By David Golumbia
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. The conference was set up to consider “digital experiments with revenue models, payment systems and currencies… and critically explore, map and probe the politics, inner-workings and governance of these alternative digital-economic forms”. 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 expected to fetch between $8 million and $12 million, in the end 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 role. 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). It is thus a genuine experiment. It benefits from its fatal flaw and so 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 rigorous 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 traction, 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 coin 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 they 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 current 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 actual 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 out.
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 waiting we are lending our money to the banks. 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 signifier 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 money. Money should flow, that is why it 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 inadvertently revealed a key weakness when he declared that 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 Peperkamp, 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 easy of gadgets such as laptops or iPads, which unlike art begin to lose their value at the moment of acquisition. 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 artefacts Peperkamp 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: