I looked into this one a while back—I'm pretty sure it's the explanation Scott launders in "Whither Tartaria?". Moldbug (2007):

And what has entirely disappeared, as the quotes above should make quite clear, is any sense of a mutually critical aristocratic elite…

There is not even a concept of what it would mean to “succeed” outside this system. There is simply no independent pool of taste.

Alexander (2021):

Best-case scenario, you want a field that talks to itself enough that you get status for impressing other experts with your expertise, not for impressing the public with demagoguery.

But if you talk to yourself too much, you risk becoming completely self-referential, falling into loops of weird internal status-signaling.

Honestly, this kind of involution is already thoroughly discussed within a lot of creative fields (which Alexander admits he hasn't read, so this is likely still downstream of Moldbug). It's just that when a poet says something like this, they usually aren't attributing it to a gigantic 75-year-old New Deal octopus. (Alexander himself leaves it to his commenters to blame socialism.)