By: Comrade Toussaint

Redditors, many of whom were frequenters of the subreddit r/wallstreetbets, had the financial world all atwitter this week as shares of Gamestop (GME) rose exponentially, closing at $347.51 on Wednesday. On Thursday, shares peaked at $483.00. A week before, it was trading at just under $40. These relatively small actors are being widely discussed and blamed for driving up the price of Gamestop through anonymous reddit accounts unconnected to any institution or firm.

Hedge fund managers and other big financiers had been betting that the stock would fall in value, leading them to short sell large amounts of the stock. A short sale is essentially when an investor or institution borrows a company’s stock, sells it, and then buys it back later at a lower price to realize a profit. When the value of a company’s stock goes up, the short seller loses money. The argument made by those who shorted Gamestop is that it is part of a dying industry, being smashed by online retailers and is not expected to survive. This led some “smart money” on Wall Street (compared to dumb money, or individual retail investors dealing in relatively small amounts) to make large bets against the company’s stock. Those who believe that Gamestop is viable point to a trend of rising price in the value of the company’s stock over the past months and a strong earnings report driven by digital sales.

Short selling can be dangerous because there is theoretically no limit to how much a trader can lose through this process. This is what happened with Gamestop. There was nothing fundamental about the company that triggered this exponential rise over the course of a couple days. This demonstrates the anarchy and chaos of the capitalist-imperialist financial system. Even more ludicrous is that these institutions shorted more shares of Gamestop than actually exist! Most hard hit was the hedge fund Melvin Capital Management, which was able to close its short position (buy back shares that it had shorted) and was bailed out by two other hedge funds (Citadel and Point72 Asset Management) to the tune of $2.75 billion dollars.

Popular retail investment app Robinhood came under fire for restricting trading in the stock, as did TDAmeritrade. This has been roundly denounced by retail investors as a purposeful restriction of their rights as traders. Furthermore, Robinhood has been arbitrarily closing retail investors’ positions. A class action lawsuit has been filed against Robinhood accusing the company of manipulating the market and shutting out customers.

The contradiction between small retail traders and large hedge funds such as Melvin Capital Management is a contradiction between the petit-bourgeosie (which literally means small bourgeoisie) and the big bourgeoisie and finance capitalists that manage hedge funds. Small traders who try to behave in a fashion similar to “smart money” are routinely ruined, restricted, and punished, while the big finance capitalists bail each other out or merge with each other to avoid bankruptcy. NASDAQ has stepped in as well, saying that they will take action to prevent volatility based on social media posts on Twitter and reddit, once again putting the lie to the myth of the “free market” that Americans imbibe freely. Large financial capitalists routinely engage in shady and barely legal activity as a matter of good and pragmatic business sense. Relatively small traders are now being hounded for doing what is entirely legal. The big winners of this week weren’t small traders, although they made some modest money provided they bought their shares when the stock was still in the double digits and sold when it was in the triple, the winners were big hedge funds like Blackrock, which is projected to have made $2.4 billion over the course of this week. The house of cards simply must not be allowed to collapse, the memory of 2008 still rings in the ears of many. The memes claiming that “reddit bankrupted a hedge fund” are erroneous, as Melvin has not gone bankrupt. While the memes regarding the “small guy sticking it to the big hedge funds” are amusing and hilarious, we should not act as if the majority of the working class and proletariat who can not afford to lose even a hundred dollars, never mind $1,000, over the course of a few days can afford to dabble in the stock market. Even the “little guys” in this situation are still dealing with amounts of money that are tens of thousands of dollars. The smallest “investor” is lower petit-bourgeois/labor aristocrat, or can afford to save money to dabble in the market through living with roommates and family, engaging in legal or illegal side hustles, or a variety of other money making activities. The average proletarian spends their money as soon as they make it and can not afford to risk their bills, rent, food and gas money on the stock market.

The class character of those who engage in activity around r/wallstreetbets should also be taken into consideration. A cursory glance at the subreddit shows that many of them have vaguely progressive views, are certainly opposed to the big financial bourgeoisie, and in many cases are politically educated through losses and the blatant double standard afforded big institutions versus small investors. The appropriate term to describe the general sentiment would be petit bourgeois left populism, reminiscent of the Occupy Movement. They see themselves as the 99% trying to game the system. Of course, as every gambler knows, the house either wins or it will flip the tables over.

What should be the position of the Communist revolutionary who may have a bit of disposable/losable income, or who dabbles in the market? Ironically, Marx and Engels in their day did engage with the financial markets, with Marx saying in an 1864 letter to his supporter and friend Lion Phillips:

I have, which will surprise you not a little, been speculating — partly in American funds, but more especially in English stocks, which are springing up like mushrooms this year (in furtherance of every imaginable and unimaginable joint stock enterprise), are forced up to quite an unreasonable level and then, for the most part, collapse. In this way, I have made over £400 and, now that the complexity of the political situation affords greater scope, I shall begin all over again. It’s a type of operation that makes demands on one’s time, and it’s worth while running some risk in order to relieve the enemy of his money.

Engels, in pragmatic fashion, wrote to soon to be revisionist Eduard Bernstein in 1883:

“But one can perfectly well be at one and the same time a stock exchange man and a socialist and therefore detest and despise the class of stock exchange men. Would it ever occur to me to apologise for the fact that I myself was once a partner in a firm of manufacturers.. There’s a fine reception waiting for anyone who tries to throw that in my teeth. And if I could be certain of making a million on the stock exchange tomorrow, and thus put an ample supply of funds at the disposal of the party in Europe and America, to the stock exchange I should promptly go.”

Huey P. Newton also chastised a supporter who turned down an offer to get a million dollars for the benefit of the Black Panther Party, and the Party itself routinely solicited and accepted donations from Hollywood stars and popular musicians. Communists regularly need money for our variety of projects, and the financial markets in many cases can be used to make money (or lose it) — there’s a choice between being a “pure proletarian”, which is a myth inspired by petit bourgeois idealism and lifestylism (even most real proles hustle on the side), or taking opportunities to get money which can be used to grow the movement. Of course, money making should not be the primary or even secondary role of Communists, but it would behoove Communists to be a bit more pragmatic and creatively use things to our advantage and the advantage of our organizations when possible.