Hold the line
Like many, I spent a lot of time this week reading up on why the stocks of moribund but highly recognizable businesses like GameStop, AMC Theatres, BlackBerry, and Blockbuster were suddenly rocketing upward, thanks to the combustible combination of apps like Robinhood, which offers commission-free trading (though it has since controversially restricted this), and the stock-pumping forums on Discord and Reddit, most notably one called r/WallStreetBets, famously self-described as "if 4Chan found a Bloomberg terminal." There are probably hundreds of explainers by now that go into the arcana of short squeezes, order flow, and delta hedging on one side (I generally find Matt Levine's commentary useful on this front), and the culture of subreddits, with their shitposting, inside jokes, and other expressions of taunting, bullying, and bravado, on the other. (DO NOT SELL!!! HOLD THE LINE...)
The take bubble about the stock bubble was itself so intense that it already feels complete: "What was the meme stock?" For a moment it seemed like these online forums had found the most direct way to turn virality into money — the influencerization of everything comes to Wall Street, at last. It would be the apotheosis of a public sphere that functions like a market, where every utterance and every participant receives a real-time score. Social media platforms could finally cease maintaining their parallel forms of sociocultural capital and be fully collapsed into stock exchanges: Why parcel out status and recognition in likes and shares when you can get down to the tried-and-true measure of money?
Admittedly, it was a relief and a novelty to be absorbed by news that was not about Covid-19 or Donald Trump; perhaps that alone has helped fuel all the attention paid to GameStop (which in turn inflates its bubble further). Though you could still interpret the story in terms of Covid (quarantine boredom drives hobbyist day trading) and Trump (conspiratorial chat and "meme magic" are shifting away from Trump and QAnon and back toward gaming, nostalgia, and greed), it felt as though a page had been turned and the possibility could again be entertained that resentful online mobs might be populist in a positive way.
Some tried to construe the Reddit investors as akin to the Anonymous hacker collective or to Occupy Wall Street; they were described as protesters who seized upon a sophisticated strategy to strike at the heart of capital and expose the irrationality of financialization. I could even imagine someone trying to treat them an immanent expression of Hardt and Negri's "multitude," which is destined to dismantle "empire" from within. If anything, the investors are probably more like the gilets jaunes protesters, with ideological alignments that are inchoate and contradictory, subject to spontaneous drift.
Regardless of its implications for how stock markets work (and there may well likely be none), the GameStonk saga speaks to the rational irrationality of emergent collective action. One could place GameStop in the lineage of "Extraordinary Popular Delusions and the Madness of Crowds," to borrow the title from Charles Mackay's 1852 book on fads, hoaxes, panics, financial bubbles, and the like. In the preface, he writes, "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." This view basically makes rational thinking individualistic by definition, and collective goals (let alone a collective subject) misleading alibis at best.
As with the South Sea Bubble (or the late 1990s tech bubble), the GameStop phenomenon could be explained as individuals getting carried away by a seemingly plausible narrative about a new method to make money. This might be a matter of imperial expansion opening resources and peoples to exploitation, or it might be a technological innovation or "disruption" of an everyday practice or business model, or it could be a familiar product that has been financialized in a new way, as with Dutch tulips in the 1630s or suburban American houses in the 2000s. In the case of GameStop et al., the story is that the internet has made it relatively easy for random investors to coordinate stock bets, making "outsider trading" the new insider trading.
Eventually dissemination of the bubble narrative itself drives the bubble. "Popular imitativeness will always, in a trading nation, seize hold of such successes, and drag a community too anxious for profits into an abyss from which extrication is difficult," Mackay writes. In other words, "dumb money" pours in and is vaporized. To protect people from making their money dumb, they must be made to think investing is so complicated and confusing that it must be left to the professionals. (Much of the reaction to WallStreetBets in the mainstream finance and business sphere is predictably shaped by this idea. Robinhood's trading bans, also.)
But on the forums, some stock touts have argued that GameStop represents something genuinely new, with "dumb money" sticking it to the hedge-fund professionals. That is the rationalizing narrative, and they have a vested interested in convincing as many people as possible of it. They want everyone to believe that rather than a hodgepodge amalgamation of amateurs, rogue finance bros, and hardened gamblers pursuing their own self-interest and being coordinated by only mimesis and market movements, they are in fact an organized movement, unified by political motives, by class struggle.
In essence, what this means is that they have turned the idea of political organization itself into a bubble. That seems less like the road to utopia than a way political resistance can be subsumed and neutralized.
It also creates a "community" held together by pure reaction. If "outsider" Reddit investors were to choose "logical" or "rational" investments, the outcome wouldn't register the group's existence or its power; it would just reinforce what was already expected. (The same logic holds for "believing the earth is flat" or "nominating Donald J. Trump for president" or "spreading QAnon.") By choosing obviously bad stocks, their investments manifest not their individual good sense but their "irrational" commitment to one another as a force that others must recognize — others quickly configured as "enemies," if they weren't already seen that way at the outset. The specter of "enemies" sustains the emerging group's momentum.
The collective commitment to buy and hold, as with Bitcoin, creates an exciting chart, a legible proof of a community's power and faith, but the "profit" apparently traced can be realized only by a few; the rest will be left holding the bag. Selling high is rational at the individual level, but it would negate the basis of the community, which has been structured as necessarily irrational in order to make itself known. But at least the eventual bag holders will have bought themselves a fleeting escape from a pervading sense of impotence, and who can properly price that?