The rise of the Internet meme is more than a 21st-century fad. It is the most visible example of the essential market process of spontaneous order.

To those who spend time on the Internet, memes require no explanation. From “Doge” to “Condescending Wonka” to “Yao Ming face,” you either get it or you don’t.

To understand the market is to acknowledge and accept perpetual imperfection and failure as essential in the process.

For those who blithely go through life without knowing what a “Pepe” is: think of a joke or reference that nearly everyone gets by virtue of having a cultural connection. More generally, a meme is an idea, behavior, or style that spreads from person to person within a culture, whether on or offline. In the continually unfolding Internet revolution, memes have become so entrenched that almost any conceivable observation, insight, or joke can be expressed in meme form, often in an easily shared photo.

Selfish Memes and Spontaneous Order

The portmanteau word meme was coined by evolutionary biologist Richard Dawkins in his 1976 book The Selfish Gene. Dawkins wrote that memes are the cultural analogues to genes. While Dawkins did not anticipate the current Internet meme phenomenon, the principle is largely the same. Memes compete with one another for limited resources, whether attention or bandwidth, and the winners replicate and spread throughout society. If a meme offers subjective value to its users, it becomes more widely adopted, growing and jumping from mind to mind, like an informational virus. This can take the form of idioms, dances, stories, jingles, ideals, or, as is often the case with Internet memes, images.

Spontaneous order is the emergence of ordered behavior from the seemingly unorganized interactions of individuals. It is the process through which countless actors, who do not and cannot know the aims and purposes of more than a few of their fellow individuals, achieve cooperation through market signals. Georgetown law professor John Hasnas writes,

A single firm or state may consist of many independently functioning parts, but there is always some person or group of persons authorized to decide how the firm or state will act as a collective entity. A spontaneous order has no such centralized, collective decision maker.… Spontaneous orders are evolving systems.

Individuals create memes, and they are seen by others and either deemed to be valuable or not. While no meme can be said to arise “spontaneously” — each is individually constructed by an actor — the process through which they become assimilated into and recognized by a collective culture occurs spontaneously. The memes deemed valuable are reproduced, both in their original form and in countless offshoots and variations.

Success and Failure in Memes and Markets

The creation of a meme is by no means a guarantee of its propagation. Only memes that serve a valued communicative end are rewarded by proliferating. The process by which new memes are “invented” and then enfolded into the lexicon is through the inherently decentralized process of imitation. The process of creating a meme requires the active minds of an audience as much as the producer; memes are continuously tailored and updated to satisfy the “consumer.” When a meme is successful, others copy its method. If a new meme is actually superior to all extant conveyors of meaning, it may completely displace the previous memes. Or perhaps it just satisfies a new niche. Only through repeated interaction does a meme gain general acceptance among a particular community of people.

University of Virginia English professor Paul Cantor describes this market process as “a means of mediating among the intentions of the vast number of individuals who participate in it, actors whose interaction often produces results larger and more complex than anything which an isolated individual can aim.”

The meme ecosystem, like the market, looks far from perfect. Googling any successful meme reveals many ersatz iterations too crude or too boring for widespread adoption. There is no such thing as a “meme equilibrium,” only chance, contingency, and unknowability. As in the marketplace, this imperfection is not a flaw in the system; it is the driving force.

The memes deemed valuable are reproduced, both in their original form and in countless offshoots and variations.

The market process is not neat and tidy. There is always a knowledge deficit between actors. There is no way to predict what will be widely adopted days, months, or years from now. To understand the market is to acknowledge and accept perpetual imperfection and failure as essential in the process. Of all economic systems, the market is the only one with a built-in feedback mechanism capable of correcting its imperfections in a systematic and rational manner.

In most economic affairs, this feedback loop can be seen in prices, which are rough approximations of value as a ratio to supply. Memes, in contrast, are mostly created without any expectation of traditional profit, and are therefore subject only to social scrutiny. On the Internet, with no barriers to entry and nearly zero transaction cost, anyone can participate in the exchange of ideas. This results in millions of trial-and-error experiments.

Sovereign Consumers Online and Off

Multitudes of independently acting consumers serve as the gatekeepers to promote or quash a given meme, as with any other product. Consumers are far from passive, whether the subject is a Scumbag Steve meme or a $400 iPhone. On the contrary, consumers constantly send producers signals through money, opinion, reviews, and word of mouth. The meme consumer, like a consumer in any other market, is sovereign. Memes evolve, as with any other good in a market, according to millions of people making choices.

While memes can be created within small groups, they grow when many people contribute. Every meme, like every invention, is a variation of one idea that grew through countless people sharing the same idea. No memes exist independently. When one person comes up with a new meme, its entire foundation is based on the ideas and resources of countless other people.

We all share memes, whether consciously through the Internet or unconsciously in everyday life.

Memes and Meaning

Language is the greatest meme in human history. It is fluid, dynamic, and completely without central direction. Since its beginning, language has continuously flowed naturally, a process of trial and error that adapts in each continent, each region, each community, each home. The usage of words is never up to any one individual; it results from the distributed behavior of all speakers of that language. Referring to a car as a “cabbage” prevents the efficient transmission of information unless it is adopted by a critical mass of individuals. Words mean what people, acting individually but cooperatively, agree that they mean.

The letters that make up this sentence are only arbitrary lines and curves, yet they have arisen to confer meaning without any overarching, guiding intelligence. This is the story of the market. It is all a part of a great spontaneous order, a process that is utterly beyond human comprehension or top-down individual control. Through its decentralized apparatus springs all progress and order, even if it is often difficult to see.

In all of its mimetic celebration of creativity, expression, and freedom, the meme epitomizes the market itself.