What does ‘GameStonk’ mean for democracy?

Have these amateur traders’ “diamond hands” changed the world forever?

Image from Flickr.

At the beginning of this year, news of a group of amateur traders on Reddit and across the internet hit the headlines as they collaborated to lose Wall Street speculators billions of dollars by playing them at their own game. By now, you will probably have scrolled through more than your fair share of posts, Twitter threads and articles attempting to explain the meaning of shorts, hedge funds and maybe even “Diamond Hands” like some Margot Robbie wannabes. So, let us skip all that. Instead, this article will explore the question: What do these events mean for the future of politics and this thing we like to call democracy?

Democratising finance for all

Apps like Robinhood, the one many Redditors used to make transactions on the stock market, claim to “democratise” finance. As these apps offer a zero-commission model, amateurs do not have to pay a fee for their service when making transactions. This is a relatively new business model for investment firms and was certainly a driving force for the events that culminated in the mania of January.

By empowering masses of “amateur” brokers, these services could be said to realise the concept of “Dollar Voting”: using your choice as a consumer or investor to govern the actions of businesses. In a world where the line between political parties and corporations is increasingly blurred, and in which the will of the markets often seems to overrule the will of the people, this development could represent a genuine political change.

However, the GameStop polemic has shown that the company name “Robinhood” could be more ironic than Little John’s in the folkloric tale. The firm has been accused of market manipulation after restricting transactions of shares in GameStop and several other securities. Perhaps more importantly, it has been accused of siding with the wealthy elite who use and manage hedge funds by restricting the power of the masses it claimed to embolden.

Many have held Robinhood to account, some filing lawsuits against the company, and the firm has since promised to restore GameStop trading. Robinhood’s ordeal may prevent other firms making the same mistake they did and stay true to their “mission to democratise finance for all.”

Not about Left or Right

Two of the loudest voices who spoke up against Robinhood’s choice to restrict trading were from very different positions on the political spectrum. Congresswoman Alexandria Ocasio-Cortez and Donald Trump Jr both voiced their opinions on Twitter. AOC revelled in morally dubious Wall Streeters getting a taste of their own medicine; whilst Trump Jr pointed to the attempts to protect hedge funds as evidence of a rigged system.

This has caused several outlets and social media users to speculate on what the political motivations of the movement might be. A minority have suggested that the Reddit traders are, wittingly or not, being driven by the alt-right. This is not surprising. For a long time, general trolling has been conflated with actions of the alt-right, who often use similar methods to further a certain agenda. This leads to many users on sites like Reddit and 4chan being painted with the same brush.

Others have viewed the actions of Reddit users on the forum r/WallStreetBets as a struggle against the wealthy elite: those who gamble with the livelihood of your average person, protected by right-wing politicians and a belief in power of the market. This is believable, especially as short sellers in Wall Street have certainly played a part in accelerating the bankruptcies and job losses that have come as a result of the coronavirus pandemic.

Nonetheless, it is debatable whether the forum actually had such concrete party-aligned intentions from its inception. Rather it seems that, to a greater extent, these Redditors’ actions have very little to do with everyday party politics, and everything to do with the populist trend we have seen in the years since 2015. People are understandably tired of their voices not being heard. They seek new means of amplifying their discontent, with varying degrees of success and consequence; be that electing populist leaders, protesting in hi-vis jackets, voting against the will of the elite, or causing mayhem in the stock market. Perhaps, this is the most direct representation of the discontent of the masses to date.

Enter Elon…

As we have seen in the past, so-called populist movements on the right, the left and nowhere in particular, are often in search of a figurehead. A leader with power that represents them and platforms their grievances. The problem is they often come with agendas of their own that do not always benefit the masses. Elon Musk has, for a long time, found a fanbase in the wider Reddit community. But this popularity, which like many things on Reddit is often hard to discern from pure meme potential, has never been on show quite like now.  Musk, who has his own grievances with big-time short sellers following a number of major hedge funds bet against his company, Tesla, voiced his support for the Redditor’s in a tweet last year, calling short selling a scam.

Some might see Musk as an odd choice for a figurehead, especially those who perceive all this as a crusade against the wealthy elite; he did, after all, recently become the world’s richest person. Nonetheless, he seems to have been elected – some might argue, self-elected – as a de facto leader in this mania. If these events do go beyond Reddit and take on more concrete political intentions, it will be interesting to see whether Musk has a hand in deciding what those intentions are, and whether they are in the best interest of the people who made this possible.

Freedom for whom? Regulation against whom?

In light of the events discussed in this article, many speculators on Wall Street have called for greater regulation of the markets to avoid something like this happening again. Yes, you read that correctly, the people running Wall Street are calling for more regulation of the market that, until now, they have openly exploited. The Church of the “Invisible Hand,” the diehard free-market capitalists, have turned against their Gods.

Opposition to regulation is inherent in the neoliberal story of our time, coming about as a reaction to state planning and interference (taken to the extreme nth degree by the monstrosities of Nazism and Stalinism). However, the reaction from the Wall Street and the media to the GameStop bubble could be used to demonstrate how this neoliberal narrative is being used to benefit only the already rich and powerful. Notice how fast Wall Street turns against it as soon as amateurs get involved and they realise that they no longer hold the monopoly on manipulating markets.

The Mother of All Ponzi Schemes?

So how have they justified these double standards? Well, some claim that the regulation they are calling for is to protect small investors. Investors such as those who were “conned” into investing late into GameStop to continue driving up the stock prices and holding on to the bitter end, likely resulting in them losing most of the money they invested. In making this claim, they are characterising these events as a Ponzi scheme set up by con artists. Whilst we will not say that no investors were ill-informed or that no one made ill-judged investment decision, a cursory scroll through the subreddits discussing the GameStop stocks reveals that many knew what they were getting into. For example, one of the top posts on r/WallStreetBets was a tweet from billionaire entrepreneur Mark Cuban, warning those expecting their investment to carry them out of a financial hole that, for them, “this is the EXACT WRONG time to trade.”

Another post depicts a man responding to his partner’s pleas to “sell so we’re millionaires!” with “No. We must make them pay.” Many invested, knowing they would likely lose their money, as an act of protest, as a way of making unscrupulous speculators pay. Perhaps this is a demonstration of just how intense anti-elite feeling has become.  These posts also demonstrate the fact that the patronising justifications for regulating the market, to protect the masses who cannot govern themselves, mischaracterise the course of events.

Source: Reddit

The Digital Capitol Riots?

Many of those now calling for regulation have also compared the amateur traders’ actions to the January 6 Capitol Riots. A former commissioner of the State Corporation Commission pointed out in an interview with CNBC that both events were a result of a “platform created frenzy.” The Capitol insurrection, carried out by ardent supporters of former President Donald Trump as a protest against the electoral victory of Joe Biden, was an attempt to upturn a democratic result. As discussed earlier in this article, the Reddit stock surge was not an attempt to achieve any concrete political goals, carried out by proponents of any particular political party or figure, but rather was a manifestation of the discontent of the masses. In comparing these Redditors to the select few extremists involved in the riots, people in power can point to the storming of the Capitol as the inevitable result of empowering the masses. Some have speculated that this sort of misleading conflation will become a common tool to justify anti-populist thinking, using the Capitol riots to undermine any expression of popular discontent.

Even now, GameStop and other ‘stonks’ continue to rise, defying expectations yet again. It will be a long time until we know the full implications of these events. So for now, all we can really do is sit back and enjoy the madness, and all the memes it has spawned.

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