The London Art Fair celebrates its 21st anniversary this week, bloodied but only slightly bowed. The fair, which runs from Wednesday until Sunday at the Business Design Centre in Islington, north London, was launched with great ambitions: to give the flourishing London art scene what it had long lacked – a contemporary art fair of global coverage and appeal. It also shrewdly judged where the big collectors of the future might come from by locating itself close to the City of London.

London now has a contemporary art fair with an international reputation, but it is the Frieze fair, held each October for the past six years in Regent’s Park. The London Art Fair has been forced to find a new role. After some difficult years, it has settled on an effective but less glamorous alternative: it is the fair for the British art lover attracted to challenging 20th-century art of every period who prefers to spend up to £10,000 ($15,200) on something that is easier to live with than the provocatively avant-garde.

It is unlikely that any foreign billionaire collector will jet into Islington next week but the less ambitious, more insular, formula seems to work. In a recession, there will always be a larger market for well-painted, accessible art, especially figurative paintings by accepted British masters of the 20th century, than for the speculative conceptual installations favoured by Frieze.

The return to the familiar has already started: a record number of 112 galleries is exhibiting at London Art Fair, with dozens more on the waiting list. The recent dismal auctions in London and New York signalled the end of the glory years for contemporary art and, with fewer visitors to galleries these days, this well-established fair offers dealers the opportunity to huddle together for reassurance, knowing that at least 22,000 potential buyers will view their stock.

More than 2,000 are expected on Wednesday evening alone when the fair traditionally plays host to City art lovers. This year the economic situation has widened the guest list: dealers who relied on City clients for the bulk of their business are already suffering badly. But, in a recession, committed art buyers can at least expect generous discounts, and fair director Jonathan Burton is keen to promote the bargains on offer.

The Video Booth will offer a choice of four videos in editions of 250 priced at just £20; Contemporary Art Projects of Shoreditch presents a range of work by young artists at £250; while the House of Fairy Tales, a not-for-profit company set up by Gavin Turk and Deborah Curtis to introduce children to art, offers boxed sets of 22 prints by artists such as Paula Rego, Peter Blake, Mat Collishaw, and Jeremy Deller for £6,500.

At the other extreme, big dealers such as Richard Green and Crane Kalman will bring paintings by LS Lowry priced nearer £1m, but even among the leading traders realism rules. “Prices should be lower,” says Jonathan Clark. “We will be more flexible. Dealers should get used to becoming slightly less stout on sales.” He will still show works by Reg Butler and Duncan Grant priced around £100,000 as well as collages by the long-neglected 1960s abstract artist Robyn Denny for £25,000 (and Denny paintings for much more) but he will also have Roger Hilton works on paper for £3,000.

The fair’s attraction is that it touches most bases. There may well be galleries showing mundane decorative items that upset more subtle palates but there is also Art Projects, subsidised space for 27 cutting-edge galleries, many from overseas, which would fit in comfortably at Frieze. Here HF Contemporary Art exhibits pieces by the Viennese “actionist” artist Hermann Nitsch, while Flowers offers Max Dean’s robotic collapsing chair, and I-MYU Projects has new work from Korea. There is also Photo50, the fair’s attempt to give London greater exposure to photography, with 50 selected works by new and established artists, priced between £500 and £8,000.

Despite its amorphous image, exhibitors are enthusiastic about the London art fair. Sophie Hall of Flowers says: “It’s a local fair for north London and gives an overview of what is on show in galleries.” In deference to the times Flowers will bring more prints this year, including a new edition by Bernard Cohen at £500 and upwards, and more photographs, including bromide prints of west coast America by Boyd & Evans for £2,500, although there will also be works by its heavyweight artists, such as Eduardo Paolozzi.

Toby Clarke, of FAS Contemporary, says: “The fair is getting a lot better. There is still room for improvement in its look but it is not achingly trendy and trying to be something it can’t be. Instead it appeals to a different art world and attracts lots of good people. We always meet a new client, and if you have £10,000 to spend on art you will find something good.”

This year one of his stable, Rob and Nick Carter, who include Elton John, the Beckhams and Simon Fuller among their clients, has produced the billboard artwork that promotes the fair on the street, a collision of the verbal and the visual with 42 neon signs spelling out colours, with “blue” in purple and “red” in green, priced at around £30,000.

Among the work on show at Purdy Hicks will be photographic images by Susan Derges, created in the dark room but without the use of a camera, priced between £600 and £5,000, and photographs of Dublin bay by Tom Hunter, a former photographer in residence at the National Gallery.

The London Art Fair has now established itself as the pragmatic British alternative to Frieze. It you want a painting by Terry Frost, Patrick Heron, William Scott or earlier figures of 20th-century British art, this is the place to come. If you are a supporter of emerging artists such as Melanie Comber, Jeffrey Blondes, Sumedh Rajendran and Leonardo Drew, their work is also available. If you are looking for a modestly priced print or photograph, the choice is as broad as your taste, and this year all at bargain prices.

The London Art Fair runs from January 14 to 18. www.londonartfair.co.uk

Stimulus Ambivalence

David Backus

My daughter has a t-shirt that reads: ”I’m confused. No wait, maybe I’m not.” Obama’s stimulus package has a similar effect on me: ”It’s a great idea. No wait, maybe it’s not.” Or maybe I’m just confused. Government spending could very well help get the economy going again. And its example might raise business and consumer confidence: in times of trouble, strong leadership can be a wonderful thing.

But there are also reasons to be skeptical. I can’t help it, I’m an economist, we’re trained to think this way. I’m sure everyone can think of reasons why a stimulus package could be less than a brilliant idea, but here’s my list.

Hard to do. It’s not easy to spend large amounts of extra money quickly. And harder still to do it in a way that creates good value for society and doesn’t bring out the worst in our politicians. I can hear Jon Stewart on the Daily Show: ”Where’s Ted Stevens when we need him?”

Hard to time. Right now, most forecasts call for continued shrinkage in the first half of 2009, modest growth in the second half, when the stimulus starts to come online, and faster growth in 2010, when spending hits high gear. In short, we get the most stimulus when we need it least. This is, of course, the classic argument against countercyclical fiscal policy: it’s hard to get the timing right.

Small multiplier. Let us say that for every dollar of extra government spending, GDP goes up m dollars. The ”multiplier” m is a measure of how big a bang we get out of every dollar of extra spending. The evidence is fuzzy, to be sure, but it suggests to me that the multiplier is around one, and some think it could be smaller. Even stimulus cheerleader Paul Krugman is only willing to claim 1.1. If the multiplier is around one, then the impact of the government spending (say) 700b over two years is barely enough to reverse the decline in GDP we’ll see from the middle of 2008 to the middle of 2009. That might lead you to propose a larger stimulus, but remember: it’s hard to spend that much money.

Long-term budget issues. I don’t spend much time in Washington, but I thought the mainstream view among government economists was that our retirement and health-care programs were likely to bust the budget over the next 2-3 decades. The numbers, in fact, swamp anything we’ll see in a short-term stimulus package. Recent directors of the Congressional Budget Office under both Republican and Democratic Congresses have made this point, and I hope I wasn’t the only one listening. The US is not Argentina -- we can do this without ruining our credit rating -- but it still seems a little incongruous to advocate massive increases in spending when the long-term problem is paying for spending already on the books.

It’s the financial system, stupid. Japan in the 1990s is a Rorshach test for macroeconomists, so not everyone sees this as I do. But in my view Japan demonstrated that the central issue in a financial crisis is the financial system. If you don’t fix it, no amount of fiscal stimulus will make much difference. That’s one of the reasons I’m optimistic about the US right now: unlike Japan, we’ve faced up to our problems, ugly as they are, and have acted decisively to correct them.

What would I do? I’d prefer to remain in my comfortable academic office at NYU and avoid policy altogether, but if forced to make a recommendation, I guess I’d say: Go ahead, spend a few hundred billion over the next two years. It could help, especially if the economy performs worse than we expect. But spend it on things that have clear social value. At the same time, try to make some progress on the long-term spending issues built into our current retirement and health-care systems. That won’t be nearly as popular as spending money now, but it’s an opportunity to show some real leadership. And make sure you keep your eyes on the financial system: if the banks don’t recover, none of us will. Good luck!

David Backus teaches at New York University’s Stern School of Business. This piece is part of the NYU Stern project, ”Repairing the US Financial Architecture: An Independent View.”

Home page: http://pages.stern.nyu.edu/~dbackus/