Keynesian beauty contest is a concept that is widely used in economic parlance on finance, but rarely heard in discourses on popular media and democratic politics. Scholarly and intellectual commentary badly needs this concept, though being painfully unaware of its lack.
The Keynesian beauty contest is the forgotten twin of another type of contest we evoke self-evidently and incessantly when we contemplate on political or journalistic competition in the popular media space: the „popularity contest”. The two types of contest are not just twins, but Siamese twins: wherever one appears, the other one is there, too, even if unnoticed and unreflected. The exclusive presence of one „twin” in mainstream reflection and the almost total lack of the other is a serious imbalance that disables the understanding of today’s deepening crises of democracy.
Popularity contests are aimed at opaque targets
Since the rise of the popular media-driven political system in the 80es and 90es, the popularity contest idea has almost exclusively shaped our understanding of political corrosion. The idea has been that contestants chasing popular success make all they can for getting as close as possible to the popular soul. However, the idea of „closing in” – detecting and gratifying genuine popular taste – is heavily compromised as popular constituencies and news readers are exposed to myriads of such efforts. In today’s „media torrent”, the popular soul becomes an intangible and evasive target, and effects of even the most bombastic events are extremely hard to assess (remember debates on whether the reopening of the Clinton file in 2016 October influenced election results). In such uncertain and opaque conditions, actors can hardly „close in” to the popular ground, as they don’t even see their very target. Actors inevitably switch strategy: they start scrutinizing each others’ bids on popularity and try to follow the best practices of popular resonance making and to avoid each others’ failures.
Instead of closing in on the popular targets, actors choose to imitate each other – and step on a path akin to financial speculators’
The strategy of imitation places politics and public discourse on a radically different trajectory than what familiar notions like the „popularity contest” usually suggest. This trajectory can better be understood by analogy of financial markets, where actors know that the value of an asset depends heavily on how it is judged and traded by all other investors, and thus, instead of estimating the asset’s „fundamental” worth on their own, investors try to estimate their value by monitoring how the same assets are judged (bought or sold, hyped or denounced) by other investors. In finance, the basic rule is to imitate the moves of the „herding” crowd: to buy when others (start to) buy, to sell when others (start to) sell, to form one’s own strategy based on one’s expectations regarding other investors’ present and future judgments. In the popular media world, actors also try to estimate the predictable „popular value” of assets – news, stories, scandals, promises, rhetorics, policies – based on their expectations about how close these would fall to the commonly approved „best practices” of popular success.
The logic of mutual imitation estranges actors from their targeted field
Actors who seek popularity by imitating others’ popular success fall hostage of an inevitable paradox, since in order to reach their distant and contourless target audiences, they lay their eyes on each other instead of their targets. In their attempts to closing in to the popular realm, actors rely on other actors’ collective experience, which reliance estranges them from the popular realm they try to approach. This paradoxical estrangement is the equivalent of the well-known departure of „speculative bubbles” from economic „fundamentals” in finance.
The inner paradoxes of the popularity contest make it transform into a “Keynesian beauty contest”
The above controversial dynamics is best captured by Keynes’ beauty contest model that offers a standard metaphor of financial speculation in economic discourse. Interestingly enough, Keynes instinctively established the finance-media link I’m proposing here, as he originally based his beauty contest model on a popular media case. Keynes compared financial speculation with the popular beauty contests in British print magazines in the 30es, where readers were called to vote on three candidates, and those who had voted on the three actual winners got a reward. Keynes’ quesion was what readers should do if they vote not just out of pure enthusiasm but with an eye on the reward? In this case, they cannot simply vote by their own taste, instead, they have to guess which candidate will get the most votes. This guess, however, cannot be simply aimed at genuine popular taste, either, as such a guess would naively assume that other spectators are voting by their own taste and are not speculating on the future winner. For a rational voter, the only option is to vote for the contestant whom the voter estimates would be perceived by the most voters as the most probable winner of the votes. Thus, in the end, as the famous diagnosis goes,
„it is not a case of choosing those [faces] which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.”
Keynes’ model shows why the popularrity contest cannot simply be a “two-degree” game
The original model of the popularity contest envisions a two-degree game in which actors adapt their “first-degree” personal behaviour to the collective opinion or vote of the crowd (allegedly a genuine popular vote expressed in polls, ratings, engagement metrics, actual votes etc.) Accoordingly, the popularity hunting politician or media worker hopes to make personal gains from adapting her behaviour to the genuine collective verdict of other actors. They say or do what is popular, what is approved by „second-degree” average opinion, and not what is the best thing by their personal first-degree judgment. All this resonates with the situation of Keynes’ reader-voters who would not vote on whom they personally find „the prettiest face” but try to bet on popular opinion. However, Keynes’ key contribution to the popularity contest model is exactly the hint that the contest cannot stop at the second degree, because actors cannot be certain that they see well the genuine (second-degree) collective opinion of the crowd.
The three and higher degree reflexivity problem jotted down by Keynes points to the very core of the speculative tensions that inevitably undermine all „popularity contests” in the spheres of media and politics. Keynes’ model shows why actors’ orientation towards popular taste is doomed to go astray in opaque environments where they do not see clearly what exactly the targeted popular opinion is. Similarly to the above readers-voters who cannot be certain how other readers vote, actors of the popular media universe have neither a direct access to the genuine popular opinion. Therefore, they have to anticipate this „second-degree” collective opinion (the majoritarian opinion), and their only anchor point is other actors’ collective experience about popular opinion and popular taste. Actors inevitably depend on collectively recognized evidence – best practice stories, common explanations on why certain campaigns faled, databases, commonly used methods, gossip, narratives – regarding the popular opinion they try to follow.
Popularity contests open an infinite “speculation ladder”: opinion on opinion on opinion on opinion….
The participants of the „popularity contest”, in their attempts to detect and serve popular opinion are inevitably dependent on collectively approved knowledge on what the popular opinion is („average opinion on average opinion” in Keynes’ terms). Actors are not able to assess what is popular on their own. They rely on „third degree” collective opinion in anticipating „second-degree” collective opinion in the same way as, one degree lower on the ladder of speculation, they based their first-degree personal strategy on „second-degree” popular opinion.
Third degree speculation contests
The above constellation fosters „Keynesian beauty contests” at various degrees. The baseline beauty contest, that could be called a „third-degree speculation contest”, is aimed at exploiting as much as possible the most commonly acknowledged, most effective tools of influencing and measuring popular opinion. This contest is aimed at employing the best campaign strategists and the best campaign slogans, and using the most effective machinery of PR or algorithmic profiling, making personal use of tools that „average opinion” of observers finds the best to control the „average opinion” of voters.
This baseline third-degree speculation contest has grown into an essential and autonomous structural force that transforms politics by its own sensemaking logic about what popular taste is like and how it can be controlled. I have analysed this baseline process in The Neopopular Bubble.
Fourth degree speculation contests
My further studies explore how this baseline Keynesian beauty contest shift gears and steps on even higher degrees. I think that many of today’s crisis processes – from viral contagion to new populism – may well be explained with the fact that the engine of speculation switches into a higher degree. This means that new actors enter the stage whose aim is not simply serving the popular taste by collectively approved techniques but manipulating actors’ commonly held expectations about popular taste, by actively shifting and shaping the “valuation basis” on which popular opinion is commonly assessed. These fourth-degree contests – pioneered by actors like Facebook or Trump – aimed at creating a new collective opinion about why the formerly held collective opinions on how to measure and serve popular opinion were wrong.
There is no such a thing as a pure popularity contest that would be devoid of the speculation logic. The contests of today’s public sphere are “popular-speculative”, deeply schizophrenic competitions.