The stock market isn’t irrational, it’s mimetic.
What we now see clearly happening in a few special assets (termed “meme” stocks)—movement fueling more movement—is merely an amplification of what has always happened in the stock market: price action matters because it is, above all, a reflection of what other people want; and what other people want affects what other people want. And that is a product of mimesis, not memes.
The great social theorist René Girard (1923-2015) speaks prophetically to us from beyond the grave in the writings he left behind. No thinker in the twentieth century has more accurately diagnosed the pathologies of the modern world. His central discovery was mimetic desire: the idea that people desire things mimetically—that is, imitatively—not intrinsically. This is especially true when the thing is totally abstract, like a stock.
According to Girard, we don’t choose the objects of our desires independently. There is always a model of desire involved: a third person or group that mediates the desire for that object. When other people want something—especially if we admire those people in some way—it imbues that object or person with a special, almost mystical, value.
We can only recognize meme stocks ex-post, or after the fact: when we see them taking off. But Girard allows us to see what was going on back at the mystical beginning when there were hidden secrets exchanged in subreddits and whispered at bars: the genesis of desire.
Nobody wants alone. A single person desiring something strongly enough will always attract a set of eyes—and with them, a second and third pair.
Those looks may be subtle and embarrassed glances from a stranger in a room. In our digitally connected world, they need not be subtle glances at all. They could be long and engrossing stares from behind a computer screen.
The eyes reveal desire, but our eyes are now hidden. And that’s part of the reason mimesis sneaks up on us. People are always looking. We just don’t know, or where, they are.
Girard died before meme-stocks became popular, but his words seemed to speak directly to their power:
“The most mimetic institution of all is a capitalist institution: the stock market. You desire stock not because it is objectively desirable. You know nothing about it, but you desire stuff...because other people desire it. And if other people desire it, its value goes up and up.”
Mimetic desire is to psychology what gravity is to physics: a force so ubiquitous that we often forget it exists at all, and it’s hard to wrap our minds around just how active it is from minute to minute and moment to moment. (It’s similar to what the philosopher Timothy Morton calls a hyperobject, like “the climate”—it is so all-encompassing that we can’t grasp it or wrap our minds fully around it.)
Attempts to describe meme stocks on their own, without an understanding of mimetic desire, always get tangled in circular and incomplete logic.
Robin Wigglesworth wrote an article on meme stocks in the Financial Times and quoted a self-proclaimed “meme-lord” named Litquidity. The meme-maker said this: “Individually, a meme from one small account probably won’t do much, but if it’s a concerted effort and it goes viral, then there is a possibility to drive the share price.”
The concerted effort is one of generating mimetic desire. Yet the process by which that viral movement happens receives little to no attention because it has been obscured by the term “meme”—which describes, at best, only half of what is going on.
Memes are just shortcode for ideas. Sometimes, they act as shortcode for desires (“BREXIT”), too.
A meme on its own is not powerful. Millions of memes have been created; you haven’t heard of 99.9% of them. A few memes stick, though, and they spread through contagion. And that is the work of mimetic desire.
People want to own a meme stock not due to any intrinsic quality of the company or its stock but because other people want to own it—or will want to. Once you buy in, you count on more and more people to want to own a piece of the action in order for the stock price to rise. The entire process is governed by mimesis, which Girard called an “absolute monarch.”
“The analysts of the market have not yet discovered that,” Girard said. When they tell you psychology is getting into the market, they mean that the mimetic wave that moves stocks rise is getting out of bounds."
One may hope that fundamentals and breaking news supports the decision to buy, but anyone who has been in the market for more than a day knows how easily the desire to buy (or to sell) can become completely untethered from any objective criteria.
And there are specific things that make some stocks perfect targets for memes. In the case of Gamestop, the enormous percentage of outstanding shares that had been shorted—initially greater than 100% of the outstanding float—set it up for a vicious squeeze.
Yet mimesis was the dominant force both on the buy side and the sell side.
Memes are not inherently contagious. Desires are, though. That’s because, according to Girard, humans are fundamentally mimetic creatures. He is echoing what Aristotle noticed 2,500 years ago (“Imitation is natural to man from childhood, one of his advantages over the lower animals being this—that he is the most imitation creature in the world.” This is from The Poetics)
An undesirable meme is a dead meme; the right person interacting with it sets it alive. A mimetic process unfolded in the subreddit /WallStreetBets. The desire of a single individual spread to thousands, eventually millions, who proffered their desires to others—many of whom knew nothing about the stocks or the risks involved but suddenly wanted something that they had previously never even considered.
We’re enmeshed in a web of wanting, and that makes us particularly susceptible to bubbles and crashes as the waves of desire reverse direction.
The stock market is mimetic to the core. This represents huge opportunities for those who know how to play the game. But one thing is clear: the mask is off.
The question now is: will the market become one giant mimetic game?
Maybe it always has been.
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