Glossary

Mimetic Theory

Mimetic theory explains human behavior and culture, and when understood contextually in economics, it deals with how things become desirable to individuals.

What Is Mimetic Theory?

Mimetic theory, developed by Rene Girard, explains human behavior and culture, and when understood contextually in economics, it deals with how things become desirable to individuals. Specifically, Girard states that mimetic desire operates as a subconscious imitation of someone else’s desire, in which we actively participate. For example, individuals are made to feel that Nike Air Jordans are worth the inconvenience queuing up for and the high costs because others feel the same way. 

When contextualized to the world of decentralized finance, the theory explains the very rapid swings in the price of an asset, like Bitcoin. There are multiple groups with their mimetic desires that are in play around Bitcoin. For example, some mainstream investors are slowly becoming convinced of the viability and profitability of Bitcoin. There are also serious early adopters who are happy to advise each other to “HODL” the coin even during dips.

Mimetic Theory Examples

An example of this process could be seen in Elon Musk’s commentary on Bitcoin. Musk tweeted first that he was in favor of the currency and later backtracked, saying that he was breaking up with it due to environmental concerns. The prices went down as soon as he made the comment. Though Musk had no direct power to affect Bitcoin prices, he essentially functioned as a mimetic model for those who wanted to achieve an entrepreneurial, high-technology lifestyle through methods that he recommended. Musk later received backlash for his tweets and was accused of manipulating the market and “ruining lives”.

Mimetic Theory Criticism

The fundamental problem with Girard’s Mimetic theory is that it overstates its claim where it attempts to explain every aspect of human nature and assumes that there are no plausible alternative explanations for the phenomena he highlights. For example, it assumes that all people make autonomous decisions based on how others assign value to certain objects. When we look at the case of Nike Air Jordans, it is perhaps true that some individuals value it highly because those around them also assign great value to it. But what about those who do not value it as high because they are not interested in collecting branded sneakers? In that case, the mimetic theory fails to consider that individual autonomy might supersede a collective culture that places value on the object.  

Author: Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.