Mimetic Theory

Understanding Mimetic Theory

Mimetic theory, developed by Rene Girard, offers an explanation for human behavior and culture. In the field of economics, it focuses on how individuals develop desires for certain things. According to Girard, mimetic desire refers to the subconscious imitation of someone else’s desire, in which we actively participate. For example, individuals may believe that Nike Air Jordans are worth the inconvenience of waiting in line and the high costs because others share the same sentiment.

When applied to decentralized finance, mimetic theory can help us understand the rapid price fluctuations of assets like Bitcoin. Bitcoin is influenced by various groups with their own mimetic desires. Mainstream investors, for instance, are gradually recognizing the viability and profitability of Bitcoin. Additionally, early adopters who believe in the coin’s potential advise each other to “HODL” even during market downturns.

Examples of Mimetic Theory

An example that illustrates this process is Elon Musk’s commentary on Bitcoin. Musk initially expressed support for the currency but later changed his stance, citing environmental concerns. As soon as he made this comment, the prices of Bitcoin dropped. Although Musk didn’t have direct control over Bitcoin prices, he served as a role model for those who aspired to achieve an entrepreneurial, high-technology lifestyle through methods he recommended. Musk faced criticism for his tweets and was accused of market manipulation and negatively impacting people’s lives.

Criticism of Mimetic Theory

One fundamental criticism of Girard’s Mimetic theory is that it tends to overstate its claims by attempting to explain every aspect of human nature. It assumes that there are no other plausible explanations for the phenomena it highlights. For example, the theory assumes that all individuals make autonomous decisions based on how others assign value to certain objects. While it may be true that some individuals highly value Nike Air Jordans because those around them also do, the theory fails to consider those who do not place the same value on the sneakers because they are not interested in collecting branded footwear. In such cases, the mimetic theory overlooks the possibility that individual autonomy can override the collective culture’s valuation of an 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.