words its not really money) how does 
the purchaser trust the value of these coins ? Because, and this is what 
gives the project momentum, you can go back to the bank and you can exchange 
your coins at any point for the original cost with an annual rate of 10% a 
year non-compound interest. One would have thought that this would make the 
incentive to return the coins is very high after all the 10% rate of 
interest outstrips and actual retail bank. But Peperkamp and his associates 
reason the incentive to keep the coins is also very high because they may 
reason that as a piece of art its value may appreciate at an even faster 
rate. So far very few coins were returned. Though the coins are showing up 
on e-bay with an asking price of 150 euro. When the artists observed this they 
decided to integrate this into the project. So if you visit the site you 
will find their 'dealing room' where the coins are traded among the public. 
>From this process they estimate the daily fluctuating market value of the coins. 
Every morning, like the Libor exchange rate, they cut of the top and bottom bids 
to arrive at an estimate of the actuall trade value of the currency. This 
means that as good little capitalists the exchange rate of the art currency 
is set by the market.

So what security is there against a large number of holders of the currency 
arriving to demand their money back? The answer is that for every 100 euros 
that people pay for the coins 10 euros is put in the safe. This represents 
their reserve capital. 90% of the income goes into maintaining project (the 
costs of minting the coins and other elements of the infrastructure are 
quite high). So it’s a gamble that the "intrinsic value" of the coins will 
outweigh the impulse to make a quick profit and convert the value of the 
coins back into “real money”. If there were to be an actual 2088 style 
Northern Rock run on the bank they would go bankrupt. There would be no bail 

Real banks have only a capital reserve of 3% which makes the Kunst Reserve 
Bank triple A rated and ensures, Peperkamp jokingly declared, "it conforms 
to the Basel norms to at least 2040 ". In many ways this is one of the most 
interesting aspects of the project as a mirror of the fractional banking 
system as it currently exists. A reminder that the bank doesn't store our 
money in their safe. The final dimension of cunning that accompanies the 
project that it is not open ended, it is finite. After 5 years the bank will be wound 
up and the project concluded. At that point there will be 25,000 coins in circulation 
which according to Peperkamp is the critical mass that is suggestive of some kind 
of as yet unimaginable transition, the suggestion is that at this point the 
currency could start to circulate rather than just be hoarded and becoming 
the "universal equivalent" and signifyer of value we call money.

In some ways the questions that hang over Kunst Reserve Bank are also at 
work in the overall logic of the MoneyLab conference, the risks of looking 
at money as an isolated moment outside of the system of relationships that 
is the wider political economy. The "money form" is but a single moment in 
the creation and circulation of value as it moves from the money form to the 
commodity form to the labor form. The systemic role of money is the very 
opposite of the 'intrinsic' value that this project seeks to re-inject into 
currency.  Money should flow, that is why it is called 'liquidity. 
Unlike labour power, land or commodities money is the least lumpy and most 
mobile expression of value. The Kunst Reserve Bank emphasises the opposite 
impulse; the desire to hoard value. Peperkamp inadevertently revealed a key 
weakness when he declared in his presentation that the bank only 
selected "good artists to create the coins".

Sadly this loyalty to a traditional forms of connoisseurship, that 
mysterious process through which value is conferred transmuting base metal 
into artistic value, separates Peperkamp from Warhol's cynical realism in 
which economic or exchange value is seen as the true source of arts' 
potency. Unlike Peperkam, Warhol never spoke about quality. By seeking to 
maintain arts' status as a 'super commodity' whose mysterious value 
accumulates over time Peperkamp weakens the project as both experiment and 
as art.

In his presentation Peperkamp went on to claim a special status for art as 
exhibiting features that make it unlike other commodities. He deploys the easy 
comparison of gadgets such as laptops or ipads, which unlike art begin to lose their 
value at the moment of aquisition. The selection of gadgets in which swift 
obsolescence is a key part of the business model is misleading. We are 
surrounded by commodities whose exchange value may appreciate or depreciate 
over time, from cars to furniture. The long term value of the objects that 
surround us are no more or less predictable than any artwork.

This is not to dismiss this project. Its flaws are generative rather than 
fatal and make it more significant than many boring success stories. More 
than most, Peperkamp and the others who are behind the Kunst Bank have taken 
considerable material risks and have done so without public subsidy. Within 
its own terms it is both a rigorous and ethical piece of work leading us to 
ask important questions about just how the world of finance became so 
detached from the everyday world. It has the potential to expose systemic 
and malign contradictions in a fresh and original way. But in the end the 
central contradiction is serious. By emphasising the 'intrinsic artistic 
value' of the artifacts Perkamp renders the project complicit with the 
status quo. And intensifies the commodity fetishism that lies at the heart 
of the dilemmas we all face. Its apparent sophistication is to a degree 
limited to surface appearance. The project most closely resembles a limited 
edition fine art prints, that take the deceptive appearance but not the 
actuality of  money. In the end the coins are too locked into the desire to 
be seen as art to be able to function as the universal signifier of value 
which is money, and so these coins (whether valued and collected or not) are 
destined to remain just art.

An illustrated version of this text can be found at: 


d a v i d  g a r c i a

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