The Twittersphere has been blowing up over the story of amateur traders upsetting Wall Street, seeing it as a severe blow to the elite. Manchester communist Allison Fewtrell says, “Cool your jets…”
I can’t help feeling bemused by much of the commentary on social media about #GameStop.
While I confess to being briefly entertained by ruffled feathers on Wall Street, I see many hailing it as a victory for the working class. Sorry to rain on the parade but this is not the case.
In a nutshell, a large group of ‘ordinary people’ from online community Reddit decided to use a fee free trading platform, Robinhood, to buy shares in a company called GameStop. GameStop isn’t doing very well and it’s share price was low at the time, so the sudden influx of buyers artificially inflated the share price which meant some of the “redditors” made money by selling the stock on at the higher price.
First of all, this was not an organised group of working class people. One of them reportedly invested over $50K - does that sound working class to you? There was no plan to ‘bring down the system’ - just a bunch of amateur investors wanting to make a fast buck and irritate Wall Street.
There’s another chapter to this story. I’m not going to get into all the ins and outs of share trading, short selling and buybacks, there are some links at the end of this article if you want to learn more, but in a nutshell, a hedge fund or two lost some money because GameStop’s share price rose, and as the redditors were not part of the big boys club, Wall Street closed ranks and stopped further trading on the shares in question.
People seem shocked by this with cries of “not fair!”
It’s no surprise to me, however. Of course they are going to protect their interests! The capitalist class always does. Wouldn’t it be wonderful if today’s working class collectivised and showed the same solidarity to protect their own (and each others') interests?
Playing the stock market is nothing more than betting. You win some, you lose some. Hedge funds have deeper pockets than we imagine - literally billions at their disposal. They often lose money - they can afford to do so, but they will make more in other trades to cover their losses. Why do you think they are called ‘hedge’ funds?
There’s another consideration, which nobody seems to be addressing. Artificial inflation of stock values like this happen all the time, and it ultimately leads to deeper income inequality:
Apple alone has reached a stock market valuation of $2 trillion. All of this is feeding a massive increase in income and wealth inequality in the United States, as the gains from financial assets rise relative to income. Yet, like all previous bubbles, this one too will burst.
Make no mistake, another crash is coming, with or without the intervention of a bunch of Redditors. However, we need to look at the bigger picture and analyse who really loses out when there’s a crash.
Not the banks, financial institutions or global corporations. The burden of cost, as we have seen since the crash of 2008 falls upon the working class - by way of austerity, unemployment and rising living costs.
So where does all this leave the working class? Precarious zero hour contracts, a decimated health service, insecure tenancies and inescapable debt mean that venturing into stock trading is never going to be an option for them.
Take the poorly paid employees of GameStop, for example. Did the inflated share price of the company result in more secure work, better conditions or a pay rise? Not on your nelly. Their situation is as precarious, if not more so, than before.
In the case of companies like GameStop, who are struggling already, any sustained over inflation of their share price could actually speed up their demise, with a high likelihood that the management and shareholders cash in, one way or another, on their stock.
Instead of getting over-exited at the unambitious idea of ‘working the system’ for a brief moment, we need to set our sights much higher and work towards building a different system which favours working class interests.
Investment in public services, health and transport, a genuine commitment to building safe, secure, good quality social housing, an end to precarious jobs, a bolstering of workers’ rights and an end to the financialisation of education are just some of the things we should be, and many are, fighting for right now.
Looking back over the last year, the government has been forced into numerous u-turns, all because people in trade unions, tenant unions, pressure groups and community organisations stood up and fought back. Yes, it’s exhausting, yes, it’s continuous, but as more and more voices join in, the burden is shared.
Collectivisation and true solidarity among ordinary working people, in a word - Socialism - this is how we win.
Further reading:
- The Contagion of Capital
(a long read but well worth it it as covers a lot of ground) - NYU’s ‘Dean of Valuation’ says driving stock price up won’t make GameStop’s fundamental problems go away
- GameStop shares plunge after ban by Robinhood app
Photo credit: Adam Nowakowski on Unsplash
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