A populist revolt in the stock market
It has been a crazy week in Wall Street, where the entire financial services industry of the United States, including the New York Stock Exchange and Nasdaq, is located. The place has become the epicenter of a populist revolt being waged by small “amateur” retail investors against those they perceive to be the grand manipulators of the financial markets—hedge fund managers, brokerage firms, gigantic investment houses, and their enablers in the mainstream media.
Operating through online trading apps (like Robinhood, Webull, and eToro) and coordinating their actions through messaging boards on social media platforms like Reddit, these insurrectionists of the stock market are mobilizing an army that is driven not mainly by profit but by a passionate resentment against the rapacious few that make money at the expense of everyone else. Their most hated targets are the so-called “short-sellers”—professional investors that make their money from driving down the value of certain stocks by dumping them and then buying them back at a lower price.
Mostly young people who have basically known no other reality but that of the digital world, the stock markets’ new warriors are leveraging their mastery of the internet to challenge the power of the entrenched financial oligarchy. They want to show that the latter are not only unworthy of government bailout (“too big to fail”) when they are in trouble, but also deserving of being destroyed.
Here’s a representative sentiment posted on the “Wallstreetbets” forum a few days ago, addressed to the “enemy”: “Your continued existence is a sharp reminder that the ones in charge of so much hardship during the ‘08 crisis were not punished. And your blatant disregard for the law, made obvious months ago through your illegal naked short selling and more recently your obscene market manipulation after hours shows that you haven’t learned a single thing since ‘08. And why would you? Your ilk were bailed out and rewarded for terrible and illegal financial decisions that negatively changed the lives of millions.”
The guy who wrote this says he had just paid his rent with a credit card so he could use all his available cash in the bank to hold the line and buy more shares of GameStop, a videogame retailer that has been victimized by short-sellers. And he’s enjoining all his comrades out there to keep the faith and do the same if they are to become a “global force” to be reckoned with.
Ironically, many are looking to China’s mass of active retail investors to join this emergent populist movement, and to use the huge resources at their disposal to upend oligarchic power in the global equities market. The volatility that this fledgling movement injects into the world’s financial markets cannot be scoffed at. Hedge fund managers have found themselves compelled to sell some of their other assets elsewhere in order to cover their losses, thus plunging world markets to new lows just this past week.
It is easy to mock this development as nothing but the fanciful protest of a digital generation that is out to remake the global order using the virtual weapons at their disposal. John Cassidy, in a recent column for New Yorker magazine, sees this phenomenon as just another instance of financial mania—“the madness of crowds.” Nothing new here, he surmises. “Looking past the short sellers, who are relatively few in number, many professional investors have been playing the speculative game, even though they know that it’s likely to end badly.”
I am not so sure. Though I know little about how stock markets work, I would not be so dismissive of the perturbations that this new army of differently-motivated online traders can potentially create given that they are able to coordinate their actions in real time through online messaging boards. Still, many in mainstream media prefer to see them as a short-term isolated threat to the stability of the US financial markets.
The problem, I think, is that they continue to be constrained by the limited discourses of the local, the national, and the regional. Because of these blinders, they cannot see the global interactions that have been quietly taking place in every domain of human existence—in the economy, mass media, science, the arts, politics, education, religion, etc. These interactions have spawned voluntary communities worldwide that are skeptical of governmental authority, seeing this as no more than the instrument for perpetuating the wealth and power of the greedy few.
It would be naïve, of course, to think that all participants in these online movements are equally driven by the same sentiments. But, as with all online communities, members create their own codes and procedures for ferreting out opportunists and weeding out the faint of heart. Those who remain withdraw anytime at their own will. Bound by no illusions of permanence, they are there to inject a dose of heroic hope into a dreary world.
If one can imagine a global anarchist movement rising up against entrenched hierarchies—brought together and empowered by an online communication system, and able to operate synchronously across time zones, geographic boundaries, and functional domains—I suppose it’s not difficult to see in this stock market revolt a portent of something more encompassing and radical than the “reset” of the capitalist system that the Davos-based World Economic Forum thinkers have in mind.
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