Artifice is the name of The X Factor game

In 1988, Fredric Jameson wrote - half in mourning, half in warning - of a contemporary "world in which stylistic innovation is no longer possible...all that is left is to imitate dead styles, to speak through the masks and with the voices of the styles in the imaginary museum". If 1980s postmodernism was a hall of mirrors, recycling and reflecting the past, Wembley Arena on the night of The X Factor final is a fractured mosaic, a spinning mirrorball of snatched images thrown up on the big screen. The irony is as thick as the fog thrown up by the dry ice. Dermot O'Leary urges the crowd to vote for the winner, although the guest appearances are from JLS (runners-up, 2008) in a mash-up with One Direction (runners-up, 2010), hosted by Olly Murs (runner-up in 2009). Every loser wins, it seems, and yet the audience is told repeatedly that fame rests on this final performance.

"When the real is no longer what it used to be," Jean Baudrillard proposed, "nostalgia assumes its full meaning. There is a proliferation of myths of origin and signs of reality; of second-hand truth, objectivity and authenticity. There is an escalation of the true, of the lived experience...and there is a panic-stricken production of the real." That 1980s trend of recycling and dressing up, of desperate searching for scraps in the cultural wreckage; that breathless, blink-and-you'll-miss-it aesthetic of multiple masks, voices and styles, reaches hysterical levels in Saturday's show. Little Mix, the first band to reach the final, is in essence a tribute act to Girls Aloud, the winners of another pop music reality show nine years ago; each of their songs is drilled with military precision, complete with glitter cannon, snappy salutes and airborne leaps on to the stage. Despite the slick spectacle and the rehearsed soundbites, their mentor, Tulisa, insists constantly that her "little muffins" are genuine and authentic; as evidence, they're shown crying, hugging their mums and talking about bullying. One of them, Jesy, worries about her weight, which is translated as having "real" curves and being a "real" girl.

Their rival is Marcus Collins, the first out gay man to reach the final; he performed on a real plane surrounded by short-skirted dolly birds in a pastiche of television's Pan Am, itself a pale copy of Mad Men, itself a nostalgia trip back to a 1960s that never was. The "mode rétro" discussed in Jameson's article - films in the style of an earlier time - now seems quaintly simple and straightforward, compared with this mise en abyme of frames within frames. There is no "original" at the heart of this performance, any more than Girls Aloud are "authentic" artists inspiring a copy in Little Mix. Open up one postmodern parcel, and there's always another inside.

"If I was looking for a perfect pop star and fed everything into a computer...I'd get Marcus Collins!" shrilled Louis Walsh, meaning it as a compliment. In the audience, a boy held up a simulation of Marcus' face, sculpted from toast and Marmite. "When he's onstage, everybody just wants to look at him," Gary Barlow announced proudly; but the camera lingered longer on the toast-and-Marmite replica of the singer than on Marcus himself.

In Wembley Arena, where the show is broadcast live, nobody was actually looking at Marcus, either; they were looking at the big screen, or at the tiny windows on their own phones. There were 10,000 people in a hangar together watching a giant television, and half of them were filming the television to watch later. Marcus himself, grinning bravely onstage, had become almost irrelevant; he looked like a little man who's wandered out of a huge screen. "Something has changed," as Baudrillard mused. "With the television image - the television being the ultimate and perfect object for this new era - our own body and the whole surrounding universe become a control screen." The larger-than-life close-up of the singer has become more fascinating than the diminutive, silhouetted figure onstage; but more important yet is the home-made, hand-held digital video, the grainy, shaky video ready to be uploaded to Facebook as an authentic souvenir, the proof that they were actually there. If it can't be tweeted or uploaded, it could be argued that it didn't happen at all.

The members of the audience know that they are also part of a structured reality show, and they embrace the artifice. They're told to boo when the judges say something they don't like, and to cheer when they approve, but they already know the routine. This is a church of the devoted, a place of happy ritual. They cheer the playback of the songs performed an hour ago because they look much more exciting on video, with the camera swooping and swirling around static performers. They cheer last night's show, already colour-coded in washed-out blue as "history". They cheer the bursts of flame, because the heat feels authentic and reminds them that this is "live". They cheer the Coldplay wristbands when they light up, transforming them into part of the show. They cheer the confetti falling from the ceiling: a wedding between audience and the TV, between simulation and the real.

Dermot O'Leary asks the contestants and their families how they feel, digging for an emotional response. Tears come, on cue. But hidden beneath a camera is another, far smaller and more subtle screen: black, with white text. "HOW DOES IT FEEL, AND WHAT WOULD YOU WANT TO SAY?" Dermot's words appear on screen before he recites them. "THEY EXIT," the screen commands, like a Shakespeare stage direction. Dermot and Marcus exit obediently. Enter Little Mix. The screen scrolls upwards. "JADE: THERE'S STILL A LITTLE BIT OF YOUR TASTE IN MY MOUTH." Onstage, Jade reads the words, and dutifully sings the first line of Cannonball, the winner's song.

So it really is karaoke; the lines are scripted, the lyrics are provided. But does it matter? The people in the audience aren't stupid: it's not that they believe it's improvised, it's that they don't care. The difference between simulation and the real doesn't matter any more. The two are mashed-up, mixed-up, merged. It's the 2011 show, the ultimate end-of-the-pier show, the penultimate end-of-the-year show, the all-singing, all-dancing post-apocalypso, the panto at the end of the universe. And it's our show, whether we like it or not, because Wembley Arena is not a bubble of spectacle and showmanship, isolated from the rest of society. The gigantic, apocalyptic, glittering ball of The X Factor reflects back only what we give it.

Outside is the world of fake bloggers, rigged votes, structured reality, YouTube pop stars, holograms in pantomime and protesters in comic-book masks; albums from dead singers, scripted political debates, simulated flash mobs, arrests for Facebook pages, Twitter rumours, online bomb threats and TV marriages shorter than an advert break. As Baudrillard said of Disneyland, the arena's artifice exists to convince us that the world outside is real. In fact, that world looks an awful lot like The X Factor.

"Illusion is no longer possible," Baudrillard asserts, "because the real is no longer possible." Nevertheless, as Jade reads the words from the screen, she breaks rank and pronounces one lyric in her own speaking voice, and Perrie, her band partner, echoes it in a South Shields accent. "What's goin' on?" these two girls ask each other, onstage in front of 10,000 people. "We're seeing four little pop princesses being born," Louis exults, like a proud father. "How do you feel?" asks Dermot again.

Is this a last glimpse of the "real", as four young women exchange incredulous glances and can't believe what's going on, as they make the transition from authenticity into celebrity? The glitter cannon fires, demanding an encore. It's time for Little Mix to face the crowd, to read the autocue, to embrace the autotune, to face the music.