The contemporary art market continues to grow - but is that a good thing? Peter Aspden, the FT's arts writer, sat with some of the leading members of the art establishment to find out. Jussi Pylkkanen is the president of Christie's Europe; Maureen Paley is a private dealer who runs an influential gallery in the East End of London; Matthew Slotover is a co-founder of London's Frieze Art Fair.

PAWe've seen some good auction results again this week, defying those who have been waiting for things to go pear-shaped because of the credit crunch. I wonder what explanation you have for that, Jussi?

JP We've been looking at this situation, so to speak, every year since 1990; every season we have the same questions being asked. Obviously, it's slightly more significant now, because there is a particular economic pressure on all types of markets with the credit crunch. The art market generally doesn't necessarily follow the money markets or the investment market, and frequently when there are forms of downturn in certain economies the art market is a place where some investors seek to hide - hey, go into the art market! - with the liquid capital that they still have.

If you look at the results of this week, we have the third-highest sale total from an impressionist sale on record. Sotheby's did equally well; they had a very strong sale with good percentages sold. What is that about?. Is that about the oil price being at $123 a barrel? Is it about the globalisation of buyers? Or is it just about people feeling secure about the quality of art being offered? When the art market is strong, collectors who own very good things choose that moment to put major works on the market, so the sales have some high calibre things in them. Collectors who only have one moment in a lifetime in which to acquire major things choose that moment to spend the capital they have to acquire a work of art to add to their collection. They don't get a second chance. The last point I would like to make is that the Christie's evening sales saw 52 per cent of the buyers in New York coming from Europe, which is a very high percentage; only 32 per cent were from America. The American press jumped on this and said, this is a sign that the dollar is weak, the euro is strong, the pound is strong, and the European buyers are flooding into the American market to take advantage of the fact that everything is effectively that much less expensive.You think that's a perfectly valid argument, on the basis of those statistics. The following night, Sotheby's had their sale of $220m, against our $270m, so it's pretty equitable; 67 per cent of their buyers came from America. So, you can't jump to conclusions purely on the basis of one season.

It's a very difficult puzzle, but it seems to me that the market in general is firm, and that's indicated by the strength of the day sales and the works-on-paper sales where the objects are less expensive and there's much more volume.

That's a much clearer indicator, I think, of the strength of the market overall.

PAMaureen, that's the multimillion-pound world. How does it look from your perspective?

MPThere are a lot of similar things to say about the world that I inhabit. Since 1991, one sees a kind of a steady rise, a commitment, in terms of what is happening in young contemporary and emerging contemporary art. One of the things that is very interesting, is that we now have more British and European collectors, who are very, very committed to what is happening here, and very, very committed to the contemporary market.

JP And I think Matthew's responsible for it.

MP Yes. There are a number of things going on. A certain generation came of age, at a time when Matthew and Amanda [Sharp, Frieze co-founder] and the Frieze generation came of age and - dare we say it, I can't stand the term - the YBAs were coming of age.

When I first inhabited the East End, it was this lone outpost. Yes, there was the Whitechapel, of course, there were a number of galleries that were doing very good work; it was a place where artists might have studios. Now, it's a Mecca. Now everyone knows to go there; and also all over London, in the west and everywhere. It's just a vibrant city for art. And that leads to what goes on with the Frieze fair.

PAMatthew, the Frieze generation: when you started out, did you have an idea that this was going to happen? That you were tapping into that?

MS Well, yes, in a sense. We started Frieze magazine in 1991, and part of the reason for doing that was because we saw a lot of really interesting young work going on in London that wasn't being talked about. It wasn't just five or six people - within about three or four years, there were 20 or 25 really interesting artists coming out. It was exciting, coming out every week and seeing another interesting show. But there were a tiny number of people, maybe 50 people you would see at the same openings, every week, and everyone goes to the pub afterwards. That would be fun, but it wasn't about sales, it was about a cultural moment, and we felt that. And every year we felt, OK, this is it; it's never going to get bigger.

PAThe media coverage was phenomenal, wasn't it? But it made everybody feel confident; to launch into the contemporary market and to buy works of art by young English artists was credible. It wasn't something to be embarrassed about.

MP One is looking at a situation that we hope can be sustained. You want to think that artists can actually journey forth, and continue into middle age and beyond, and be viable beyond the point when they're just a bright young thing. That's the important thing: we've now got an infrastructure for contextualising work.

MS Markets go up and down, interest rates go up and down - this is a financial time, so it's understandable. But if you look at the trends over the past 50 years globally in arts, it's been a gradual growth, and the contemporary art world is maybe a hundred times bigger now than then.

PASo there's real depth now.

MP There is incredible knowledge and also recognition from abroad. It's not as if lone provincial outposts were deciding to show some work from abroad that they'd heard about vaguely. These are people who are clearly in the scene; people from here go to New York; they go to Tokyo; they go to LA, they are known, they have colleagues that work closely with them. This is something beyond a narrow network, it really is a kind of true commitment through interest.

MS And it's not just the private sector, it's the museums. Every city wants to have a contemporary art museum; they want to have a serious presence.

PAComing back to deal with the financial question: at the last boom, the last time the market was so healthy, there were a lot of people who were investing in art as investments; the Japanese for example. This is very dissimilar, is that right?

JP It's so polarised, it's so totally different. In the marketplace, there's a multiple of six or seven, in terms of buyers that would buy objects of more than $1m. Last year we sold 790 such objects at Christie's, which gives you some idea of the growth. You look at the trends Matthew was mentioning, about the globalisation of fairs, whether they're in Dubai or Miami, attracting collectors from all over in the contemporary sector. It's mirrored by every sector, whether it's Old Master paintings, jewellery or even classical furniture, so the strength of the market is upheld by the fact that there's so many different people involved in it.

The size of Christie's market has trebled since 2001; we've moved from $1.9bn to more than $6bn. When we were talking about the art market in 1990, it was a much smaller environment. So you're not really comparing like with like: collectors now come into the market younger; they've been involved in the market for a good deal longer; they come with much more knowledge, particularly in the postwar contemporary area, which is actually the biggest area of growth.

PAWhat is happening that people should suddenly want to focus on contemporary art, rather than go for reliable Old Masters? A taste for experimentation?

MS I think it's a number of things. As the great works in modern and impressionist art migrate to museums they become less available, so if someone wants the best, it's very difficult to get them. The thing I have noticed is that we have become much more focused on the new contemporary. In architecture, in design, in art, in the way we live and look and learn: people are much more forward looking, and they want to tap into something that speaks to them of their time.

MP Along those lines, too, we are now living in a city that didn't have, till fairly recently, Tate Modern ... I have tears in my eyes when I see people coming to look at difficult things, things that may be controversial. In terms of culture there is a general democratisation. Through education, people are learning about contemporary art.

PAIt is weird stuff, too. You don't get that annual Turner shock thing any more.

MS No, you don't get cab drivers any more saying "is this art?". They're saying, "I quite like this one, I didn't like that one". The "is this art?" question has disappeared now, which is quite interesting. You can also meet the artists if it's contemporary; you can go and hear them speak; you can get actively involved in buying art, or looking at it; you're part of the decision-making process about whether an artwork is good or not, important or not. Again, it's a modern living, active engagement, I suppose.

MP There is one danger that I think has to be pointed out, vis à vis the auctions and the auction houses. I think what's very important for people to recognise, when they're wanting to collect very contemporary and taking risks early on, is to let art sit in the galleries for just that bit longer. With a buoyant market, people can get overexcited by the possibility of their return. It's a question about whether you're collecting because you love art, because you're committed to art, or whether you're collecting, even secretly, because you might have an idea about investment. When you look at some of the great art of the world that has come to auction, it's often been in collections for many, many years, with very serious collectors, who have built carefully.

PAThat's almost impossible in the current climate, isn't it?

MP No, I think it's part of what needs to be understood, and I don't know if the auction houses will be entirely happy to hear it, but it's something that is part of our responsibility.

MS I think you could say that almost without exception the most valuable collections built are the ones where the person building it loves the art, and is not building it for investment purposes.

JP Art values are important, though, because people need to be clear about the relative merits of the works of art they're buying, and therefore they need to have a yardstick when they're planning to buy a work by any artist, that they're making sure that they're not overpaying. That's a very important check that continues to be the safety valve of the art market, and avoids it getting overheated; people must look at benchmarks and try to equate the price that they're being offered to something that has been offered before.

PAGiven the multiplicity of techniques, forms of expression and so on, isn't it more and more difficult to establish those benchmarks and those yardsticks? Isn't it quite hard for most people to tell the good contemporary art piece from a bad one?

MS It's also important to say that the most expensive art is not the best art. Some art is easier to buy and sell than others. You might have some fantastic video installation artist who has major shows all around the world in major museums but in terms of sale prices, they're not going to reach the same as a figurative painter. It doesn't mean they're less important artists.

PAI'd love to hear what your views are on the state of Chinese art now. In a country which is going to become an economic and political giant, we're looking at a culture, and saying, "OK, what can you produce, what can you tell us?".

MS Amanda and I did a visit to China a couple of years ago and talked to lots of people. It was super interesting because it's changing so quickly, culturally and physically. We were looking for dealers to show at Frieze but the gallery system works very differently: it's unusual for artists to have an exclusive relationship with a dealer in that country, which is how we choose the galleries in Frieze.

JP From a slightly different perspective, I know there's a phenomenally broad audience for Chinese art. On the Indian contemporary side it's different, because the collecting in that area tends to be polarised towards Indian collectors and Indian buyers. It doesn't have the breadth of interest, although the artists are good, some extremely good. It doesn't have the same breadth of interest as Chinese art.

MP I had some curators come and visit me from China with the British Council and they came to visit the gallery. They were the most well-informed people, the questions they asked, the amount of research they had done; they were absolutely spot on. They are doing a very quick read, a quick learn, coming up to speed very, very quickly.

PAI want to ask this final question to get you at each other's throats; but I'm sure I won't. I want to buy a piece of contemporary art for my sitting room. Why should I come to any of you, in particular?

MS Our fair is a fantastic way to see many things under one roof. Even if you don't buy anything there, as an educational experience it's very good. The other thing about Frieze, I suppose, as with a very good gallery like Maureen's and as with the auction houses, there's a pre-selection going on. We get triple the number of galleries applying than we can accommodate, so it's only the very best from each country.

PAMaureen?

MP Could I just up-end it a bit to say something about the sitting room? I think we have now moved away from the concept of art above the couch, as it were, which really may be anathema to a great deal of the art that is challenging and interesting and worth considering.

So although I would never turn anyone away who wants to live with the art that they are going to collect, it's important to see that the way that collectors are now considering their collections, and presenting their collections, has also started to change. People are building structures, allowing art to sit in certain places; they want the art to be housed in a way that allows the art to breathe, that allows the art to be seen, and they understand something about the installation demands. I'm not saying that this is for everyone, but it's exciting because people are rising to the occasion, they're seeing what the art demands, and they are actually wanting to meet that demand. In the past that would have been almost unheard of, except for a very few.

JP I would encourage anybody to visit the Frieze Art Fair. I would encourage anybody coming to London to feel that going to a primary market, and looking at what's going on in the galleries, is an essential and a very exciting part of a visit here. If you come to the auction houses, to Christie's or to Sotheby's, you will probably find that the art market convenes at the time of the sales. Christie's offers works of art in every category, which perhaps a particular dealer wouldn't. We serve a corner of the art market that is not the primary market - it is not the cutting-edge art fair but a place where you can learn a huge amount about a much broader part of the art market.

PAThank you very much.