GameStop’s story isn’t revolutionary. The rich just got richer.

Monopoly Money and the GameStop logo
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The hashtag #EatTheRich has been all over social media in recent days because of the “GameStop” chaos that has engulfed Wall Street. People have been pushing the narrative that the ‘small guy’ has taken on the big financial corporations and won. But this is, in no uncertain terms, utter bullshit.

Welcome to GameStop

CBC reported on the current storm surrounding a video game retailer, the online social media platform Reddit and some hedge funds. It said:

Shares in a U.S. retail chain that hasn’t made any money in years have risen by 1,000 per cent in less than two weeks, wiping out billions of dollars from two Wall Street investment funds in the process.

It went on to note that:

In the early days of COVID-19, the company’s shares were changing hands at around $4 US a share. They hit almost $400 on Wednesday

What happened is this.

What’s going on?

Hedge funds are financial organisations. They pool together their members’ money. Then, they use this money to make more money. Some people say that hedge funds helped cause the 2008 financial crash. This is because the way they work is risky. But it is also often unethical. For example, hedge funds regularly make money by betting that a company’s share price is going to fall. This is called “short selling”. CBS said:

Read on...

short sellers make money on falling shares by borrowing the shares from existing shareholders, selling them and then buying them back to replace the shares they borrowed at a lower price later and pocketing the difference.

So, hedge funds had been short selling GameStop’s shares. They thought the price would fall. But another group of investors cottoned onto this. They were part of a Reddit group. These investors saw that GameStop’s price was falling. They knew it was because hedge funds were short selling the shares. So, they decided to buy a load of them. Then, they refused to sell them to the hedge funds. This caused GameStop’s share price to quickly rise. And it meant that the hedge funds lost a load of money.

But then, a stock market trading app called Robinhood got involved. It saw what the small investors were trying to do to the hedge funds. So, it stopped people buying GameStop shares. But, small investors got angry. So, Robinhood allowed people to start buying shares again.

So, why has this story caused such a fuss?


People have been using #EatTheRich to talk about the story. They believe that the small traders who outdid the big hedge funds gave poor people a victory over the system. For example, Srivatsa tweeted:

Braus UK said that this could be “the largest redistribution of wealth in history”:

And Ash WSB thought this was an example of the system shutting “regular” and “poor” people down:

All of this is bullshit. Here’s why.

Cut the bullshit

First, the small time investors, called “retail” investors, who screwed-over the hedge funds aren’t “regular” of “poor” people. BBC News reported on some of them. One was a “railway cyber-security engineer”. The 28-year-old from Kingston-upon-Thames in London was having trouble with his non-state pension. He said the pandemic ‘dealt it a blow’ last March. So, he decided to starting investing in shares. Someone else is currently doing a degree. But he’s hoping to go into investment banking as a career. Another small investor was a nurse. She used massive corporation Fidelity to buy $500 of GameStop shares. Her grandfather was an independent stock trader.

These are not “poor” people. They didn’t spend their social security on GameStop shares. For example, I’d say a nurse having enough money to pay a multi-trillion dollar asset management company to “manage her retirement investments” isn’t the ‘norm’. As a fairly ordinary 40-year-old man, I have no private pension; nor do I have investments. And I wouldn’t have $500 knocking around to invest in anything.

But there are other problems with the GameStop story.

Making a killing

People have been pushing the narrative that this is some sort of revolutionary act. But as one former Wall Street trader told TRUTHOUT:

This isn’t hedge funds versus retail. It’s hedge funds versus other hedge funds… with retail driving the way forward. Melville [Melvin] Capital (a hedge fund that was shorting GameStop) may have imploded. But Citadel (a hedge fund whose Market Making arm is handling the majority of Robinhood orders) took part of it over. That’s hardly a resounding victory over the biggest titans of finance.

You only have to look at who else made a killing from GameStop to realise this. Because already very rich people have also made money. The Guardian reported that:

Other winners include Donald Foss, the 76-year-old founder and former CEO of Credit Acceptance Corp, a subprime auto lender. Foss bought 5% of GameStop early last year for about $12m. His stake is now worth more than $500m.

In 2020, Credit Acceptance Corp was subject to a class action. The claimants said that the company:

had, for years, made unfair and deceptive automobile loans to thousands of Massachusetts consumers. In addition, the lawsuit specifically alleges that Credit Acceptance provided its investors with false and/or misleading information regarding the asset-backed securitizations it offered to investors, and that Credit Acceptance engaged in unfair debt collection practices as well.

But another crucial example is BlackRock. And its benefitting from GameStop sums this whole mess up.

The BlackRocks of this world

BlackRock is an asset management company. And it may well have made over $1bn from the GameStop saga. This is because it owned 13% of the company. Compare Blackrock’s £7.8tn (yes, trillion) of assets to Melvin Capital’s £12.5bn – meaning it is 0.16% of the size of Blackrock. So, the GameStop saga was not some ‘David and Goliath’ battle. It was individual traders taking on a relatively minor hedge fund and the principles of the system. So actually, this isn’t potentially the “largest redistribution of wealth”, as Braus UK called it. The GameStop saga has just made the already very rich even richer. And what it’s also done is further kept in place the system we live under.

In 2011, New Scientist published research into corporations. It found that in 2007, just 147 companies actually controlled 40% of the wealth of 43,060 trans-national ones. That is, as New Scientist put it, just a handful of companies formed a “capitalist network that runs the world”. These 147 companies were mostly financial institutions. And overall, just 1,318 companies dominated the global economy. Other studies found similar results. So, it gives an idea into how our globalised economy really works.

Fast-forward to 2017, and little appeared to have changed. In fact, in some respects it had got worse. A Cambridge University study found that BlackRock and two other investment firms were the largest shareholders in 88% of the top 500 biggest US firms trading on the S&P 500 stock market. It’s fairly safe to say that’s still the case now. Therefore, the GameStop/Melvin Capital saga is hardly revolutionary. What it’s highlighted it that our economic system is a corporatist, not capitalist, one.

Welcome to corporatism

Naomi Klein said in her 2007 book The Shock Doctrine that:

A more accurate term for a system that erases the boundaries between Big Government and Big Business is… corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security.

She also noted that:

other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, although not always, torture.

Ring any bells? This has been the US and UK system for years. Now, in the age of the coronavirus (Covid-19) pandemic, it’s accelerated. The point being, much of the debate about GameStop has been about “free markets”. People have realised that the markets aren’t actually ‘free’ at all. But government and regulators rig them in favour of a handful of large corporations.

One example is the regulator’s response to the GameStop saga. They’re going after the mid-sized hedge funds and trading apps. This leaves the likes of BlackRock sitting pretty. So, these huge companies both control and benefit from the corporatist system. But what’s the alternative?

Milton Friedman would be thrilled

Jacobin noted that the GameStop saga was:

the market working as it’s theoretically supposed to

That is, free market, or laissez-faire, capitalism. Investopedia sums this up as:

The purest form of capitalism is free market or laissez-faire capitalism. Here, private individuals are unrestrained. They may determine where to invest, what to produce or sell, and at which prices to exchange goods and services. The laissez-faire marketplace operates without checks or controls.

This is what we saw at first with GameStop. Private individuals being able to manipulate and make money from the stock market. But is free market capitalism any better than corporatism? In short, no.

Don’t listen to the capitalists

Entrepreneur” and former KPMG executive (one of the biggest accountancy firms in the world) Sid Mohasseb argued in the Independent that Joe Biden needs to enact free market capitalism. He said:

America… does not need handouts. It wants a helping hand up towards self-sufficiency.

Biden must put America first by unleashing its power of entrepreneurship, and giving true capitalism a fighting chance

The problem is, the pitfalls of corporatism would still be there with “true” capitalism. Greed and wealth hoarding won’t suddenly go. They’ll be more spread out, with more bosses ready to exploit workers. Inequality would still be there. The social diseases that come with a system based on hierarchy (addiction, mental health and crime) would still sicken us. Corporatism may have created, as Klein put it, a “chasm” between the super-rich and the rest of us. But free market capitalism would just put those chasms on our doorsteps and in our neighbourhoods.

A global Monopoly game

Moreover, the globalisation horse has bolted. You can’t suddenly shut the stable door on the likes of BlackRock; nor on the Walmarts and Amazons of this world. Both systems also revolve around poor people owing money to rich people (debt). Both corporatism and free market capitalism only ever leave one group of winners.

All that’s without stock markets essentially being filled with pretend money: numbers on screens, created at the click of a button; how much of it there is depends on the whims of gambling bankers. And when they bet on the price of water – you know we’re fucked. We’re locked in a global game of Monopoly. Seven billion of us are playing it, along with a handful of bankers and their lackeys. And regardless of the economic system, none of us will ever own Park Lane.

There’s no easy solution to the sickness of the economic system. But it’s definitely not corporatism or free market capitalism. And it certainly isn’t what went down with GameStop.

Too far gone?

Revolution is not a group of fairly well-off individuals playing games with a hedge fund. Progressiveness isn’t getting doe-eyed about ‘true free market capitalism’. The future certainly isn’t corporatism. And to be honest, I no longer know what we need to do as a species to save ourselves. But what I do know is that anything involving the stock markets isn’t radical, by default. Unless it involves the entire collapse of the system.

“No is not enough” as Klein called one of her books. Tinkering around the edges of the system will bear no fruit. So, let’s stop pretending that minor blips in corporatism’s MO are anything more than that. We need seven billion people to collectively start to enact change. And until that happens, anything else is just window dressing.

Featured image via Suzy Hazelwood – pxhere and Wikimedia 

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  • Show Comments
    1. Although I agree with most of the content I do take issue with the headline.
      A few people I know have invested in GameStop. These people are on slightly above average wages (~£35K).
      The ‘poor’ taking on Wall Street is hyperbolic but is *relatively* true when in comparison to the hedge fund investor (professional gambler) wages (£200K* to £125M).

      Secondly, the hedge funds were short selling GS stock by over 100%, purposefully sinking GS value for $20 per share down to $4, which is what made this whole thing possible.

      Personally I’m enjoying the hedge fund managers tears.

      * Figure does not take into account of bonuses & dividends.

    2. Short selling depends on ‘borrowing’ shares, selling them, and then replacing them after the market has fallen.

      Who would lend shares to a fund knowing it intends to short the stock and the shares when returned will be worth about a quarter of what they were worth before you lent them out? Well of course no-one. Well no-one that knows, as these are ordinary peoples’ shares lent out by the brokers that they trust to look after their interests, and the first the owners of the shares know about it is when the value has plummeted. In return the brokers get a payment from the borrower. And alarmingly this is with the share owners permission, because it is in the small print of just about every commission free broker’s T&Cs that the broker can do this. And we all read the small print, don’t we?

      Remember folks, if it is free then YOU are the commodity.

    3. One of the worst parts about what happened which doesn’t get a mention is, ordinary people were banned from buying a stock to drive the stock price UP so institutions could continue to drive the stock price DOWN. How deeply immoral that is.

      Once they invented a way to profit from stock prices going down it became a racket.

    4. Agree to a large extent. The system is rigged. The smaller investors are at a built in disadvantage. And its typically ‘human’ to want to play in the exact same rigged system to pick up a few scraps here and there. I always think that our character as a species creates our own misfortune. We are hierarchical by evolution. We are greedy and self interested by evolution. Making the best of a bad lot, is the way I always think of a fairer system. Because of our nature I don’t think ‘true’ socialism and only socialism would work. The best of a bad bet is probably a mixed economy. A regulated capitalism with a strong social motivation.

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