The Gamestop Short-Squeeze: Class War or Civil War?

LB, Baile Átha Cliath

The recent short-sell and subsequent short-squeeze of GameStop shares and reactions to it perfectly represents the true nature of capitalism. It is a conflict between the material interests of the petit bourgeois and large capitalists. I have seen articles published by the likes of the BBC, Yahoo, etc. and heard the claim on social media, that this is a working class movement against capitalism many times. A Yahoo!Finance article, for instance, stated that “a clash of the classes – proletariat vs bourgeois – is at the heart of the GameStop (GME) short squeeze saga”. [1] However this is both a false narrative and harmful claim to make. As we will see this is not a collective anti-capitalist action for the benefit of the working class, and narratives presented by the media and ill-informed online only serve to obfuscate this reality. The bourgeoisie has used similar tactics before in order to enrich itself, and the collusion between the main trading platform used, Robinhood, and the short-sellers who were targeted only serves to further illustrate how “free” the free-market really is.

The suggestion that the working class can benefit from stock trading is categorically false. Participation within the capitalist system will only serve to benefit capitalists, at the expense of the proletariat. This is, of course, not the first time that a suggestion that the proletariat can benefit from the exploitative nature of capitalism  has been made. In Vladimir Lenin’s Imperialism: the Highest Stage of Capitalism, Lenin addresses a harmful claim that Karl Kautsky, a German Social Democrat, made when he claimed that imperialism would take a higher form known as ‘Ultra-Imperialism’, and that the international proletariat can benefit from the peace created by cooperating imperialist powers: 

From the purely economic point of view, […] it is not impossible that capitalism will yet go through a new phase, that of the extension of the policy of the cartels to foreign policy, the phase of ultra-imperialism,” i.e., of a superimperialism, of a union of the imperialisms of the whole world and not struggles among them, a phase when wars shall cease under capitalism, a phase of “the joint exploitation of the world by internationally united finance capital. [2] 

Lenin response highlights how harmful such a narrative is:

Kautsky’s utterly meaningless talk about ultra-imperialism encourages, among other things, that profoundly mistaken idea which only brings grist to the mill of the apologists of imperialism, i.e., that the rule of finance capital lessens the unevenness and contradictions inherent in the world economy, whereas in reality it increases them. [3]

This same argument applies here. The primary motivation of capitalism, ever increasing profit margins, makes it totally unsuitable as a vehicle to benefit the working class. However, if this is not a working-class movement, then who are its instigators, and who stands to benefit the most?

Various people have made the claim that this is a movement that represents class war to benefit the working class. For instance, a post on tcnjsignal.net claimed that “to consider this anything less than a class war is an egregious error”. A more accurate description would be civil war. The only classes pitted against each other in this movement are the two elements of the bourgeoisie, the petit bourgeois and the large capitalists.  The shorting of stocks in order to make profit is not a new phenomenon. There are many instances of it happening before, the only difference now being that the petit bourgeois have decided to have their hand at it. A famous example is George Soros’ “breaking of the Bank of England” on Black Wednesday, 1992, when he short-sold more than $10 billion worth of pounds sterling. Did George Soros do this to benefit the masses? Of course not. He did it, contrary to the opinions of the far right, simply out of the lust for wealth. On the off-chance that the strategy employed had worked, it would have only resulted in the creation of a few new capitalists, the replacement of one set of oppressors for another.

While I do not deny that the idea of Wall Street traders losing large sums of money and panicking over the fact people have used their manipulation of the market against them is quite humorous, this action does not have the intention of benefiting the working class. The motive of this is, first and foremost, to gain profit,. An argument that has been made is that this profit is gained at the expense of exploitative capitalists, such as short-sellers like Melvin Capital, who registered losses of 53% and were forced to close their short-position. However, it must not be ignored that several large capitalists also benefited from this. Three of Gamestop’s largest investors, Ryan Cohen (largest shareholder), Donald Foss, and George Sherman (Gamestop’s CEO) have seen their share value increase by over $2 billion. [4] A working class movement does not make shareholders $2 billion, because a working class movement is inherently anti-capitalist. This action will not benefit a homeless person, it will not benefit a disabled man on social welfare, it will not benefit the single immigrant mother. This is a collective petit bourgeois effort, the proletariat will not reap the rewards. A person who is 2 unpaid weeks away from being evicted, would not bet their life savings on something as risky as stocks. As a comrade pointed out to me recently, the majority of people on r/WallStreetBets (the reddit forum where the idea for the short-squeeze originated) are either betting their savings or retired. From this you can assume that these people do not have much financial worries or strains. You may then come to the conclusion that these are comfortable petit bourgeois and wish to simply make a bit more money and enjoy the thrill of trading. However, while they may have fun in the short-term, those in control of the system are already working to ensure that it does not happen again.

The logo of Wall Street Bets, a reddit community where speculators gather to gamble with the surplus value of the proletariat.

The stock trading app Robinhood (the platform that the vast majority of the short-squeezers used) restricting the trading of GameStop stocks, the calls by the hedge funds for market regulation and the attempts to shut down communication between small investors,  demonstrates that big finance capital will never allow it’s interests and motives to be undermined. Senator Elizabeth Warren after hearing about trading being restricted by Robinhood decided to write to the CEO. In her statement she claimed: 

 “In addition to putting customers’ finances at risk, Robinhood’s actions revealed a new set of questions about its relationship with large hedge funds and other financial institutions, and follows past criticisms of Robinhood’s insufficient investor protections. Robinhood has a responsibility to treat its investors honestly and fairly, and provide them with access to the market under a transparent and consistent set of rules. It is deeply troubling that the company may not be doing so”. [5]  

While Senator Warren raises this point she fails to realise that finance capital is inherently predatory and will always seek to save itself rather than being  “honest and fair”. You would expect her to know this most of all due to her chairing of the oversight panel during the bailouts of 2008. [6] The motives of finance capital is exploitation, imperialism and monopolisation in order to squeeze out as much profit as possible. Capitalism can never be altruistic. The market can never benefit the working class. This is inherent in the system and to say otherwise is misleading. As Lenin correctly stated, “Freedom in capitalist society always remains about the same as it was in ancient Greek republics: Freedom for slave owners”. [7]

To suggest that the Gamestop short squeeze is a working class movement is totally unsupported by the reality of the situation. The actions of the small investors were motivated by an individualistic profit motive. The intention was clearly not class conflict but only participation within the market system. There was no motive to benefit the working class, only a drive to make money off of hedge funds. The entire incident serves only to highlight how “free” the free market really is: a market free for those with capital.

Endnotes

[1] Innes Ferré, ‘GameStop saga is about ‘working class vs hedge funds’: Reddit WSB user’, Yahoo!Finance, 27 January 2021, https://finance.yahoo.com/news/game-stop-phenomena-is-about-the-poor-vs-rich-reddit-wsb-user-204822769.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAGRMD6E2F_U52IdEAAU5eAk0VCVXivpuRls6M6gxB7V2-is7VRbLb8spDEueZHcmq1KEpNj7RCjOZSwkTLRSQQaMtMtCcWywkx2y311G6YWSpMXnnB8g9oPxMhFY9aw4tddTJce1xys4vgNt6F4CNx6PAl7FgJsQRearUM9EcdV2

[2] Lenin, Vladimir Illyich. Imperialism: The Highest Stage of Capitalism, Chapter VII: Imperialism as a Special Stage of Capitalism, https://www.marxists.org/archive/lenin/works/1916/imp-hsc/ch07.htm#fwV22P271F02

[3]Lenin, Vladimir Illyich. Imperialism: The Highest Stage of Capitalism, Chapter VII: Imperialism as a Special Stage of Capitalism, https://www.marxists.org/archive/lenin/works/1916/imp-hsc/ch07.htm#fwV22P271F02

[4] Edward Helmore, ‘GameStop’s three largest shareholders earn over $2bn amid stock surge’, The Guardian, 28 January 2021.

[5] Senator Elizabeth Warren to Vladimir Tenev, 2 Febraury 2021, https://www.warren.senate.gov/imo/media/doc/02.02.2021%20Letter%20from%20Senator%20Warren%20to%20Mr.%20Tenev.pdf

[6] Diane B. Henriques, ‘Bailout Monitor Sees Lack of Coherent Plan’, New York Times, 1 December 2008, https://www.nytimes.com/2008/12/02/business/02tarp.html

[7] Lenin, Vladimir Illyich. The State and Revolution, Chapter V: The Economic Basis for the Withering Away of the State, https://www.marxists.org/archive/lenin/works/1917/staterev/ch05.htm

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