- by Bree Booth
- The Guardian
- Issue #1948
The week before last, the financial trading platform Robinhood restricted access to its trading services after posters on the online forum Reddit caused stock in GameStop to skyrocket 1,700 per cent, bankrupting the hedge fund Melvin Capital. In brief, redditors on the thread r/WallStreetBets became aware that hedge funds were short selling GameStop stock. Short selling involves betting on a decline in the price of borrowed stock so that traders can return the stock at less than the price they borrowed it for, resulting in a profit for the firm. Ostensibly to get back at the “greedy fat cats” in the hedge funds, Redditors bought up shares in the game retailer, sending its share price from US$19 to US$483 in just three weeks. This resulted in billion dollar losses to Melvin Capital. Then, the trading app Robinhood on which the shares were being traded, restricted access to its platform.
Mass outrage ensued, but unfortunately not for the right reasons. The GameStop saga has proven that “pull yourself up by the bootstraps” rhetoric is a tool of the ruling class to place the burden of surviving under an oppressive system back on the working class. Yet when billionaire hedge fund managers are suddenly bankrupt, everyone from trading platforms to Congress is lining up to give them aid. In recent days there has been talk of bailing out Melvin Capital, and broader calls for increased regulation of the stock market to prevent independent traders like those on r/WallStreetBets from “playing the stock market like a casino.” If that seems a bit rich, that’s because it is.
To say “let the average worker play the stock market” is like Marie Antionette proclaiming “let them eat cake.” GameStop is a blatant example of the ruling class seeking to rig the game in favour of the capitalists. But the real story here is not whether the working class should be allowed to game the system like the stock brokers, but whether such a system should exist at all. The truth is, while this event has laid bare the inherent artificiality of the stock market, this artificiality has material impacts, ones which hedge funds have little regard for. To put it in simplistic terms, when stock prices plummet, the working class suffers through job cuts and the collapse of markets like housing and insurance.
Marx saw that crises such as stock crashes are “the real concentration and forcible adjustment of all the contradictions of bourgeois economy.” Stocks represent, like all capital, value produced by the labour of the working class, but the true relationship between this value and its source is obscured.
The stock market appears as an abstraction whose economic value arises from the stocks themselves, and not the social relationship which produced those stocks, namely the relationship between the worker and the capitalist. Thus, the livelihoods of stock brokers depend on the labour of the working class, to drive profits from a wildly fluctuating stock market.
Conversely, the survival of the working class depends on a stable economy and an adequate job market. The two cannot long co-exist.
Thus, the GameStop saga lays bare the flaws and contradictions of a system in which the ruling class can bet on the workers’ livelihoods. The working class must demand an end to stock speculation and full control over the value they produce.