Sarah Thornton - Swimming in shark infested waters

IT IS a Monday evening in mid-September, and Sarah Thornton is in London's New Bond Street waiting for the earth to move, or at least for the tectonic plates of the art market to shift seismically. The Damien Hirst sale at Sotheby's seems like the perfect place to meet Thornton, the Canadian-born author of a revelatory new book, Seven Days in the Art World, about the booming contemporary art market and its global network of overlapping subcultures.

In the end, the most talked about art auction of recent times doesn't quite live up to the hype, but Thornton is very good company. "Who's bidding on the phone with that Sotheby's employee who I happen to know speaks Russian?" she whispers as we sit among the hack pack observing proceedings. Lot 11, two gold-plated cabinets studded with zircons (fake diamonds) was auctioned earlier. Clearly, this person is buying a lot of sparkly, glitzy stuff, she observes, as the most blingtastic piece in the sale is hammered to the phone bidder, who also buys a stainless steel diamond cabinet and a butterfly painting, among several other works from the 223 on offer.

Roman Abramovich perhaps? "That was exactly my thought," responds Thornton. "But I know Molly Dent-Brocklehurst, who used to work for the Gagosian Galleries, always bids for him. It's definitely another Russian oligarch. I've a few ideas who it is – I'll find out his name eventually."

Thornton, an art historian, is now based in London, but lived in Glasgow for several years, gaining her PhD in Sociology at Strathclyde University. She specialises in ethnographic research – a genre of writing with its roots in anthropology which uses "participant observation", a method she first used when she immersed herself in the nocturnal world of London dance clubs for her acclaimed book, Club Cultures, taking a fervent interest in the minutiae of the milieu, ranging from close observation to attentive listening and casual interviewing.

Although usually described as fly-on-the-wall, a more accurate metaphor for Thornton's kind of exhaustive research would be cat on the prowl, for a good participant observer is more like a stray cat – curious and interactive but not threatening. "Occasionally intrusive, but easily ignored," she says, with a feline smile.

She turned ethnographer again to explore the art world, and has spent five years researching and writing her new book, travelling extensively and interviewing more than 250 people. She recorded these encounters in 45 blue notebooks, including an interview with Damien Hirst himself, of whose work she's a big fan. That interview never made the book – nothing to do, she says, with the fact that he took her up to the extremely untidy bedroom he shares with his companion Maia Norman and invited Thornton to sit on their unmade bed for the interview.

"I think it was part of the game he sometimes plays with interviewers, especially ones he doesn't know, but it was a good interview," she says. "Sadly, it just didn't fit into the book, for which I had so many revealing chats with hundreds of people I never even interviewed formally, from the photographer Nan Goldin and the American artist Richard Prince to Charles Saatchi and Larry Gagosian."

Surveying the scene at the Hirst sale, Thornton notes: "This is not a busy, busy auction" – despite the fact that more than 700 people are packed into the room. She identifies many bidders, such as billionaire collectors and people from Larry Gagosian's galleries and Jay Jopling's White Cube – Hirst's American and British dealers. The hands aren't flying up; it feels a bit down, although it looks very good on paper now because it made 111m, well above its high estimate, she concludes later.

Nonetheless, she notes, a handful of billionaires are still out busily shopping for trophies, such as Hirst's golden calf, at a time when the financial markets are going into freefall. "I keep thinking a bull for a bull market because so much of Hirst's work seems to be about the bullish art market. Perhaps he should have made a bear? But I'm just not getting chills down my spine. There isn't the electricity or the frenzied feeding quality of so many sales I've attended. I'd expected many more mini dramas. But it's always hard to read a sale on the night. I need to go away and digest it. Even so, I'd say the art market is definitely still booming."

It's this boom that forms the backdrop to Seven Days in the Art World, in which Thornton explores why the market has soared in the past decade – although she suggests that we might start with a different but related question: why has art become so popular? One reason, she posits, is the increasing televisualisation of culture.

Her book begins with a blow-by-blow account of a ritzy evening sale at Christie's, in New York, which included works by Jeff Koons, Andy Warhol, and Hirst. Sometimes, she says, an auction feels like a whodunit where thrills are provided by the large sums, and mystery created by the shy or shady bidders who avoid the eye of the press. Even if the people are initially lured into the auction room by a love of art, she explains, they find themselves participating in a spectacle where the dollar value of the work overwhelms its other meanings.

Yet since the art world is so diverse, opaque and downright secretive, Thornton cautions that it's difficult to generalise. Even the most business-like dealers will tell you that making money should be a by-product of art, not its main goal. Art needs motives that are more profound than profit, if it is to maintain its difference from – and place above – other cultural forms.

Each chapter of Seven Days is a day-in-the-life account, each based on 30 or 40 in-depth interviews and many hours behind the scenes, including a legendary seminar at the California Institute of the Arts, an incubator of sorts where students transform themselves into artists and learn the vocabulary of their trade.

In "The Fair", she describes going to Switzerland on the opening day of Art Basel, where the crowds and the congested display of works make it difficult to concentrate. "The Studio Visit" takes her to three workspaces and a foundry in Japan used by Takashi Murakami, many of whose artworks are allegedly going straight to auction at Sotheby's next February, by-passing the gallery and dealer system as Hirst did. With Murakami it's also hard to tell where the art ends and the commerce begins.

Murakami's enterprise outdoes Warhol's Factory, remarks Thornton. She spent a day behind the scenes at the Tate for the Turner Prize, investigating the nature of competition between artists, the function of accolades in their careers and the relationship between the media and the museum. In another chapter, "The Magazine", she explores different perspectives on the function and integrity of art criticism at Artforum International, the New York-based trade magazine of the art world, as well as meeting many influential critics.

Her final chapter is devoted to the Biennale, in Venice, amid the mayhem of the oldest international exhibition of its kind, a Goliath of a show – an event that is so strongly social that it's hard to keep one's eye on the art. "It's like a three-ring circus – or a 300-ring circus," she exclaims.

After spending five years on the book, she's still fascinated by the art world. "I have to say I grew a tad weary of club culture, but the art world is just so paradoxical," she says. "I'm still unravelling those paradoxes, especially after the Hirst sale. Now I want to see a major retrospective of his work – give us the classics!"

Thornton may yet get her wish. The Scottish National Gallery of Modern Art, in Edinburgh, is rumoured to be planning such a show next summer in the wake of the success of its Tracey Emin retrospective.

Seven Days in the Art World by Sarah Thornton is published by Granta, priced 15.99.