If the 2008 financial crisis hadn’t already exposed Wall Street for the crooks that they are, a collective of retail traders on the r/WallStreetBets subreddit did so even more flagrantly this last Wednesday. It started out as a meme to momentarily prevent the GameStop stock from being shorted, but it culminated into an ideologically-diverse quasi-proletarian all-out assault on the ivory tower of greed and fraud that is Wall Street, with moderate success.
For the purposes of this analysis, knowing the particular details with which the assault on hedge funds looking to short GameStop stock (which author of the Markets Weekly newsletter Alexis Goldstein speculated might be partially aided by other competing hedge funds) isn’t of pressing importance. What’s been rather interesting is the divergence of perspectives between sympathizers and skeptics, the media and politicians, the rich and the poor, and how the forces of each coalesced into a nigh-unanimous disdain for the way financial institutions in Wall Street conduct themselves, free of consequence for much damage done.
Most-surprising of all has been the involvement of Elon Musk, who seems to impart upon a certain flavor of false-consciousness to signal himself somehow against the interests of fellow members of the capitalist class, as he called shorting “a scam” and “legal only for vestigial reasons.” Some took heed of Musk’s comment as they perceive him to be the ideal entrepreneur, but others were understandably skeptical of a notorious opportunist taking such a sharp stance against what might not immediately seem to his own peril.
Further from that is the media’s reaction, which was mixed all things considering. Some took the disciplined approach against a movement-led revolt and dubbed it populistic even though it dons of the label only its surface definition, while others attributed the highly-organized nature of the collective to the last remaining vestiges of Gamergate almost seven years after its inception–it makes intuitive sense that this is correct, but the r/WallStreetBets community is not a monolith. When a critical size of internet users is packed into a small space with little room for moderation, collateral damage is inevitable but it doesn’t strip the movement of the heart it had–which at least for a short while, was to beat Wall Street at their own game.
The tool with which this was most-prominently undertaken was Robinhood, an investment platform erstwhile praised for its commitment to democratizing the stock trade for the average Joe, now falling under harsh scrutiny for halting trade of the relevant stocks, losing the brand all its value within hours after having taken years to build it. “The financial system has many moving parts, and the day traders on Robinhood who imagine themselves as literal Robinhoods are really just grist for a larger mill,” writes Edward Ongweso Jr. for Motherboard. “Robinhood may bill itself as an app for the little guy, but its platform, perhaps more than any other, is a great reminder that the stock market is a casino–which means you cannot forget that the house always wins.”
What ensued in the wake of this chaos is hedge funds losing big on bets turned sideways, and in a fit of unexpected haste, legislative movement from Congress who’s set to hold hearings on the situation with broader focus on potential remedies courtesy of Rep. Maxine Waters. This also saw Alexandria Ocasio-Cortez and Ted Cruz share a moment of temporary agreement, quickly coming to a short stop as prior tensions of the Capitol storming rose again to the fore–optics of the partisan divide aside, that there’s anything resembling consensus on Wall Street sweeping the rug from under retail investors is an anomaly, and it might bode well for enacting appropriate reprimand though its flavor between what Democrats and Republicans advocate may differ.
The short-order effects of this entire debacle are obvious–legislators will assess if further reins are to be put on the parasitic practice that has become shorting, with a cursory look at how investment platforms have come to so blatantly ignore their whole raison d’être. But in the longer term, this volatility on the market has shed somewhat of an epistemic fog on its legitimacy, making its unknowable traits seem more like make-belief than too complex for the average person to understand–when that gatekeeping structure is laid out barer, it’ll be harder for Wall Street in the future to claim their handbook is a prized possession only they have the wisdom to decode and practice best.
Most-instructive still has been the short-lived existence of what could only be described as an Occupy Wall Street 2.0, only in ways that leverage market forces against its very manipulators. While the revolutionary fervor faded quick as patronage for an ineffectual free market found renewed purchase, it’s still worth pointing out the uniqueness of such an event. Paralyzed by historical stasis, it’s very rare that we get to see the common man make a stand against the big and abstract bully that is the greed of the wealthy class–it’s unlikely that this will result in a massive rush of new members for the DSA, but it would have at least given credence to the theory that with enough people galvanized and sharply-focused, any political objective is within their reach.
There have been moments in American history when the thumb presses so hard on the scale, that those watching the odds stack against them foresee no political path ahead unless it is radical. For many already, this meant a rejection of the liberal status quo in favor of leftist political ideology, but others swing so wildly in the other direction that they endorse an even stronger version of what is currently at play. One thing is for sure though: We’ve not seen the last of this saga, and the specter that haunts capitalism — in its present subverted and wildly unequal form — has yet more dues to claim.