I read that Damien Hirst’s accountant reckons that the artist is worth £100 million. Maybe the richest an artist has ever been? The working-class lad from Leeds turned taxidermist, restaurateur and master of his own three-ring circus has done good. Death, business, spectacle, branding, Hirst is the perfect artist for a time when, as the critic Robert Hughes would have it, “the only function left of contemporary art is that of investment capital”.

Boosted by an influx of Asian buyers keen to hoover up the classics of the modernist canon, the recent sales at Sotheby’s and Christie’s in London broke many records. And it is not only the safe bets of Warhol, Freud, De Kooning and Bacon that are getting big prices. An Anthony Caro sculpture sold for £1.3 million (his previous record was just £77,675). A Frank Auerbach went for £433,600, £400,000 above the estimate. Fine-art auctions turned over

£4.1 billion last year. Hughes thinks such figures do art a disservice. I’m sure that he is not alone in being shocked at the money sloshing around the contemporary-art market.

What makes individual works of art so valuable? Popular demand? Well, as far as I know the richest artist in the world is not Hirst, it is the American Thomas Kinkade, aka “painter of light”™. His company made $140 million (£80.5 million) in 2000 alone — money made from selling prints of Kinkade’s sickly scenes of cosy patriotic nostalgia, which hang in ten million American homes.

His imagery may be popular, but he does not make his money by selling his originals. If he did, they would not come within sniffing distance of the record price for a living artist. That is held by Jasper Johns at $40 million for Grey Numbers 1958. No, popularity does not necessarily correlate with value.

Is it rarity that makes art valuable? Well, mostly being hand-produced by one person means that art works are by nature rare. Scarcity does inflate prices — Johns makes only about two works a year — though curiously the top two earners at auction last year were notoriously prolific: Picasso, who is said to have made three works for every day of his life, and Warhol, who called his studio the Factory.

I think by far the most important factor in making art works valuable is what experts say and write about them. Respected figures in the art world hold the power to increase the value of a given artist’s work by bestowing art-historical importance and “specialness” upon them. Academics, curators, critics, powerful gallerists and collectors can give out extremely valuable brownie points. A work purchased by a leading public institution boosts an artist’s stock, which is why dealers will offer considerable discounts to museums.

A write-up in one of the heavyweight art mags such as Art Forum or Art Monthly spreads the consensus. One reason that I was so surprised at winning the Turner was that I had never featured in one of these publications. Maybe this is the art equivalent of climbing Everest without oxygen.

As fellow ramblers on the spiritual uplands, I’m sure that you will join me in disputing Hughes’s claim and agree with me that the function of art is not only measured in vulgar coin. In the 1980s the art dealer Nicola Jacobs used to run adverts for her Cork Street gallery in Tatler with the strapline: “A new painting says so much more about you than a new car”. Well, she’s kind of right but what it says depends on what painting you buy. Have you bought an Auerbach, the painting equivalent of a dove-grey 1957 Rolls-Royce Silver Cloud, or have you bought a Thomas Kinkade bus pass? I think art also has a useful signifying function on the slippery scale of class. For what defines class more clearly than taste?

To have an important investment in the social cachet of art we do not need Charles Saatchi’s riches. We don’t even need to have an original masterpiece on the wall at home. All we need to do is to visit an art museum to pocket our share. But even by just looking at art in a gallery we also strike a deal with the value-adders and power-brokers.

The sociologist Wesley Monroe Shrum says that one of the defining characteristics of high art is that it is mediated by critics. This intellectual apparatus around it helps consumers to identify art that is “special”, ie, more classy. People who choose to consume so-called low art usually do so without an expert as intermediary. Consumers allow themselves to be influenced by critics in return for the status bestowed on them by their choice of culture. Shrum calls this “the status bargain”.

So next time you are in a gallery and you get annoyed at the pretentious guff written on the explanation panels or begrudge the artist his millions, please remember: they are helping you to look posh.