This summer, we drove through a rainy Denmark. We took the Strandvejen from Helsingör to Copenhagen and saw all the white, shiny, million-dollar houses along the coast towards Öresund. Here lives the Danish upper class, people with money and status, and we were struck by how willingly people displayed their wealth. Maybe it’s just as important as having money, I thought.

After Copenhagen, we continued south along the coast to The Ark – an art museum of glass and concrete, ugly, with a large parking lot in front, surrounded by sprawling vegetation that hides the water and Køge Bugt. The Ark is a brutal contrast to the orderly, bourgeois charm north of town, with the naturally beautiful Louisiana Museum in Humlebæk where the buildings are harmoniously embedded in nature. Not to mention the picturesque Skagen Museum, which we later also visited.

At the Skagen Museum, we saw romantic paintings of where Marie Krøyer and Anna Ancher wander along the beach on a summer evening. A painting that newspaper magnate Axel Springer bought in 1978 for just over 500 000 Swedish kronor, much to the anger of the museum’s curator. Springer, however, donated the painting to the museum after his death as a ‘thank you’ to all the Danes who helped Jews during the Nazi era.

The Skagen painters were active around the turn of the century. They painted an idyll with weather-beaten fishermen, beautiful garden parties and lying on sun-drenched beaches. These are paintings that have been appreciated by many during the last century, and which have become part of our cultural history.

But it is far from Skagen to The Ark. Directly to the left, inside The Ark’s entrance, we are greeted by Olafur Eliasson’s Din Blinde Passager (Your blind passages) – a strange tunnel made of plywood and wood. We go into the tunnel and are engulfed by fog – a white, milky smog that forces us to grope our way forward without being able to see further than our hands in front of our faces. According to Olafur Eliasson, it is a vision of Utopia: “For me, the utopia is tied to the present, to the moment between one second and the next.”

The tunnel is nearly one hundred metres long, and the fog remains, even after we make it out. Two of star gallery owner Larry Gagosian’s artists are also there; one, the German Anselm Reyle, shows a number of his ‘junk piles’, which are abandoned televisions, construction debris, oil drums, chains, and girders decorated with neon advertising. Anselm Reyle has also done paintings of guitars wrapped in aluminium foil.

The other man, Damien Hirst, is in the museum’s main hall, with a number of works belonging to the museum’s permanent exhibition. The most remarkable feature is perhaps a two-meter circular canvas full of dead flies. Arts writer Richard Polsky recounts in the book I Sold Andy Warhol (Too Soon) how a few years ago, he was at the opening of Damien Hirst’s exhibition at the Gagosian Gallery in London. There was an installation with a large glass cage in which was a severed cow’s head, dripping in blood and with thousands of live flies.

“In the middle the artist had rigged up a device that can best be described as an electric net functioning as a fly-killing machine” writes Polsky. When the flies died, they fell down onto a plate, which was then emptied when it got full. “The brilliance of the installation is that Hirst had created an artistic work, which in turn produced ’material’ for further artistic works.” But Richard Polsky wonders what happens when all the flies have died: “Does the work need new flies to maintain its originality and value?”

This was probably the result of this fly-killing machine we saw at The Ark. The value of the work was certainly many millions of dollars, and I could not help comparing with the window blind at home, which is also loaded with dead flies between the glass panes and the black board.

The true value of art seems always to have been the subject of dispute. Richard Polsky talks about Andy Warhol’s first (and famous) exhibition of 32 paintings of Campbell’s soup cans in 1962. It was at Irving Blum’s gallery in Los Angeles, and the price was $100 per image. The exhibition was so provocative that the gallery next door set up a pyramid of real soup cans in the shop window with the sign: “We have the real thing for 29 cents”. Irving Blum claimed in a documentary from 2006 that Warhol’s cans were worth $100 million.

As we sat in the car again after our visit to The Ark, we did our best to understand this contemporary art. It was not an aesthetic experience, not beautiful and edifying; quite the opposite. “The aesthetic experience is probably not so important,” said my companion Ninni, thoughtfully. “Now it’s just the ideas that are important.”

And Damien Hirst showed undeniable attention to detail. To realise his visions, he has a great shop with 20 employees, producing to his instructions. The artist’s craft is no longer critical. At his show in London, Hirst explained: “I like the idea of having a factory that makes my work, and which separates the work from the ideas, but I would not like to have a factory that produces the ideas.”

In the mid-1920s, the American car dealer Harry Hahn tried to sell a painting, La Belle Ferronniere, which he believed had been painted by Leonardo da Vinci. The painting was questioned, however, by the great art dealer Sir Joseph Duveen, which led to a decades-long legal battle, described in The American Leonardo by John Brewer. It was the heyday of American industrialisation, and the nouveau riche bourgeoisie was buying cultural artefacts from Europe like there was no tomorrow. Joseph Duveen’s mission was to sell art from war-torn Europe to an American upper class with a lot of money and big houses. The ideal was to combine the newly acquired wealth with high-standing cultural values. And the prosperity was manifested not only in the homes; dirty and run-down industrial cities soon competed in building concert halls, opera houses, museums and galleries.

Edith Wharton wrote in Decoration of Houses that anyone who purchases art must not only have the financial resources but also the knowledge and skills to select the right items. Being a member of the upper class was no longer merely a question of the size of the wealth, but was decided instead on the ability to follow proper etiquette, observed Thorstein Veblen in The Theory of the Leisure Class, in which he coined the term ‘conspicuous consumption’. Art was a way to refine raw capitalism to a higher plane.

Today, a hundred years later, we have perhaps come full-circle. Now art is no longer a means of cultural education. Gone are the social ambitions and instead it is anarchy and a sense of doom that have taken over. While the robber barons of the late 1800s wanted to use art for moral education, much of today’s art seems to be aimed at tearing down our cultural values.

And to prove that money (again) is all that counts, during the last art boom in the 1980s, people were amazed when the works of long-dead artists were sold for many millions.

Today, contemporary art has become the hottest part of the art market. One reason for this change is that the great classical works are no longer accessible. Over the past 25 years, a hundred new museums have been built throughout the world, and on average one can expect that these new museums will have bought around 2000 works. In addition, the prolonged economic upswing in the world meant that many people had much more money. The number of private collectors today is many times more than in the 1980s. To supply this growing market, contemporary art now has a crucial importance.

Don Thompson presents in his book, The $12 Million Stuffed Shark, a list of the world’s leading contemporary artists, and notes that rank and price are now closely related. The aesthetic evaluation of art has become less important, says Don Thompson. “Paintings are now described in relation to the artist’s enigma, who else collects these works, and what price the artist’s work has fetched at auctions.”

Damien Hirst had a flying start when, in the early 1990’s, he was commissioned to preserve a large shark in a glass tank. The client was Englishman Charles Saatchi, one of the most influential collectors of contemporary art. Saatchi paid £50,000 and got in a shark weighing two tons. Many questioned even then whether this was really art, and The Sun newspaper was ironic about the award: “50,000 For Fish Without Ships.”

But when the ‘sculpture’ fourteen years later, in January 2005, was offered for sale by Larry Gagosian in New York, the price had risen to $12 million, even though the shark was already in a state of putrefaction.

“Who buys a rotting shark? For 12 million dollars”, asked Don Thompson, stating that the buyer Steve Cohen – one of the financial market’s stars and owner of Capital Advisors – is one of many examples of extremely wealthy financiers “that drives up the market for contemporary art”. For Steve Cohen, with an annual income of $500 million a year, the purchase of the shark represented five days’ income.

The ever-increasing prices also have their risks. After Cohen’s purchase, Damien Hirst promised to replace the deteriorating shark with a new shark in a ten-times higher concentration of formaldehyde. But when Damien Hirst bought a new shark, he took the opportunity to purchase four more, which he put in the freezer. A few years later, a new shark came onto the market, this time at a gallery in Mexico City. It was bought by a museum in Seoul for a much lower price – $ 4 million. But, writes Don Thompson, “Steve Cohen made no public statement on account of the sudden increase in the shark family, or on account of the threat from the remaining sharks in Hirst’s freezer”.

Sunday Times critic A.A. Gill had a painting of Joseph Stalin on his desk, in order to “encourage hard work”. In February 2007, he asked Christie’s auction firm if it wanted to sell the painting. But the auction firm said that it did not do business in Hitler or Stalin. But if it were a Stalin by Hirst, or Warhol? Yes, it would of course gladly take it. A.A. Gill called because it was Damien Hirst who had painted Stalin’s nose red and then signed the painting. Later, the painting sold at Christie’s for £140 000.

When the art market was invaded by many very wealthy people who were willing to pay almost anything to get quick access to attractive work in competition with others, it also radically changed the conditions for a new artist to break through. Today, it is no longer necessary to be a talented painter or a good craftsman; it is vital to have new ideas and also the ability to generate publicity around these and your own person.

Media impact is crucial. And, to get there, frequent contact with a well-established gallery is crucial. The gallery has established media contacts, can provide artwork to the right customers and influential collectors, and it can also lead to some museums opening their eyes. A number of artists have been able to break through in this way, and have quickly been able to get rich and achieve an almost rock star status.

Anselm Reyle is such an example. He began as a poor musician in a punk band but, after a solo show in early 2006 at the prestigious Kunsthalle Zurich, he could see prices multiplied. A Reyle two years previously had cost $14 000, but after, one of his works at Christie’s went for $600 000 dollars. The month before that he was enlisted by the Gagosian Gallery in New York.

“Markets tend to put high confidence Gagosian’s selection”, said art adviser Mark Fletcher to Bloomberg. Before, there were strict boundaries between galleries and auction houses. A gallery represented artists, and sold the newly produced art, while auction houses sold second-hand art on the secondary market. Nowadays, the boundaries are blurring and increasingly revolve around the auction houses. Where an artist’s value can be regularly tested by the market.

Collectors, gallery owners and artists, like most others involved, today have a common interest in rising art prices. Especially those who bought at the end of the art boom of the last few years art boom now have an interest in prices continuing upwards – as they might otherwise be saddled with overvalued art.

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In September 2008 – the same day Lehman Brothers crashed – Damien Hirst staged a new spectacular coup. For the first time, he went directly to the auction house Sotheby’s (ignoring their intermediaries), and conducted an auction of hundreds of newly produced works. That he thus trampled over his gallery owners Larry Gagosian in New York and Jay Jopling in London (both of whom probably had large stockpiles of his works) was regarded by many as provocative. But the auction was a success and the sale’s turnover was more than $ 200 million. Possibly Hirst was lucky and managed the project just weeks before the financial crisis hit in earnest.

But it’s also possible that Damien Hirst, who is a skilled businessman (good for £130 million, according to Thompson), conducted a brazen coup in which he did not give his supporters a choice; collectors who had bought expensive were simply forced to go to the auction and buy more to keep prices high, which Larry Gagosian and Jay Joplin did. “Who was it that bought these things and wrote out all the cheques?”, wonders Richard Polsky in his book. We may never know the answer. After the auction, it was speculated that Hirst himself, through front men, had used his considerable fortune to support the auction. In addition, the collectors who had taken a large position in Hirst also did their best to keep prices artificially high.

At Bukowski’s in Stockholm they are now working hard for the autumn auctions. The ads proclaim that “Art’s value endures”, and one writes: “Investing in art has proven to be not only pleasing to the eye, but also wise long-term business.”

And when you read about the explosion in prices in the art market, both internationally and in Sweden, it’s tempting to conclude that art (as well as gold and other physical property), has a more lasting value than the shares on the shaky stock market, which also seems to have been taken over by robots.

The question is whether the recent extreme values will hold. For some artists, and for certain works of iconic status, prices will most likely continue to be high. But what of the vast majority of artworks? During the last economic crisis of the early 1990s, the art market also crashed. From July 1990 to July 1993 the index for the arts fell from 100 to 45, according to Don Thompson. Then it took until 2005 for the prices of impressionists, as well as modern and contemporary art, to get back to the level of 1990.

The financial crisis of 2008, however, made no significant impact on the art world. Auction houses had some poor seasons, but since then prices have continued to rise, albeit at a slower pace. One reason for this is, of course, is that the whole economy of the Western world was rescued with massive rescue packages and even more credit. But the consequence has been an even higher level of debt, and this has basically just moved the problems a bit into the future. Sooner or later, the huge mountains of debt must be dealt with, and this inevitably leads to lower consumption, which certainly will be felt also in the art market.

But the art world has its own rescue policies. It is, again, not unusual for gallery owners and collectors to actively participate in the auctions to hold up the prices of their own artists. Richard Polsky talks about the New York collector Jose Mugrabi. He started collecting Andy Warhol in the late 1980s and, in 2007, he owned 800 works by Warhol – more than any other collector, and as much as the entire collection at the Andy Warhol Museum in Pittsburgh.

When Richard Polsky took part in the sale of a Warhol painting at Christie’s in London, he saw himself how one of the sons of Jose Mugrabi, Alberto Mugrabi, bid the painting up to a certain level, simply because it could not be sold cheaper. “Nobody liked Warhol at 300,000 dollars. But they love him at 3 million dollars”, Alberto Mugrabi explained, according to Richard Polsky, who also quotes what Mugrabi said after participating in a bidding war: “I only support my own collection. And if I do not win in the bidding, I still keep the market healthy. And everyone likes a healthy market.”

With a collection of 800 works, the Mugrabi family has a crucial influence on the price of Andy Warhol. Were they to become insolvent and be forced to release a large amount of Warhol paintings on the market, it is very likely that the price would crash. And if Warhol crashes it would certainly send shock waves out to the rest of the art market. With the shaky stock market situation and the threat of new market downturns, we can only hope that the large collectors’ finances are in order. Otherwise, expect a very shaky art market going forward.