Andre Orlean's mimetic economics & Macron's golden showers

French thinkers, as different as Gabriel Tarde and Rene Girard have stressed mimetic effects in Society and Politics. However, the Anglo-Saxon world associates such effects with 'mob psychology' and the theories of Gustav Le Bon. We have a mental picture of the excitable Frenchmen storming the Bastille and then cheering for the Guillotine, whereas the 'man on the Clapham omnibus' keeps a stiff upper lip and casts a cold eye over the financial pages of his newspaper. Veblen, it is true, introduced us to the notion of 'positional goods' and bandwagon effects- but the thing was vulgar ; noveau riche Chicago meat-packers would grow out of it. Indeed, if only the Americans could learn to play a gentlemanly game, like cricket, they wouldn't be so damn obstreperous. 

Keynes, it is true, was a bit of a bounder and spoke of 'animal spirits' in financial markets but au fond he was merely the perennial Old Lady of Threadneedle Street, rouged and lipsticked and got up in a garish frock- having to play the sultry gold-digger because it had run short of bullion. 

Still, purely as a matter of modelling dynamics, there's no reason we can't simulate mimetic effects and pass the thing off as Expected Utility theory under lagged Information dispersal. 

The French Economist, Andre Orlean, however, thinks a more fundamental change in our thinking is required.

In a recent interview  he states

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A.O.: According to mainstream theory, commercial stakeholders are already socialized—before arriving on the market for exchange, they already know exactly what they want. Contrary to this, we must recognize that stakeholders’ preferences are built during interactions with others. This is what I call the mimetic universe—economic stakeholders never know what is good for them; they seek to discover that by using models which they copy. Nobody is naturally inclined to want a mobile phone or access to the Internet!26 As the philosopher Rene Girard explains it, imitation takes two forms, according to whether the model is external to the subjects’ social world, or belongs to it. Don Quixote, who conforms to the precepts of Amadis of Gaulle, a fictional character, illustrates external mediation perfectly. Consequently, their preferences are exogenous and the Walrasian model is observed, except for the fact that the stakeholders’ objectives are no longer considered natural, but resulting from an external model.

It seems this 'external mediation'  is simply a representative agent theory. In the next period, these Quixotic agents have no money or have been locked up in a loony bill. Utility of a 'natural' sort has weeded out unviable mimetic models. Well, not quite. But the law of large numbers means that the wannabe Quixotes are cancelled out by all the Christs and Napoleons and me pretending to be a K-Pop idol and so forth such that for a big enough market there is little actual noise.

27A more interesting case is that of internal mediation, where models and subjects are in the same situation, namely that, a priori, neither know their preferences, and both determine them by observing each other.

Again, for a large enough market, this cancels out as noise. Anyway, Tarde's Law would suggest that the inferior will follow the superior- unless it is cooler to do the reverse. So we don't really have a chameleon on a mirror type situation here unless public signalling is dysfunctional. But that would mean the Central Bank and Treasury Secretary and so on are all for shit. But, in that case, both need to be fixed pronto.

Models also need a model of their own to copy. In this type of situation, the cumulative phenomena are in full effect because the goods’ desirability increases with demand. Think about trends, for example: the fact that an individual chooses an object has a snowball effect; it encourages another to want the same object.

There are markets which are chaotic because bandwagon effects are too big. High Fashion, Speculative Financial instruments- sure- there can be dramatic 'tulip' type booms and busts but for a large enough, diversified enough, economy it oughtn't to matter too much.

According to Walras, such cumulative phenomena do not occur; as soon as several people want the same object, prices increase and demand falls; the mechanism is self-regulating. In the world of internal mediation, the more others want an object, the more desirable it becomes.

I may want the life of a rap-star but I don't got the moolah for it. Effective Demand is what counts.

This is because a product’s attractiveness is not based on what it is, but on the fact that others want it.28 In this world, the scarcity of goods is by no means natural.

It is perfectly natural for everyone to want to be the richest man or the person married to the most attractive spouse and so forth.

Girard, for some crazy reason, decided, on the basis of his reading of Proust, that Society would need to periodically sacrifice a scapegoat so as to discharge all the hostility generated by 'mimetic rivalry'. That's also why he thought Christianity was such a special religion coz, apparently, Christians get together and crucify Christ every year at Easter and then chop up pieces of him and drain his blood which they consume at Mass for the rest of the year. Anyway, that's why I'm not talking to the Christians, not coz Santa didn't bring me any prezzies this year.

The idea of need-oriented production must be abandoned.

Cool! We won't need to make boring stuff like food anymore.

Mimetic competition keeps creating new desires. They permanently reinvent objects in a perpetual motion of scarcity creation.

Sure. If one animal sees another chewing on a nice piece of meat, it wants some too. If it is bigger, it may chase off the other animal.

The anthropologist Marshall Sahlins understood that very well: in Stone Age Economics, he shows that the societies in which scarcity prevails are by no means the primitive ones, but our own. Why is that? Because ancient societies have exactly the goods they need, and nobody would enjoy working pointlessly to produce additional goods–whereas this is what we do.

We produced better weapons and killed the primitive guys and took their women and land and also confiscated any nice shiny stuff they may have found- like nuggets of gold.

Land became scarce even before the invention of agriculture. Stronger bands chased off weaker groups of hunter gatherers. Women were probably always scarce which is why you have gender dimorphism and some guys got six packs and glossy hair and so I end up in the kitchen talking to Engineers at parties.

Producers keep creating new goods; because they enter our differentiation and distinction strategies, they try to monopolize our desires to their benefit. Perpetual scarcity is the first law of our political economy, with the known ecological consequences.

Scarcity is the first law of Biology. If it didn't exist, Evolution would have had no selection mechanism.

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Aren’t you reinventing the ideas of Thorstein Veblen? This American institutionalist economist from the beginning of the 20th century had already shown that individuals consume whatever gives them social status by copying the trends of the upper class.30 

A.O.: Indeed, Veblen is one of the thinkers who understood that consumption is all about competition, that products bought are like trophies acquired for the prestige they offer. He also saw that this led to endless, unquenchable desires.

Desire for women and land are pretty unquenchable for most people. A guy who has plenty of both also has an unquenchable desire not to get killed- so he has has to keep beefing up his security.

Nevertheless, in Veblen’s approach, although everyone follows the model of the upper class, no one knows how the upper class itself functions. In response, Veblen introduces the predatory culture hypothesis, which is specific to these classes and determines their behavior. The mimetic approach does not need the existence of this hierarchy a priori: it explains how distinction occurs in a world of equals. Paradoxically, the mimetic theory produces hierarchy.31

How is this a paradox? If people want stuff others have- indeed, if they want to be them- then evolution is gonna endow a socialized species with dominance and submission rituals and a sense of hierarchy coz otherwise intra-species conflict would be too great and you'd have an extinction event.

Mimetics is also about learning new stuff. This can create a knowledge based hierarchy.

In this approach, goods selected for their prestige can, a priori, be anything. But, in reality, it is money that has become essential. You even say that fascination for money is the market economies’ main driving force.32 

A.O.: The constitutive desire of market societies is the desire for money. What binds stakeholders of market economies first is not the goods’ utility; it is the general belief in money as the definition of value.

Why did Trump want to become President? The answer is he gets more value that way then just being a fat guy whose Finances might come crashing down once again.  Money can't buy you Happiness. You've got to use it buy stuff that makes you happy. Which rich guy has a wholly liquid portfolio? Only one who is planning to skip town before the shit hits the fan. Otherwise, most people follow rational portfolio choice theory and keep only a small proportion of their assets in liquid- i.e. money- form. That's why them guys got so many mansions they scarcely visit and uncut diamonds and Old Masters and so forth.

What is objective and binding for economic stakeholders in this world is the fact that, for each transaction, there is a transfer of money, which agents’ accounts serve to record. Money is the institution that creates value. 

So, a utopian Commune, or College, or Monastery could create no value.

33But in that case, where does the desire for money come from? It is the direct consequence of the separation of markets. The fundamental objective of economic stakeholders is to access the goods of others, and the only way to achieve this is by arousing their desire for what I have to offer myself. The economist who understood this well, was . . . Adam Smith! At the beginning of The Wealth of Nations, he writes: “Every prudent man in every period of society, after the first establishment of the division of labor, must naturally have endeavored to manage his affairs in such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.” Everything is there. The question is indeed to know what others desire, to determine the next general trend. And, as Smith wrote, finding the answer to this question is first of all a matter of the imagination. A priori, any goods can be suitable. I suggest calling the property of being desired by others “liquidity,” and the goods which satisfy this property “liquid goods.” Liquidity is the form power takes within commercial relationships, because it is through the possession of liquid goods that stakeholders gain access to the products of others. This power, unique to market economies, is a purchasing power.

Unique to market economies? Hardly. You could get a lot with dollars in the Soviet Union. Rubles- not so much.

Money is the absolute form that liquidity takes. It results from mimetic competitions, because these demonstrate a propensity to focus on one and the same object.34

In which case fiat money is impossible. We should all be trading cowrie shells or gold coins or whatever. Mimetic effects can't fully explain the origin of money. Only rationality involving a theory of mind- which is what defeats mimetic effects coz if I think you're stoopid my instinct to imitate you is repressed or goes in the other direction- can explain the origin of fiat currency.

How a feeling of collective belief can be permanently focused on an object like money remains to be explained.35 

A.O.: Remember that, for thousands of years, gold remained the reference, the fabled object par excellence that everyone chased after, because everyone believed in its power.

Cows were important. The word pecuniary derives from pecu- a cow.  It was only after an Economy reaches a certain stage of sophistication that gold gains salience because of its intrinsic properties- ductility, untarnishability, etc- as solving a coordination problem regarding the medium of exchange.

It is this kind of fascination that we need to try to explain. We believe that it originates from mimetic polarization.36 The fact that mimetic polarization is capable, in this way, of generating lasting social beliefs that create value, is what Emile Durkheim already understood in his day. For this author, what is thought of and felt collectively, which he calls unison, acquires an extreme hold on individual minds, and deeply transforms them. This is the case, he says, of revolutionary crowds, whose combined force is the origin of new divinities, like the Fatherland or Reason.

Or the gilet jaunes- oh wait! Gold is yellow...so that means, Macron's showing the yellow streak is actually mimetic polarization! Wow! How mind-blowing is that! Out trumping Trump, the man will soon be begging for golden showers from all and sundry!

This particular power, inherent to the polarized multitudes, plays a particular part in Durkheim’s discourse, since he even sees in it the definition of social facts as a specific feature of society. As a result, this definition of the concept of the power of the multitude provides the basis for a theory capable of seizing all values within the same framework—economic value as well as religious, moral, and aesthetic values. This is the way to solve the current schism in the social sciences.

Very true! Pissing in each other's mouths is indeed the way to solve the current schism in the Social Sciences- at least, as these things are understood in France.