Wall Street's Chickens Come Home to Roost
On GameStop, Neoliberal Populism, and the Danger of Incomplete Critique
The Big Squeeze
The GameStop WallStreetBets saga is objectively hilarious. A horde of angry redditors lighting a hedge fund on fire for the memes ? Extremely funny. The White House press secretary answering a question about GameStop with “well I’m also happy to repeat that we have the first female treasury secretary”? Beyond self parody. CNBC pissing off so many people that the actual billionaire they had on to talk about the crisis basically just straight up said the old Occupy Wall Street line “you got bailed out we got sold out” to an increasingly irate Scott Wapner? Comedy gold. We’ll be returning to that Scott Wapner interview later because it turns out to be extremely important to understanding what’s really going on here but let me give a brief (and as we shall see necessarily partial) explanation of what’s happened so far. The saga started when the hedge fund Melvin Capital made a series of extremely expensive bets that the stock price of GameStop would fall, which could essentially only pay off if GameStop collapsed as a company completely. Redditors from r/wallstreetbets, an investing subreddit, got pissed off and jacked up the price of GameStop’s shares by hundreds of percent, which blew a hole in Melvin Capital’s pocketbook and almost immediately triggered calls for a bailout from the financial class. The financial press instantly lost their minds and began decrying the losses inflicted on hedge funds by “people sitting at home with their government checks”, who should stay out of finance altogether and leave it to the pros with their intercrate asset pricing models and true knowledge of the economy’s fundamentals. But the financial class had backed themselves into a corner. The primary argument for the supremacy of Wall Street has been, since the hostile takeover wave of the 1980’s (which continued under the euphemism mergers and acquisitions after Wall Street’s victory in the 90’s), that they and they alone could deliver shareholder value and thus should be given complete control of corporations in order to raise their stock price (see Karen Ho’s Liquidated: An Ethnography of Wall Street for a more complete history of this moment). This meant breaking with the conception of the corporation as a social entity with responsibilities to its workers that had emerged out of the era of class compromises and corporatism following WWII, and shattering both the working and technical classes by eliminating pensions and research and development departments alike. In return they promised a world of democratized finance, a whole nation of shareholders, enriched by the power of the banking sector to raise stock prices forever. On its face r/wallstreetbets is the perfect embodiment of that promise: ordinary people enriching themselves by buying stocks and driving up share prices. Wall Street insiders could cry all they like but had they too not done precisely the same thing by using the enormous piles of cash the government handed them at the beginning of the pandemic to jack up the share prices of companies like Tesla? Clearly the system is bullshit, as politicians from Ted Cruz to Alexandria Ocasio-Cortez yelled from the rooftops in response to Robinhood, the platform r/wallstreetbets used to buy shares of GameStop, shutting down purchases of the stock and even selling off people’s shares without their consent, and something must be done to fix it.
And the system is bullshit. As Piero Sraffa proved during the 1950’s and 1960’s Cambridge Capital Controversy (and as neoclassical economists have consistently tried and failed to refute) neoclassical economics cannot actually calculate the value of a bundle of capital goods. They have in effect absolutely no idea how much a company is worth because they can’t actually measure its assets. And this is all of course before, as Jonathan Nitzan and Shimshon Bichler have pointed out, you get to trying to measure the value of assets like software or brand value where even the bullshit practices used to measure the value of physical assets vanishes entirely and is replaced by “intangible assets”, the value of which is essentially just pulled out of their asses.
Certainly something must give. The system is as monstrous as it is incoherent. But the enthusiasm with which the right and even other billionaire investors have rallied to the cause of r/wallstreetbets should give us some pause. Ted Cruz’s wife after all works for Goldman Sachs. He is the very emblem of the fusion of the political and financial class he claims to be opposing. So why is Cruz firing on his own? Why are New York Republicans attempting to stage their own version of Occupy Wall Street? And why is the left likewise being drawn in? To answer these questions we need to take a digression back into the history of Occupy Wall Street and some of the theoretical debates it produced to give us a sense of the composition of the left and the right in the current moment.
On Occupy and the Disciples of Rand Paul
Americans have always been suspicious of high finance. Whatever its economic and colonial realities the imagery of the independent yeoman farmer (or later the small business owner) struggling against the hand of finance ingrained itself early and deeply into the national mythos, creating hostility towards the banking sector deep enough to stave off the formation of a central bank for over a century. It’s little wonder then that after the 2008 financial collapse an anti-high finance movement adopting the populist slogan “We are the 99%” would sweep the nation and bring together just about every dissident political tendency in the nation together into their encampments. Much has been written in the succeeding decade about Occupy Wall Street’s class analysis, in particular the use of We are the 99%. The great majority of it is absolutely interminable, and I will spare you the theoretical details, but in some sense both sides had a point. The most sophisticated analysis of the 99% vs the 1%, put forward by people like David Graeber but broadly ignored by the media, described how a tiny financial class class makes an incredible amount of money gambling with other people’s debts, uses that money to buy politicians, and then uses those politicians to bail them out when those bets go (as they did in 2008) horribly wrong. This class essentially circumvents the old Money to Commodity to More Money (M-C-M’ in Marxist notation) commodity circuit laid out in Capital as the way capitalist make their money by instead turning money into political power back into more money by using the state and the violence of the police as an enormous engine of debt enforcement and straight up armed robbery (as was the case of the massive wave of robo-signings of foreclosure notices that saw the government literally steal peoples’ houses and give them to the banks in order to help the banks recover from the financial collapse). The state (and really the entire international international system through the IMF and the World Bank) is thus transformed into an enormous engine of extraction that hands money to the 1% by taking it from the poor at gunpoint. Graeber even famously argued that this is what was really happening in Ferguson, where the police department had essentially become as shakedown operation that funded itself by enforcing draconian fines and penalties (in reality just armed robbery) on the most vulnerable people in society.
This is all true. But as Marxist critics rightly pointed out, this kind of critique, focusing on the state and a small part of the financial class, ignores the very important forms of exploitation that exist within the workplace. This in turn conceals a set of very important class distinctions by lumping the working class in with business owners small and large, managers, technocrats, and even the police (who can forget the infamous videos of protesters chanting you are the 99% at advancing police lines only to have their skulls split open by police batons), which leads to an incoherent form of populism instead of full-scale class war to abolish the capitalist system. After all if the real problem is that the financial elite are just parasites who use the state to prey on hard working Americans is the solution not simply to end crony capitalism, get money out of politics, and return to good old fashion American hard work? Graeber himself began to give lectures about how the current economic system, in which states essentially guaranteed the profits of corporations and insulated them against all risk couldn’t in any way be described as capitalism (never mind that massive bailouts of corporations were the norm even during nominally laissez-faire periods like the 1800’s) and accusations of crony capitalism became a constant refrain of the movement. All of this opened the door for a kind of Rand Paul style libertarian populism, which focused on the evils of the central banking system and the claim that this wasn’t really capitalism or the free market, which could only be established by ensuring that the state would be too small to “interfere” in the market. Followers of this ideology would invariably appear in every Occupy encampment and in classic libertarian fashion would proceed to cooperate with the police and fuck over everyone else. This libertarianism was also accompanied by an explosion in both right wing anarcho-capitalism and left wing market anarchism, fueled by the prevailing anti-state pro-market sentiments that drove a wing of the broader populist anti-establishment movement that emerged in the wake of 2008. This kind of pro-capitalist anti-establishment populism, as we shall see, is a kind of cats’ paw for the ruling class, designed to channel anti-establishment energy back into the capitalist system. But to understand why we need to talk about what neoliberalism actually is.
Neoliberalism’s Two Faces
Or Why Everyone, Including Its Supporters, Gets Neoliberalism Wrong
The definition of neoliberalism is notoriously tricky to pin down. As generations of scholars and beleaguered college students can attest, picking apart the details of the distinctions between neoliberalism, neoclassical economists, and libertarianism (which form three overlapping but not identical intellectual spheres) is indescribably dull and has caused me more than once to simply abandon projects in frustration at the sheer inanity of it all. Thankfully for our purposes the only distinction we need concern ourselves with is the one between neoliberalism and libertarianism, which in turn usefully reveals the real source of the analytic confusion that surrounds neoliberalism: neoliberals lie. They lie constantly, with a depth and breath that would leave even the greatest conmen gasping for breath. Often they call it “simplification” or “abstraction” but those terms can hardly be applied when the “simplification” in question is the precise opposite of their actual views. The result is a sort of Russian nesting doll of ideology, with an entirely bullshit outward facing doctrine churned out to con the rubes and a real doctrine, jealously guarded and discussed only behind closed doors and away from the prying eyes of the masses. The greatest of these lies is libertarianism, which neoliberalism dons like a carnival mask during election season and discards immediately upon taking power. The vaunted neoliberal opposition to the state vanishes with it. Once in power neoliberals consistently expand the power of the state, massively increasing military and police spending, unleashing torrents of mass incarceration, and directly “interfering” in the market to enrich their corporate donors and occasionally save them from financial ruin. There’s no contradiction in political practice here, the dominant view of the neoliberal thought collective has always been that a strong state is necessary for creating the necessary subjects for the creation of markets and for enforcing market discipline. As Philip Mirowski, one of the foremost scholars of neoliberalism, described it “The political goal of neoliberals is not to destroy the state, but to take control of it, and to redefine its structure and function, in order to create and maintain the market-friendly culture.” Hayek’s peons to “spontaneous order” and the necessity of the decentralization of economic life to secure liberty against the power of the state are revealed to be nothing less than horseshit to fool the rubes. By the time he wrote his little read Law, Legislation and Liberty Hayek was advocating for politicians (elected now by property owners over the age of 45) to serve 15 year terms and expansions of the state in ways that would horrify the vulgar libertarians who worship his early writings. Hayek’s actual political practice too stands in defiance of his principles. Neoliberalism would not emerge spontaneously from decentralized political and social relations but from a core of vanguardist intellectuals operating a network of think tanks that resemble nothing so much as Marxist vanguards and their front groups rit very, very large.
Mirowski draws fairly heavily on Will Davies definition of neoliberalism, “One of the best short definitions of neoliberalism is offered by Will Davies—namely, that it is a political doctrine depending upon a strong state to pursue the disenchantment of politics by means of economics”, largely to the great credit of both authors. But whatever the asperations of neoliberals the “disenchantment of politics” often fails, particularly during moments of economic and political crisis. To survive these events neoliberalism developed its own form of political populism, one that pitted its real doctrine (enrich a financial elite by the means of state extraction) against its nominal doctrine (decrease the size of the state to promote the growth of the free market). It is this game that appears to us as the r/wallstreetbets vs Melvin Capital, a neoliberal civil war designed to draw everyone involved back into the capitalist system.
The Faux Neoliberal Civil War
Returning now to the GameStop saga we find little is what it appears. The people who made the most money off of the r/wallstreetbets’ financial maneuvering in its initial hours was a massive hedge fund called Citadel Securities. The exact relationship between Citadel Securities and Robinhood (the app r/wallstreetbets used to make their stock purchases) is, as with all financial instruments, extremely complicated. If you want a better summary of what happened I highly recommend Alexis Goldstein’s piece on the subject. But the short version is that Citadel has an arrangement with Robinhood that allows it to see the purchases people are making before they actually go through. This allowed them to get their own bets in favor of GameStop’s stock skyrocketing in ahead of everyone else and in the process reap enormous profits. As Melvin Capital collapsed Citadel Securities stepped in to bail them out, ensuring that the firm would stay solvent despite all of r/wallstreetbets’ efforts. Later other hedge funds and individual billionaires would enter the fray and make billions off of r/wallstreetbets’ antics, ensuring that in the end the real winners would be, as always, the bourgeoisie. In the final analysis r/wallstreetbets serves as nothing more than a particularly hamfisted metaphor for neoliberal populism (and a source of popular entertainment). r/wallstreetbets presented itself as the alternative to the entrenched power of the ruling class, which bails itself out with other people’s money and leaves the people out to dry. The People, r/wallstreetbets posits, can defeat these entrenched interests by turning the power of the free market against Wall Street. All that stands in their way is financial regulation and the interference of the state, which must be swept aside in order for the free market to thrive. Meanwhile behind the scenes every move the neoliberal populists make has been already predicted and co-opted by the very finance firms they claim to be fighting, who reap the triple benefits of directly profiting off the financial instability, pulling political dissidents back into the capitalist system, and advancing the ideological shell of libertarianism to allow neoliberals continued political dominance. In this context billionaire venture capitalist Chamath Palihapitiya near Occupy Wall Street statements in the CNBC interview mentioned earlier are hardly surprising (as is the Republican party getting in on “re-occupy wall street). Chamath Palihapitiya and CNBC’s Scott Wapner are two faces of the same neoliberal machine, with Palihapitiya donning the mask of the populist and Wapner representing the stoggy neoliberal elite. The popular investment trend that Palihapitiya and r/wallstreetbets advance has always been a scam, designed to both build popular support for neoliberalism by promising people a piece of their own exploitation and trick rubes into throwing money into bubbles that are about to burst. The GameStop saga is not the revolution, the pundits who claim otherwise are just trying to sell you something (probably some shares in a stock they’re shorting). But that doesn’t means the situation is hopeless. The vaunted “real movement which abolishes the state of things”, which brings an end to the class system, settler colonialism and slavery once and for all, revealed itself in its embryonic state in the burning of the 3rd Precinct and the months of open Black insurrection that swept the globe. And as the neoliberal charade plays out in the media the real struggle continues.
Coda: Partial Critique and the Danger of Antisemitism
I have written here at length about several forms of partial critique which ultimately fail to fully grasp the nature of capitalism and settler colonialism. The attentive reader will have noticed that I have until now studiously ignored perhaps the most common and certainly the most dangerous form of “partial critique”: antisemitism. The Ron Paul populist and conspiracy theory parts of Occupy were absolutely rife with antisemitism, which has only become more mainstream as the overtly fascist wing of Trump’s base gained support and conspiracy theories like QAnon metastasized into real political forces. Already antisemitic forces are attempting to latch onto the GameStop debate to offer their own “explanation” for these events, seeking new converts and attempting to merge latent anti-systemic and antisemitic currents into the dominant political force in America. In this period in particular a partial critique which focuses purely on finance and on the power and actions of individuals (and not systematic critiques of the relations of production themselves, of settler colonialism as a structure, of capitalism as a set of social relations) is extremely dangerous. It is this partial critique that opens the door for antisemitism and the horrors it produces, which we must guard against at all costs. A more subtle analysis than what I have put forward here is necessary to understand the true danger we face in this moment so I will leave you with the words of the legendary Marxist scholar Moishe Postone, who produced just such an analysis in his seminal Anti-Semitism and National Socialism: Notes on the German Reaction to Holocaust. Read them, all of them, those reproduced here and in the text itself, that the world may never produce such a monstrocity again.
“It is true that the somewhat too concrete and plebeian “anticapitalism” of the SA was dispensed with by 1934; not, however, the anti-Semitism thrust—the “knowledge” that the source of evil is the abstract, the Jew. A capitalist factory is a place where value is produced, which “unfortunately” has to take the form of the production of goods, of use-values. The concrete is produced as the necessary carrier of the abstract. The extermination camps were not a terrible version of such a factory but, rather, should be seen as its grotesque, Aryan, “anticapitalist” negation. Auschwitz was a factory to “destroy value,” that is, to destroy the personifications of the abstract. Its organization was that of a fiendish industrial process, the aim of which was to “liberate” the concrete from the abstract. The first step was to dehumanize, that is, to rip away the “mask” of humanity, of qualitative specificity, and reveal the Jews for what “they really are”—shadows, ciphers, numbered abstractions. The second step was to then eradicate that abstractness, to transform it into smoke, trying in the process to wrest away the last remnants of the concrete material “use-value”: clothes, gold, hair, soap.
Auschwitz, not the Nazi seizure of power in 1933, was the real “German Revolution,” the attempted “overthrow,” not merely of a political order, but of the existing social formation. By this one deed the world was to be made safe from the tyranny of the abstract. In the process, the Nazis “liberated” themselves from humanity. The Nazis lost the war against the Soviet Union, America, and Britain. They won their war, their “revolution,” against the European Jews.
They not only succeeded in murdering six million Jewish children, women, and men. They succeeded in destroying a culture—a very old culture—that of European Jewry. It was a culture characterized by a tradition incorporating a complicated tension of particularity and universality. This internal tension was duplicated as an external one, characterizing the relation of the Jews with their Christian surroundings. The Jews were never fully a part of the larger societies in which they lived nor were they ever fully apart from those societies. The results were frequently disastrous for the Jews. Sometimes they were very fruitful. That field of tension became sedimented in most individual Jews following the emancipation. The ultimate resolution of this tension between the particular and the universal is, in the Jewish tradition, a function of time, of history—the coming of the Messiah. Perhaps, however, in the face of secularization and assimilation, European Jewry would have given up that tension. Perhaps that culture would have gradually disappeared as a living tradition, before the resolution of the particular and the universal had been realized. This question will never be answered.”
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