Yes, the arts and the marketplace work the same way. If government-sponsored roads and home mortgages had not permitted postwar suburbs, we would not say that the market had chosen styles of housing more effectively. Imagine if voting cost a small fortune. No one would call America more democratic. Just 15 years ago, before Reaganomics, the purist description of the market system was an eccentricity hardly worth refuting.
Capitalism hinges on laws to promote, restrain, and subsidize transactions.
I see no reason that artists should be any purer. The arts and the free market alike depend on change and diversity, just as any moral action depends on understanding the role of diverse opinion . In all that diversity, a relatively elite audience can be every bit as vital as a large one. A Baroque opera at the Brooklyn Academy of Music is hardly a loser for having a smaller house than a rock concert. Both can be valid art forms, and both sell out.