In the flurry of hot takes on the GameStop adventure, three common features emerge. First, almost everyone agrees, this is so much fun! That a Reddit community of amateur traders could take on a big hedge fund and win – at least temporarily – is cause for a roaring gotcha. Second, the reactions of Wall Street and more recently of Robinhood – the app used by the Redditors that subsequently sought to deprive them of their victory – are unanimously deemed outrageous: gambling with other people’s money, these predators dare claim, is a serious business that should be left to professionals. One suspects that wounded short sellers do not merely cry over the billions they lost. Equally painful is the fact that, instead of being regarded as cynical geniuses of finance, they have been exposed as not so subtle conmen whose tricks can be foiled by novices. Third, and as we shall argue, unfortunately, most commentators – especially on the left – downplay the political meaning of the Reddit insurgency.
Prominent progressives such as Elizabeth Warren and Alexandria Ocasio-Cortez were certainly amused by the woes of hedge funds such as Melvin Capital. AOC was also quick to call for a congressional investigation of Robinhood’s decision to prevent the users of the app from buying more GameStop stock while financial institutions remained free to trade their own shares. However, neither the Massachusetts Senator nor the New York Congresswoman treated the episode as anything but another cautionary tale about the folly of casino capitalism. The main political lesson they drew from the exploits of the Redditors was that Wall Street should be taught some sense in the form of taxation and regulations.
On the face of it, Warren, AOC and the columnists who share their views are right. While eager to give hedge funds a bloody nose, the myriad of amateur investors meeting on the r/WallStreetBets forum are not the heirs of the Occupy movement: their main purpose is to make money for themselves, not to challenge financial capitalism. Moreover, saving GameStop and other retail stores – such as AMC, Bed, Bath and Beyond, Blackberry, and Nokia – from short sellers is unlikely to advance progressive causes such as the Green New Deal, racial justice, or healthcare for all. Yet, regardless of their motives and of the causes they choose to embrace, the Redditors’ actions attest to the fact that speculation is now available to a vastly wider population than the usual suspects. That high stake gambling is not just the game of banks, mutual funds, pension funds, and hedge funds raises the political question of whether what can be done for the luster of videogame consoles and antiquated cell phones can be put to other uses.
For better or worse (so far, largely for the worse), platforms, even more than markets, have become key institution of our brave new world. Markets are places where commodities are exchanged. Platforms, on the other hand, are primarily made for sharing, in the social media sense of the word: they pool resources for the sake of rating, which is to say, modifying the value attributed to something or someone. As coordinators of supply and demand, markets enable the realization of profit. As havens for communities of purpose, platforms play an increasingly important role in the allocation of credit – financial but also moral credit.
Exemplary in this regard, the r/WallStreetBets community did not merely affect the financial standing of GameStop and Melvin Capital. When Robinhood deprived its users of their freedom to trade, the Redditors retaliated on the moral credit front. They issued millions of damning consumer ratings, which caused the company’s reputation to plummet and compelled its owners to backtrack.
It is crucial to see how the same speculative techniques can be harnessed by activist groups with vastly different concerns. And it is not difficult to envision since such politicized rating communities already exist. For instance, when the incoming Trump administration reauthorized the construction of the Dakota Access Pipeline (DAPL), the coalition of the Sioux tribe and environmentalists mobilized against the project realized that relying on public sympathy and legal challenges would not suffice to advance their cause. Hence the “Defund DAPL” campaign launched in 2017, which has succeeded in persuading private and institutional investors to withdraw billions of dollars from the banks financing the pipeline and the firms involved in its construction. What these activists grasped and, more importantly, managed to act upon is the negative correlation between the creditworthiness of pipelines such as DAPL, but also Keystone XL and Line 3, and the valuation of native American cultures. In other words, for Sioux lives to matter, these projects need to be defunded.
A similar equation – “Black Lives Matter = Defund the Police” – has been at the heart of last summer’s unprecedented demonstrations. There again, the millions of people who marched in the wake of George Floyd and Breonna Taylor’s murders shared the conviction that the progress of racial justice could not just be left to the impact of advocacy on public opinion or to litigation in the courts. As the movement’s platform clearly stated, Black lives will not really matter as long as moral but also financial credit continues to flow toward the institutions responsible for their depreciation – namely, the police and the carceral system.
Like the Redditors’ gambit, speculative activism is premised on the prominence that global finance and digital platforms confer to the pursuit of creditworthiness, but also on the fungibility of different forms of credit (some platforms gather online followers in order to attract or detract investments, others raise funds to boost or damage reputations) and on the correlations, negative and positive, between the valuations of various stocks. To flourish, such activism requires the creation of an ecosystem of politically engaged “gambling communities,” but also of alternative “rating agencies.” These rating agencies assess the social impact, environmental footprint, and ethical record of institutions and initiatives, thereby guiding the gambling communities in the delineation of their causes and the selection of their champions and foes.
Successful defunding campaigns notwithstanding, speculation is hardly a well-regarded practice, especially in progressive circles. Traditionally the preserve of the wealthy, it is associated with predatory scams leading to the privatization of profits and, when the dust finally settles, the socialization of losses. While the r/WallStreetBets case makes clear that speculation is open to a larger public, the moral inhibition against treating the economy like a casino remains firmly in place.
According to the website Investopedia, serious investors, who base their choices on “fundamentals”, should not be confused with reckless speculators, who act on whims and rumors without any regard for the long term. Yet, outside the world of financial analysts, such a distinction is blurry at best. After all, the managers of Melvin Capital certainly fancy themselves as serious investors: if they decide to short the stock of GameStop, it is because they believe that the economic prospects of the company are not good. At the same time, once their decision is made, they use their reputation as financial wizards to make sure this becomes a self-fulfilling prophecy. Consequently, the question of whether ratings express or actually determine what money handlers call value is not easily answered. Apologists of financial capitalism keep assuring us that speculative flow is transient and that markets are ultimately efficient. Heterodox economists and progressive politicians disagree. Although recent decades prove them right, investors remain free to do what Lloyd Blankfein, the former CEO of Goldman Sachs, used to call “God’s work”.
Activists who wish to challenge Wall Street’s corner on valuation can wait for elected officials, judges, regulators or a general strike to act as the agents of immanent justice. But in case their patience wears thin, they can also follow the lead of r/WallStreetBets and give financial capitalists a taste of their own medicine. And some of them already do, even if they would probably be loath to see themselves as speculators. “Black Lives Matter”, for example, is not only a statement of fact: it is also a speculative proposition aimed at modifying the allocation of credit – from the police and prison complex to economic resources, social services, healthcare and education.
What is politically meaningful in the GameStop frenzy is neither the populist story of the little guys beating the fat cats at their own game – fun as it is – nor the reminder that Wall Street is out of whack – as if we did not already know. The important message conveyed by the Redditors is that, thanks to the ascent of the sharing and rating platforms that gave us r/WallStreetBets, another speculation is possible.