‍Minds model the world through memes. By commanding where we pay attention, memes command what we value. Coding societies that live according to gods, kings, philosophers, scientists, dictators, entrepreneurs and influencers. That glorify some people and cancel others. That pay fortunes for some paintings, cars, phones, watches, handbags, stocks, bananas, cartoon monkeys, and not for others.

"Control the manner in which a man interprets his world, and you have gone a long way toward controlling his behaviour." — Stanley Milgram

This part delivers the thesis that memes rule the world

‍It maps all that came before onto real-world cultural, economical and social behaviour — thereby setting the stage for the NFT-finale.

Two pages

Parsing human civilisation is quite the undertaking. So, for readability, this part is split in two:

• This page builds on a (1) quick recap to introduce (2) cultural capital and its pull on (3) economic capital (money).
• The next page (forthcoming) continues with how cultural capital's determines (4) social capital (status) and (5) concludes how the three forms of capital interface to construct the human world.

One last ride from the top to finish at how NFT technology might break memetic monopolies.

Minds

Brains are locked in black boxes. They rely on data coming in from sense organs to map the world around and act accordingly.

Lived experience is stored in memory. Memories can be deconstructed in conceptual building blocks (abstraction) and then recombined into new, mentally invented realities (imagination).

To minimise energy use, brains predict large swaths of experience from memory and imagination. So attention can be focused on the most important/uncertain elements around us.

Because memory and imagination guide focus, thinking patterns self-reinforce. What you focus on and how you interpret (predict) things become habitual. Predicting present from past, we naturally see what we want to see, hear what we want to hear, and believe what we want to believe.

This subjective experience orchestrated from memory and imagination is the self.

Minds in media = memes

We can share the mental models in our minds with other minds by expressing them in language and media as memes.

Made audible and visual, memes subject your mental models to the attention of others and prompt mimesis. In such reflexive idea sharing, models self-expressed by one mind update those of other minds and vice versa. Minds invested in (infected by) the same mental models, connect.

From shared models flows aligned behaviour: minds act as one. Humans came to dominate nature because large groups of strangers act from the same values and ideas. They don’t have to trust each other individually because they share a culture.

Mind networks open-source imagination. Between minds, ideas of all times and places compose, remix and compound like LEGOs to invent new cultures and technologies.

• When memes dictate what we should and shouldn't do, they invent culture.
• When memes imagine better ways to get more with less, they invent technology.

Media technology, for example, shares ever-more ideas in ever-less time as it advances.

Culture self-copies

The first cultures mirrored nature. Then, as collective imagination compounded, the balance flipped. Culture now submits nature.

Cultures and technologies engineered human societies away from nature and its dangers. More and more, new generations were born into worlds of memes rather than of predators and prey. Rather than minds having ideas, ideas have minds. Cultures self-perpetuate through minds by programming them as they grow up within their values. Memes around us instruct how to map the world and replicate through our behaviour as we act accordingly.

Culture depends not on our choices but on where we are born — at least initially. We inherit it from the priests, synagogues, qurans, swastikas and rituals around us.

“One believes things because one has been conditioned to believe them.” — Aldous Huxley

Memes take root in culture by being useful and replicable mental models to eventually establish in a society’s traditions and institutions. Establishment defends memes against competition from new memes, which’ll need to be significantly more useful and replicable to take over.

Attention markets

In economic terms, cultures are markets wherein minds (demand)  spend the scarce resource attention (currency) on memes (supply); mental models to map the world.

• Memes are products. Minds produce memes through self-expression. Minds consume memes through attention.
• Memes gain intersubjective market share as a function of claimed attention. More attention scales memetic reach because it unlocks replication: the meme infects new minds (resonance) and is retweeted in their self-expression. Ignorance, in contrast, bleeds memes dry.
• Attention is energy as focused by the brain and thus a scarce resource. The sum of all minds — or rather all the attention they can spend — makes up the total addressable market memes compete in.
• Meme markets scale through media technology. More efficient media technology slashed meme time-to-read and time-to-copy, leaving more attention to spend.

Memes compete for attention with:

• Utility because brains retain the memes that help achieve goals. Useful memes inform real-world behaviour of which the results validate internal mapping, rather than causing prediction errors.
• Replicability because it markets memes to more minds. Replicable memes are quick-to-read and quick-to-copy, as determined by (1) media technology and (2) skill to communicate ideas efficiently wielding said media technology.

Utility and replicability determine the meme's mimetic multiplier. The higher a meme's utility and replicability features, the bigger its gravitational pull in attention markets.

Cultural capital

The memes a mind pays attention to over others proportionally impress that mind's map, informing self-reinforcing thinking and behaviour patterns. Because the brain predicts reality, we come to mirror the memes that inhabit our minds — thereby impressing them onto the attention of others in mimesis.

Leveraging the brain's inclination for echo chambers through inside-out prediction, memes secure attention flows over time. Attention is stored as capital: cultural capital. Much like companies can be financially valued by estimating their future cashflows (how much money they will be paid), memes can be culturally valued from future attention flows.

Societal source code

How a society distributes cultural capital to some memes over others explains its configuration. It codes how we eat, dress, work, play, party, gift, speak, write, argue, judge, govern, love and hate — self-express — all feeds from and back into mimesis.

Let's replay some earlier examples:

• Part 6 detailed how Leonardo’s Last Supper accumulated cultural capital because it uniquely fit new media technology with unprecedented replication features.
• God long proved a useful model to navigate the unexplainable but then irrevocably lost cultural ground against science as better results proved it a better map.
• Money indispensably expedites culture through trade but what form is most useful? Governments left the gold standard because fiat money is easier to manipulate in economic policy. But now people distrust fiat because inflation dilutes the wealth in their wallets. Some of fiat’s cultural capital is pulled to Bitcoin as its features of scarcity, programmability and pseudonymity seem more useful for individuals. How long before viral Bitcoin memes breaks down fiat’s institutional and traditional walls?
• Into the 1800s, European nobles wore tailed coats, knee breeches, silk stockings, heels and wigs. English dandy Beau Brummell, history's original hipster, thought that looked ridiculous and instead rocked a simple jacket with full-length trousers, shirt and necktie. The suit meme assumed cultural capital and today has long been the formal standard for men's fashion. Joe Biden, Vladimir Putin and Xi Jinping, along with CEOs, lawyers, mafia dons, graduates and coaches from all walks of Earth and life wear suits when putting one's best foot forward.
• The prime function of industry is to provide people with necessary means to survival. When the Industrial Revolution scaled produced supply beyond what people needed in the early 20th, companies developed marketing to scale demand and keep pushing the goalposts of infinite economic growth. In mimetic loops compounded through ads, media and peers, people increasingly spent leisure time and disposable incomes on products they wanted rather than needed. Today we buy things more for entertainment and status than utility (let alone survival). Consumerist culture has been the established backbone of capitalist growth in the past few decades. Now, as environmental and psychological harms have become obvious, progressive antidotal memes are eating away at consumerism's cultural capitalisation: minimalist living, circular business models, mindfulness — to name a few.

Memetic moats

If utility and replicability are dynamic enough to keep mimetic wheels compounding, the meme eventually establishes in traditions, institutions and law. Establishment is a meme's durable, long-term competitive advantage in the culture market — the memetic equivalent of economic moats.

• Physical moats defend castle riches from preying outsiders. They're established in deep ditches filled with water.
• Economic moats defend company profits and market share from competitors. They're established in scale, network effects, switching costs, efficient production, intellectual property etc.
• Cultural moats defend meme attention flows and cultural market share from competing memes. They're established in institutions, laws, rituals, traditions etc.

Cultural moats fix a meme's feature in mimesis. They secure attention flows for the meme by rooting it deep into the self-replicating cultural source code. Christmas, nations, weekends, breakfast, companies, money are fixed features of life in many places, seeming as real as birds, trees, mountains and rivers.

In fact, they’re figments of imagination our minds are programmed to invest attention in. Inherited from caregivers, taught in schools, enforced in laws, replicated in traditions, defended by institutions and expressed in media.

Culture distributes money and status

Because cultural capital commands what we value, it's upstream from economic and social capital.

We'll first look at how memes move markets. The next page explores how memes create social hierarchies.

Economic capital

Economic capital, typically money, is exchanged for value on markets.

The more money, the more options, the more agency over what you do, where you live and who you're with — the three big variables that defines one's life.

Price = utility ⇄ meme

To differing extents, the value of a good or service is:

• Objective — What you can do with it. Utility.
• Subjective — What it means to you. Meme.

To differing extents, utility and meme together drive demand. In markets, demand interacts with supply to set prices. Of two products with similar utility, the most memeable one will be in higher demand. If in similar supply, greater cultural capital translates into higher economic price.

• Art prices directly reflect cultural capitalisation. And so the most expensive painting in history is from Leonardo's hand: Salvator Mundi, sold for ~$450m in 2017. The Mona Lisa and The Last Supper are probably worth more, but were never for sale because deemed to belong to culture itself: literally priceless. The closest economic approximation is probably insurance value: Leonardo's Vitruvian Man sketch is insured for >$1bn.
• Everyday handbags are ~80% utility to 20% meme. Designer handbags like Louis Vuitton invert that ratio. Same idea for Fords vs. Ferraris.
• Smartwatch (and smartphone) utility has re-dimensioned mechanic watches to mostly meme. Rolexes tell time but that's not why they sell for five figures.
• Red Bull sells tiny cans of expensive energy drink that tastes like battery acid. The agency trialling it before market launch claims to have never seen a worse reaction to a new drink, with one guinea pig going as far as saying that he "wouldn't drink this piss if they paid me to." Yet, these days, Red Bull sells ~8 billion of those cans every year. Its market domination is purely mimetic. Production costs are minimised so most can be invested in telling the story of Red Bull as the default choice for high-performance achievement, e.g. Formula 1, football, world record stunts, e-sports etc.

Brands = memes

In business, utility is product and meme is brand.

Consumers pay disproportionally more for products from brands with high cultural capitalisation over alternatives with comparable utility. Examples include Ferrari, Gucci, Apple, Supreme, Rolex, Dom Pérignon. Successful brands are, in fact, successful memes.

Product management and innovation aims to expand utility, so to win over customers with greater objective value. Marketing aims to claim and retain attention for the brand, so to win over customers with greater subjective value.

Marketing aims to grow a brand's cultural capital in two ways:

• Performance marketing draws attention with the right message in the right place at the right time, e.g. advertising, content, sponsorships, influencers.
• Brand marketing retains attention through consistent communication and experience of values customers identify with. The bigger the brand, the more memetic energy: customers emulate the brands they love like they mimic the memes that run their minds.

Marketing tells a story about how your life is better with the product. Product fulfils the story as experience. The more convincing the story, the bigger the perceived value of the product experience. Reverse alchemy: to turn lead into gold you don't change the lead itself but the way customers see it.

Happy customers tell and involve others or naturally advertise the product for free as they use it. Best-selling products market themselves, i.e. they're useful memes with high replicability rates: AirPods, iPhones, Netflix, Starbucks, Coca Cola.

Marketing without product draws attention but can't store it. Product without marketing is just function. Successful brands unify marketing with product / meme with utility / culture with technology in self-replicating user experiences. These are the products that sell themselves.

Memes move markets

Rational actors

Adam Smith founded modern economic theory on the assumption of rational economic actors. Each seeks to maximise gains while minimising losses.

• Rational consumers seek to maximise utility. For example, they'll buy the hammer that hits most nails per dollar spent.
• Because consumers buy what is most useful, rational markets signal which goods and services are most useful overall — which hammers are best.
• Rational companies seek to maximise profit. They compete on resolving market feedback in better processes to supply more useful products at lower cost — making the best hammer for the lowest price.
• Rational investors seek to maximise returns. They balance risk and reward to buy ownership in companies expected to grow most in value in a given time window — investing in the hammer company they think will yield most dollars per dollar invested.

Smith's thesis posed that rational actors move markets as an Invisible Hand: the rationally behaving economy — when left free — organically advances society. By acting in self-interest, utility-maximising consumers, profit-maximising producers and return-maximising investors drive technological progress and productivity (achieving ever-more with ever-less) so the pie becomes bigger for everyone — prosperity.

Psycho-logical actors

How people behave in reality is, of course, a lot messier. Rational-economic man is a map and not the territory: a mental model to make practical sense of a reality otherwise too complex to grasp. From its blind spots, others invented complementary mental models, refining the map:

• Rationality became bounded: rational decisions are conditioned by imperfect information.
• Behavioural economics integrates emotions and external factors. Economic decisions are not so much logical but psycho-logical: logical within each's individual psyche.

The open-source development of economic theory from Adam Smith to Herbert Simon, Daniel Kahneman and Richard Thaler is a great example of how memes compose and remix to compound understanding of the world and thus our agency over it.

Memetic actors

Individual value-maximisation behaviour often seems irrational because everyone has their own values. Different values pull different logic: what makes sense to one is ridiculous to the other.

We buy different things because we value things differently. Value is not in the thing itself, but in what it means to us. The thing is physics, technology, utility. What the thing means is psychology, culture, meme.

• Apple products consistently outsell cheaper alternatives with more technological capacity.
• Per year, Starbucks sells ~1.7billion coffees for $5 to people who could make it for less than a dollar at home. Or pay half around the corner.
• Some people just need vacuum cleaners to vacuum. Others spend $1,000 on Dysons because they look and feel like Star Wars.
• In supermarkets, people either hunt bargains of pay premium for high-quality. Middle-range is boring, not worth telling your friends about. Less memeable.
• Legendary investors Warren Buffett and Charlie Munger call Bitcoin "evil", "venereal disease" and "rat poison" likely because it undermines the financial system they got rich in. In contrast, more and more people buy into Bitcoin to hedge against that same financial system because it's bankrupting them.
• Science suggests wine tastes better when expensive.

Bubbles

Memes command our attention and where attention goes, money flows. Markets are grounded in economic reality but swing with the most infectious stories; the memes pulling in the most attention.

Remember that memes multiply like viruses. Because infected minds re-share to exponentially infect more minds, stories can blow up seemingly overnight. In doing so, they suck in disproportionate volumes of attention at the expense of other stories. Viral memes balloon into intersubjective black holes: their gravitational pull becomes so strong virtually no mind can escape it. The money follows suit.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” — Phillip Fisher

Asset prices famously take after narratives. Initially, analysis may justify value increases. But once the stories take flight, imagination takes over. As tweets, headlines and talking heads fuel mimetic fires, the market disconnects from reality. Ever-louder echo chambers turn people blind to risk. They believe prices will go up forever. As they all greedily jump on the bandwagon, prices skyrocket and the prophecy seemingly self-fulfils. Everyone mistakes collective delusion for genius investing and can't shut up about it.

We call them bubbles because once the memetic genie is out of the bottle, it cannot be slowed down and rerouted back  — it can only pop suddenly. When reality finally catches up, euphoria turns into panic and the memetic spiral reverses direction. Everyone runs for the door, anxious to get out at all costs. Prices come down faster than they came up.

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep emotion under control.” — Charlie Munger

Financial bubbles are excellent examples of mimesis and how it is just about impossible to escape for humans — even if subconsciously. Successful investors from across generations keep coming back to the wisdom of "checking out your emotions" and "looking at cold numbers only." And yet, every generation again, countless wannabes get burned by the market, convinced that "this time will be different." Eventually, the market humbles them all — like clockwork.

“The investor’s worst enemy is himself.” — Benjamin Graham

Meme stocks

Bubbles are bound to keep happening because power law distribution of attention warps the representation of economic reality in the memeverse. Some more than others: the more meme-able the asset, the more irrational its market, i.e. the more vulnerable to mimetic mania:

• Economic logic suggests astronomical housing prices would drive owners to sell and go live outside of London or New York for a fraction, but no. Trending on Twitter makes them feel on top of the social ladder and/or fearful of missing out on even higher future returns. As they hold on, prices and headlines grow even more infectious.
• On the other hand, commodities like crude oil leave people more indifferent — nobody flexes oil barrels — and so stick to economic logic more closely: when prices rise, owners sell.

Instantaneous internet networks turbocharge mimetic power laws to a point where economic capitalisation can be carried by culture alone — until it can't anymore, of course.

On Twitter, TikTok and Reddit stories good or bad replicate faster than anyone can invalidate. So when Elon Musk tweets about Tesla and Dogecoin at >90m followers, markets pump and dump regardless of economic logic. All the more as speculators play these memetic swings, putting all chips on the table for quick cash.

A story takes off from reality in proportion to its meme-ability because it compoundingly infects more minds to keep spreading it. It keeps growing through a self-perpetuating flywheel until reality (the market) brings it back down. That flywheel accelerates when the story is about financial assets because the replicators are often invested with money on top of with their minds. On the internet, these people come together like armies to flood timelines and attack critics. They pump the story to pump their bags.

The most meme-able outcome is the most likely

Those who dismiss meme stocks as pure internet stupidity miss the bigger picture.

As increasingly evidenced in neuroscience, everyone navigates the world through stories and stories always simplify the more complex underlying realities. Value investors recognise this and analyse meticulously to what extent narratives diverge from fundamental economic value: upside skew means overvalued, downside skew means undervalued.

‍Markets correct memes by punishing disparity between replicability and utility: the meme claimed disproportionate attention in relation to its utility (i.e. its model of reality had critical blind spots) and is brought back down to earth. And yet, human behaviour feeds so much on stories that the reality they end up creating is at least partly inspired by not the most useful, but rather the best stories. These are the most remarkable, outrageous, sensational stories — those that claim the most attention and are thus most worth retelling. Meme stocks like Gamestop (discussed earlier here) are made from wild and infectious stories that, as more minds jump in, grow even wilder and thus more infectious.

These days, worth retelling is more than ever to be taken in the economic sense: the web's default business model is to algorithmically distribute memes for maximum attention; to be mined and auctioned off to advertisers. Facebooks, TikToks, Twitters and YouTubes decide which memes come to swing culture and markets. When clicks equal revenue, fiction trumps truth. Because replicability is more profitable than utility, man-made worlds trend more towards wild stories than boring evidence.

Bulls, bears and doges

Markets are rarely if ever neutrally in check with economic reality, for the simple reason that humans need stories to condense what is otherwise too complex to grasp. At some point, boring evidence reality-checks the wild stories, but only to spark new ones. From the ashes of one story rises another.

When optimistic interpretations prevail, the market is bullish. When pessimistic interpretations prevail, the market is bearish. Bull and bear are proto-memes to capture investor psychology in a market.

Bubbles inflate in bull markets because replication gets confused for utility. Asset price goes up not as a function of real-world value, but of the attention paid to the stories about it.‍

It starts with vision: stories about the future and the company or commodity's role in it — future utility. It is "game-changing", "revolutionary", "the next big thing." As investors buy in, rising price is mistaken for validation of that vision. Eventually, price itself becomes the headliner that pulls up demand in a self-reinforcing cycle. Greed ends up eclipsing everything else.

For value investors, the challenge is to see through mimetic fog and properly price assets in the world of things rather than in the world of stories. Future utility of course matters but vision validity is best assessed from a probabilistic projection of the present — born from an integrated understanding of reality's moving parts.

2020-21 Bull

When (1) everyone is locked inside their homes with nothing to do, (2) governments hand out free "stimulus" checks no strings attached, (3) inflation runs away because of endless money printing, (4) people left and right seemingly get rich overnight, (5) stock markets seem to keep going up forever, and (6) influencers with cult-like following like to fool around, doggy-themed internet coins with infinite supply and zero utility that started as jokes can reach $88bn market capitalisation (May 2021).

When macro-economic conditions are bright, bullish stories are useful: risk-taking pays off. Liquidity flows in, prices pump and investors make a killing. Emboldened by success, they seek ever-higher risk/reward assets to make bigger returns in less time. Time - and headlines flood with stories of new records and riches. People get anxious to miss out and ape in en masse — some going all-in and even borrowing. As markets moon even higher in response, investors get increasingly reckless. A time bomb starts ticking: while systemic risk swells uncontrollably, investors forget it exists.

2022 Bear

But when (1) wars break out, (2) geopolitical securities crumble, (3) supply chains stifle, (4) inflation dumps purchasing power (5) and central banks tighten credit, the memetic spiral flips and the doggy coin dumps 92% of its value (June 2022).

When macro-economic conditions are bleak, bearish stories are useful: risk-aversion pays off. Rather safe than sorry, investors pull liquidity out of speculative risk-on assets (story-driven) like crypto and tech stocks into established risk-off assets (utility-driven) like gold and real estate. Bubbles pop and bulls get wrecked holding the bag. As people, funds and companies get liquidated, fear of missing out turns into fear of not getting out. "Everything to infinity" becomes "everything to zero". Still wild stories, just upside-down.

Memes as assets

As I write this, cryptocurrencies have fallen off a cliff in a brutal bear market. Many lost as much 90% and more of their all-time valuation. Yet, the doggy coin is still top ten market cap — coming in just after Solana, a layer 1 blockchain powering thousands of NFT and DeFi applications with millions of users.

Dogecoin has no ecosystem and doesn't really do anything on its own. $DOGE's utility as a currency is almost exclusively driven by mimesis: people just love the idea of paying with doge money. It is infectiously fun, absurd and wild. The more attention it gets, the bigger and funnier the joke. Dogecoin is a meme worth billions of dollars.

Store of cultural capital

In a sense, Dogecoin was a pre-cursor to NFTs.‍

Physical memes like paintings are valuable to own because scarce by laws of nature. The Mona Lisa is worth multiple billions of dollar because it's the provable 1-of-1 original storing all cultural capital of a meme copied into infinity.

In contrast, internet memes spread so instantly and identically that each copy is one-of-infinite: there is nowhere to store cultural capital. When anyone can right-click-save a thing, the thing is worthless. Abundance erodes value of ownership.

Blockchain-enforced scarcity changes the game. There are only as many tokens as recorded on the blockchain — an unhackable and decentralised database open for everyone to verify. With ~133 billion DOGE circulating as I write this, you effectively own the doge meme's cultural capital in proportion to the $DOGE balance in your crypto-wallet.

NFT = cultural scale + economic scarcity

NFTs or Non-Fungible Tokens work the same way. Much like 133 billion DOGE and 21 million BTC, there are 100 Ether rocks and 10,000 Cryptopunks. Scarcity is digitally programmed on-chain. The difference is that all 21m Bitcoins are interchangeable (fungible), while each Cryptopunk is unique (non-fungible).

Make no mistake, you can still endlessly copy-paste the .JPG image of the Cryptopunk (as I do with punk6529 below). Only now the cultural capital the meme gains with every replication is stored in the one-of-one token of ownership — the NFT. The more copies, the more attention, the more valuable the NFT. Blockchains elegantly resolve the discord between natural scarcity and digital scale — rhyming the best of both worlds.

Consider this a sneak peek for Part 10 (forthcoming). First, Part 9 digs into how memes create social hierarchies.