The recent GameStop stock situation has many people declaring financial revolution, but the big question remains: is it really? The short answer is, unfortunately, no. The long answer is also no, but maybe this is a starting point. To properly understand the situation, one must know how the market claims to work, how the market actually works, and what happened with GameStop. The laissez-faire capitalist will tell you that the market is based on the value of the assets of a company. They will claim most markets are efficient markets. They will quote theory until they are red in the face, but they themselves know they are misleading you. The market is not based on the true value of a company, not on the value of its labor, but on a multitude of factors, some of which are easily manipulated with the right amount of and/or access to capital.
So, what happened with GameStop? The story goes as such: a subreddit discovered that hedge funds were shorting GameStop stock, and they decided to screw with the fat cat hedge funds. Shorting stock is a process in which a person borrows a share to sell with the promise to buy it back later. A person makes money on a short if the stock price goes down, as they sold it high, and bought it low. However, if the share price were to rise, the investor would lose money. A few investors were able to start a trend to artificially inflate GameStop’s stock price to cause these hedge funds to lose money. They were successful, with the short-sellers losing billions. However, this is a classic financial scheme disguised as class warfare. As the narrative of class rebellion solidifies, more people buy into the stock, further raising the price. There is an upper limit to where the stock can be pushed, and once it reaches it, what happens? A collapse. The bourgeois know this, and so they encourage the rebellion. They profit off our anger, selling their shares at prices unfathomable. Once the proletariat holds the shares, who will they sell to in order to recuperate their costs? The bubble pops, and the proletariat are left holding the bill as the bourgeois who sold the stock make off like bandits. This is the sad truth of the situation. The hedge funds, while hurt, will survive this; the same cannot be said for many individuals’ portfolios. A few individuals will make themselves rich from this, but once again, the stock market will transfer wealth from the many to the few.
The hedge funds, while hurt, will survive this; the same cannot be said for many individuals’ portfolios.
As depressing as this may be, this does not have to be the end. This stock bubble has exposed many of the flaws inherent in our system. We have all known that the system is broken, but we now know we the people have power. We’ve been shown that when given a good cause, the people will answer the call and then some. Individuals banded together to make the 1% hurt, and that’s wonderful. However, let us not be led astray by those promoting this bubble as good for the proletariat. The proletariat cannot win in the current broken system. A few will become rich from this bubble, but the rich will go on as always. For any real change to happen, we must take further action in dismantling the system which oppresses us.
By Sam Redinger, Contributor