Shock and bore: is 'traditional' art making a comeback?

It wasn't your usual London street party. On this balmy 1990s afternoon, a group of young artists were part of a bizarre get-together called A Fete Worse than Death.

The most eye-catching contribution came from the ever-entrepreneurial Damien Hirst. Dressed in a clown's costume, for 50p he offered passers-by a sneak peek of his testicles, which he'd spot-painted that morning.

Two decades and an estimated 215m [$321m] later, over 300 of Hirst's rather more respectable spot paintings are being shown worldwide at all 11 of Larry Gagosian's galleries. In April, he will be given a retrospective at Tate Modern, London's flagship show during the Olympics. As the world turns its eyes on London, art's biggest showman is taking centre stage. The clown, it seems, is having the last laugh.

Or is he? Sticking two fingers up at the establishment has of course become Hirst's trademark. Nearly 25 years after the enterprising Goldsmiths student staged a headline-grabbing show in a disused warehouse, and went on to exhibit a variety of pickled animals in various states of putrefaction, to say he still divides opinion would be an understatement. "Detestable and f------ dreadful" is how the Evening Standard critic Brian Sewell described one recent show. "Simple-minded and sensationalist" is Australian critic Robert Hughes's verdict on an entire career.

Last month David Hockney entered the fray. According to the BBC's Andrew Marr, when asked if a poster in his gallery reading, "All the works here were made by the artist himself, personally", was a sly dig at Hirst, Hockney nodded. Hockney has since denied attacking Hirst personally. Either way, art's enfant terrible is more than used to swipes at his use of 160 "assistants" to execute his artistic ideas. As he himself said: "I only made five spot paintings myself . . . And the spots I painted are shite." But Hockney went on to make a more telling point. "It's a little insulting to craftsmen, skilful craftsmen," he told Marr. "I used to point out . . . you can teach the craft, it's the poetry you can't teach. Now they try to teach the poetry and not the craft."

Hockney's views are echoed by the artist George Shaw. "I became incredibly frustrated at art school . . . that you needed a philosophical language to understand contemporary art, rather than a pictorial one," he says. Shaw, 45, a painter in an old-school realist tradition, won acclaim last year for his images of the Coventry housing estate he grew up on. For him, art is about works that "an art historian and his mother could both enjoy . . . But that wasn't what [the tutors] were looking for."

Many feel Shaw was scandalously overlooked for last year's Turner Prize, losing out to installation artist Martin Boyce. But was it down to the Hirst effect? Certainly, there was already a well-established shift away from orthodox art education when Hirst arrived at Goldsmiths in the late 1980s. In the 1960s - under the influence of minimalism and conceptualism - art schools nationwide had decided intellectual pursuits were as important as technical ones. Painting was dead, the US minimalist Donald Judd declared, and curating, theorising and art history soon became as important as draughtsmanship.

The painter Gabriella Boyd can't see what the fuss is about. "Drawing's still taught and it's still popular," she says.

In hard times, we might even expect to see a return to old-school disciplines on cost-grounds. Paints and pencils are a darn sight cheaper than tanks of formaldehyde. There's already talk of a new austerity aesthetic, one wholly at odds with Hirst's $100 million, diamond-encrusted skull, For the Love of God (2007).

Gregor Muir, director of the ICA, isn't sure. "Often in times of trouble, you see the rise of fantastists, surrealists and other artists looking to escape it all. In the film world, The Artist is a good example, a light-hearted movie perfectly timed to cheer us all up." Muir insists Hirst hasn't cloned a generation of artists. "Categorically not. Damien's a unique case. A brand unto himself, really."

Hirst's sales figures confirm this. At the now infamous 2008 Sotheby's sale, when Hirst auctioned off 223 works, his Golden Calf sold for 10.3m. Now the plentiful supply of spot paintings , one of which sold last year for 1.8m, ensures Hirst keeps himself within the price range of not-quite-so-rich buyers too.

In spite of global economic meltdown, Sotheby's sales in contemporary art shot up by 34 per cent in 2011 as investors increasingly turn to art to hedge against volatile markets. But how much of this rise is down to Hirst-style installations? "We tend not to take on too many big installation works nowadays," says James Sevier of Sotheby's. "The top lots in our recent sale were abstract paintings by Gerhard Richter, for instance. I wouldn't say Damien has brought about a seismic shift." The three canvases by the 80-year-old German painter sold for over 4m. Evidence that things are looking up for lovers of traditional painting?