A look at the Wall Street Bets / GameStop "Revolution" and what it can tell us about the politics of technology and the failings of society.
Since it's probably going to take another year for me to finish the second episode of the "Fear Inoculant" series, I'm going to repurpose some papers I wrote in grad school into a few bonus episodes of the next month or so. This episode focuses on the Wall Street Bets / GameStop "revolution" of January 2021 and its implications on the politics of technology and the failings of society at large.
For citations, please visit the blog post on my website.
Occupy WSB Mixdown 1
[00:00:00] Hey everyone. And welcome to God's masters in cloud three things that well, honestly, are a little bit more complicated than I originally knew when I started this podcast. First things first, I'm sorry about not posting more regularly. This year has been just as crazy as the last one is. I'll get into the details of where I've been at lately when I do finally and eventually complete the next episode of the fear inoculant series.
[00:00:30] But one important thing that I did this last year was get into grad school, actually something I never thought that I would be doing. I'm attending the social technologies program at Arizona state, and I'm really liking it so far, but I'm still, also working full time. To be honest with you. I don't know when the next episode full episode is going to come out.
[00:00:55] So I thought in the meantime, In this last semester, I wrote a few things that I thought, you know, maybe had some worth to them. Maybe the ideas were worth putting out there. I put them on my blog on Casey franco.com that nobody really reads and I don't promote, but it makes me sleep better at night knowing, you know, maybe those will live.
[00:01:18] At least until the account that pays for that domain, you know, runs out of money and they disappear from the internet. Um, but I also thought that as an end of the year sort of gift maybe, or maybe just to make you feel like this subscription is a little bit worthwhile, I thought that I would record some of these papers, um, in an audio format and give them the same gods masters.
[00:01:42] Treatment that I've given the other episodes. So over the next month or so before I leave the country, once again, sorry, long story. We'll get into it here. I'm going to try to record at least three of these and then release them here as bonus episodes. Sorry, long explanation for a very simple episode. So without further ado here is bonus episode.
[00:02:03] Number one, a paper I wrote titled occupy wall street, bets, digital revolution. And technological constructivism, please enjoy
[00:02:29] to set the scene. It was the morning of January 27th, 2021, a very sunny day in Sao Paulo, Brazil. And. I was anxious to witness a revolution. It was roughly 8:00 AM. I had just sat down with my morning cup of coffee. My workspace was set as it always was a Mac book pro to my left running both the software I needed for my real job and a web browser logged in to Robin hood doc.
[00:02:57] To my right and iPad, open to the Reddit app R slash wall street, bets daily discussion, post, front, and center with a comment section set to automatically refresh every five seconds. This subreddit had become for me. What a traditional day trader might've considered a ticker tape, albeit peppered more heavily with.
[00:03:17] Hi and millions of others, like me had only one thing on our minds that morning, a video game retailer, that hadn't been significant to us for more than a decade for the uninitiated. A few terms here need to be unraveled from the top. Starting with Robin hood. As the name suggests Robin hood was devised as an online brokerage platform for the little.
[00:03:40] With no commissions on trades availability on all smartphones and a sleek user interface. It was my first choice for trading. One could feel free to invest modestly to their heart's content aided by helpful information real-time pricing and for a small monthly subscription access to trading on margin.
[00:03:59] This low barrier to entry meant it was the perfect tool for inexperienced traders. The year of its creation, it had roughly 500,000 users. In 2021, it had roughly 18 million. Most of these users were not your typical wall street patrons. They were your average. Joe's your side hustlers. Perhaps people you would see sitting at a slot machine on a trip to Las Vegas.
[00:04:25] As of December 27th, 2020, most of these users had received at least $600. Thanks to the consolidated appropriations act. Stimulus checks meant to offset financial worries due to the COVID-19 pandemic. For me, the pandemic uprooted, my entire life and $600 was not going to change that. So into my savings account, it went and I was not the only one.
[00:04:50] According to the comments I saw on our slash wall street. This will become important. R slash wall street bets is what's known as a subreddit or a forum within the broader and fabulously popular website. reddit.com. Reddit stands currently on the shoulders of giants like digg.com and slash.dot com by this.
[00:05:11] I mean, although functions like allowing users to organize into communities based on shared interests and filtering user submitted content based on a democratic voting system are powerful functions. They are not without precedent yet. Despite the possible banality of its utilities, Reddit currently has 52 million daily active users.
[00:05:33] Roughly 1.7 million of these users were subscribed to our slash wall street bets at the time of January, 2021. At the time of writing August, 2021 wall street bets had garnered a whopping 10.8 million subscribers. Compare that to the self-reported 11 million client accounts posted by a more traditional retail investing platform, TD Ameritrade.
[00:05:58] And you've got the beginnings of a trading paradigm. If communities of practice are collectives who quote, share a concern or a passion for something they do and learn how to do it better as they interact regularly than wall street Betts was and is a community of practice built upon a framework of constant interaction revolved around a singular purpose, the acquisition of tinnies or wall street bet.
[00:06:27] Slang for chicken. As humorous as this is, I find it illustrates the original pathos of the subreddit quite well. We are average people. We've seen how the volatility of the global market has meant financial ruin for millions and simultaneously consequence, free windfalls for hedge fund managers over the last couple of decades we want in on that fun, but we're not greedy.
[00:06:52] We don't want a yacht will be satisfied with chicken tenders from McDonnell. Any further enjoyment will come from celebrating the gains and losses of our fellow wall street, Betts trader. Our favorite movie is Adam McKay's the big, short, not all of her stones wall street, just like the brokers that were mocking.
[00:07:13] We will risk financial ruin for ourselves. The difference is in the pursuit of only enough to purchase fast. To us. This is no more absurd than the structure of the market itself. All value is relative. And my only allegiance is to my portfolio and my fellow wall street better. You only live once. Now, of course, this is not an actual quote.
[00:07:40] This is just my impression of the average wall street Betz user after my two or so years of use and association that began embarrassingly approximate to the market crash of March, 2002. From March, 2020 to January, 2021, I felt sentiments towards the federal reserve, the United States government, and even the stock market in general change for the worse on wall street bets, while not rosy to begin with the announcement of unlimited quantitative easing via the federal reserve in late March, 2020 did not endear itself to the members of this community who took pride in their little guidelines.
[00:08:21] What unlimited quantitative easing mint was the federal reserve committing to the purchase of long-term securities as a means to reinflate the crashed market. Literally, no matter the cost on the always sardonic wall street Betts forum, this came to be represented by an animated Geoff of federal reserve chairman Jerome Powell.
[00:08:43] Feverously cranking dollar bill is out of a handle crank. If we assume that the average age of a wall street bed subscriber parallel the average age of a Robin hood user, then at 31 years old and amateur trader witnessing the 2020 bailing out of the economy may have gotten flashbacks to the 2008 housing crash and subsequent stimulus and quantitative.
[00:09:06] At that time, the billions invested to save wall street instead of the victims of subprime loans sparked a mass movement called occupy wall street. So named under the idea that if wall street can physically influence where we live, we can physically influence where they live for many millennials, myself included.
[00:09:26] This represents a moment in time where the values of their governing state became abundantly. Now there's much literature devoted to why occupy wall street withered away, but what's clear is it sentiments lived on in the backs of the minds of average millennials as they went off to or finished college crushed by student loan debt and hegemonic ideology that tells them no forgiveness is coming for the responsibilities.
[00:09:52] They took on themselves. Fiscal responsibility for the, and not for me fast forward now, again to early January, 2020. With Robin hood as the tool for practice and read it. The tool for communication wall street bets had become a well-oiled machine, a decentralized grassroots community of semiprofessional and amateur investors, millions of users strong, and they knew what.
[00:10:21] In the weeks prior to the 27th users on the subreddit had noticed something many large hedge funds had begun targeting older brick and mortar retailers for short sells as the market shifted to one less dependent on physical storefronts or another words, wall street was betting on these traditional storefronts.
[00:10:42] This created a kind of self fulfilling prophecy where trusting one another's valuations, more and more hedge funds took short positions. This drove the stock price of the retailers further and further down as a stock's price simply reflects what someone is willing to pay for it. Not that stocks inherent.
[00:11:02] One such retailer was game stop. If we are to continue, assuming the average age of a wall street, Betz user, this particular storefront meant something. It represented a cultural Mecca for a younger class of citizens that grew up in a time of perpetual budget cuts for social programs and infrastructure while wealth inequality.
[00:11:22] SkyRide. It represented the good old days of our childhood. We're a new game mentioned escape from the outside world, a world that seemed radically more alienating and scary than the one our parents insisted was out there waiting for us. The 27th of January was the reckoning. The philosophy was as follows.
[00:11:45] We like the. In the same way that cumulative short speculation drives the stock price down cumulative long speculation must drive a price up. Hedge funds, take positions worth billions of dollars, but relatively few positions compared to the total volume of trades on a given. Users realized it's not the reputation of these agencies that drives the prices down.
[00:12:12] It's just the size of the positions. Therefore, in the same way that a few friends could get together and all by themselves, shares of a stock that just might perform poorly communities using the internet could collectively decide to buy a stock together. Suddenly individuals investing their spare change could be joined by millions of other like-minded investors doing this.
[00:12:35] This realization created, what can maybe be seen as the world's first crowdsourced hedge fund by joining together and buying the quote unquote artificially low price of a share of GameStop, which was $3 in early January, 2021, due to the speculative nature of the. The price must go up. As people are willing to pay more for the sock, what made the 27th?
[00:13:03] So notable was its proximity to the expiration date on many short positions for large hedge funds. Should the price of the stock rise high enough. Many of these positions would expire worthless. Meaning huge losses for the hedge funds that bet against them. And as wall street bets theorized huge spikes in value for the stock.
[00:13:24] As these negative positions disappeared and had to be covered by the hedge funds. Thus wall street bets set out to quote unquote short squeeze GME, the ticker symbol for game stop from the clutches of wall street on the morning of the 22nd. The price for a single share of GameStop was $347 and 51 cents.
[00:13:52] And increase of more than 11000% in roughly a month. One particular hedge fund singled out by wall street bets. Melvin capital was forced to cancel their positions, netting a loss of nearly $7 billion over the course of the next. Now it never fully went under, but to this day it has not recovered. So mission accomplished.
[00:14:18] Now on the other hand, GameStop has yet to reach the same Hyatt did on January 27th. And thus many people who joined in the fight are still holding their shares of GameStop, waiting for financial revolutionary sentiment to hit a fever pitch. Once more for the price of a share of game stop and old. One could join in a fully digitalized revolution that was realizing the dream of occupy wall street showing wall street, that there were power in numbers.
[00:14:49] However, unlike the original occupy wall street movement, the wall street bets versus Melvin capital saga burned faster, brighter, and hotter. Its results were not simply. They were tangible like occupy wall street. It's hard to decide exactly whether or not this movement could be considered a success or, or whether it was even a movement to begin with.
[00:15:12] However, in the minds of millions who were watching and participating this digital revolution provided a valuable lesson about democracy and collectivity. So what further lessons can we derive from the wall street bets? Because of the moralistic Hollywood, ESC underdog versus big bully themes of the story, it can be hard to quantify the technological structures that underpin it all at its heart.
[00:15:37] It's a continuation of the story of techno democratization that has been unfolding since the internet was invented. It's a story that begs questions regarding the definition of democracy itself and even deeper, what it means to act in an autonomous. And non-coercive. What it means to be free famously wall street, mocked occupy wall street, CNBC still respects the name wall street bets almost a year later.
[00:16:06] One of the crucial differences between these two movements, where the tools at their disposal occupy wall street consisted of an occupation of new York's financial district, but had scarce doctrine beyond that their communication was based largely around Twitter, but was de-centralized and. There are only tool for non-violent practice was their bodies.
[00:16:27] And maybe a hashtag or two hashtags are not particularly useful. Revolutionary tools and one's own body is technically a tool for protest, but it's a tool with high collateral potential. Compare this to the tools at wall street bets. Their emotional fuel was exactly the same, a revulsion to the hypocrisy of market and state values, but they were singular in their battle plan due to their communication through Reddit.
[00:16:55] They were a community of practice, not necessarily people piggybacking on a hashtag. Their weapons for change were smartphones and tablets now Molotov cocktails, and the same government that they saw as the harbinger of an artificially inflated. I had just gifted them $600, not enough to severely help with rent, but perhaps enough for a couple of shares of game stop.
[00:17:21] Neither Reddit nor Robin hood. Despite what their marketing material might suggest were designed to be revolutionary tool, they both exist very comfortably within the status quo. They claim to be disrupting while built for the inexperience downwardly mobile retail invent. Robin hood still helps perpetuate the same market economy that perhaps also necessitates and investors need to gamble on stocks for a chance at a taste of the good life Robinhood within its proper context is not the technological guillotine.
[00:17:56] It pretends to be it's a slot machine with really low odds and like all slot machines it's designed to keep a person in there. Reddit while claiming to be built on a democratic voting system is still a platform it's still a platform built upon architectures of particular uses and algorithms of content filtering all owned by the same private organization.
[00:18:19] It will always contain some level of content bias by nature. Let's say for instance, a group decided to create a staunchly anti Reddit subreddit, one devoted to the dissolving of Reddit as a corporation at any cost. How long would read it, allow them to carry on if such a subreddit were to garner large scale attention.
[00:18:38] Now R slash anti underscore Reddit does exist, but with its 41 members, I suspect it's more valuable to read its ideals of freedom of speech to live and let live here. We should keep in mind that on February 18th, 2021, just a couple of weeks after the wall street bets versus Melvin capital saw. Reddit CEO, Steve Huffman was forced to provide a statement in front of Congress, to the house committee on financial services to distance the website as a whole, from the actions of its subreddit wall street bets won't read its mission is to bring community and belonging to everyone in the world is how his statement begins.
[00:19:24] Is following statement was a boast regarding the success of our slash unemployment. And don't just take my word. I am chairwoman Mr. Ranking member, honorable members of the committee. My name is Steve Huffman. I am the co-founder and CEO of Reddit. And I'm pleased to talk with you today about how Reddit works and what we have seen on our site in the past few weeks.
[00:19:49] Reddit's mission is to bring community and belonging to everyone in the world. What started in 2005 as a single community has since evolved into a vast network of many thousands of communities. They range from standard topics like news, sports, politics to internet culture, to support. For example, our unemployment community has become a source of support.
[00:20:09] For hundreds of thousands of Americans. We have turned a Reddit after losing their jobs during the pandemic. To me, there is no better illustration of our moment in history than the CEO of a techno democratic community platform. Bragging to a governing body about the membership size of its unemployment support groups in an attempt to defend against accusations of market manipulation, all the while neither party realizing the deeply sad irony of the situation.
[00:20:44] Just going through the motions of throwing our hands up and say, oh, who, how, who could have predicted this? How could we ever have known that those savages on our website would have done something like this? It's not our fault as if to say, how could you accuse us of defrauding wall street? Look how many unemployed people we've connected.
[00:21:07] These radically improvised uses for both Reddit and Robin hood. To me are proof that our societies are not technologically determinant, which is the same that our society. Are not directed by the technology that they invent. Both of these platforms read it. And Robin hood came about in full synchronicity with, and in full support of the status quo.
[00:21:31] As soon as their uses were recontextualized those new uses warranted, apologies, and official state. They were met with cries of market manipulation and other such reaction, the likes of which I'd expect from sour video game developers watching speed, run compilations of their game while it's possible.
[00:21:52] The game was not designed to be played in this manner and it will need to be patched, so to speak. Can a website ever claim to be fully Democrat? Is the internet itself, inherently democratic. If democracy can be simplified as the sovereignty of the will of the majority, this necessitates a sovereign governing agency to carry out that will in a neutral framework, the internet might possibly function like a decentralized library or a series of virtual, intentional communes.
[00:22:26] But the internet is democratic, not anarchistic. This means that so long as there's a starch dichotomy between creating and consuming bodies online, the vacuum's created by the desires of mass consuming bodies will necessitate platforms with greater power than they to interpret and fill those desires.
[00:22:47] Kind of like a, a cyberpunk Russo in general. But the internet does not exist in a vacuum. It was not discovered underground. It did not crash on earth via an asteroid. It rose up as a reflection of the society that built it. Cyberspace and meet space are not two independent dimensions. And adoption of something like a digital monism or perhaps more aptly, a digital dialectical materialism gives us a much clearer view of how our present moment shapes online occurrences and vice versa.
[00:23:26] The internet, like a nation state consists of many individual nodes with their own goals and wills and connections to other nodes. As time goes on the will of these individual nodes is necessarily expressed. This will is an inherent need to change one's own environment in life. This is work and travel and combating entropy, et cetera.
[00:23:53] Online. This is data creation and data consumption along the lines of an ever shifting ArchiCAD. One does not buy a computer for it to just sit idle just as one does not remain fully sedentary. Even while sleeping to be online is to generate data through action just as to be alive is to create lacks and needs online.
[00:24:16] And action doesn't derive meaning from within a single note, instead, an action derives its meaning from the nature of the connection between it and another note. And there is no internet without connecting. As we see in regalian philosophy, wherever there is to, we must evaluate hierarchy. The nature of the relationship of two nodes is not determined by the connection itself.
[00:24:40] It's determined by the architecture that enables that connection. What of yours? May I access? And what of mine can you, and what permissions would I need to change these. For instance, due to the manner in which amazon.com is designed. I, as a regular average visitor to the site have no means of contacting or offering a deal between myself and the server, which could result in money flowing from Amazon to myself, due to the design of the website.
[00:25:12] I likely wouldn't even consider such an action from their home. However, such an interaction between myself and Amazon server would be theoretically possible. That possibility is simply not embodied anywhere within the architecture of our connection. Both myself and the server are connected, but the monetary potential of our interactions flows only in one direction due to the architecture of the.
[00:25:38] Now, this is a very obvious example, but on some level, this idea can be applied to any form of architecture. It's not that the design itself is inherently political it's that the designs uses take on a political dimension when laid against the backdrop of the society. It rose up from the politics of technology or as LinkedIn winner phrased it, the politics of artifact.
[00:26:06] Functions a lot like a lens. If we see social change as sort of emanating from the society that we're in technology and artifacts, refract and hone those social changes, technology is built with inherent implications. For instance, an iron maiden, the torture device, not the band and I in maiden in the 17 hundreds, struck fear into the hearts of those who were aware of their existence.
[00:26:35] They likely kept some people from breaking laws, just out of fear that they might end up in a castle dungeon face to face with one. Nowadays people pay money to get inside a castle for a chance to see an iron maiden up close. The design is exactly the same, but the society has evolved around it. And it's one seemingly inherent fear has become a simple.
[00:27:02] Inherent to design is the ideology of the designer, whether or not they are consciously aware of it as psychoanalysis has illustrated since its founding, not even individuals are in control of their own ideologies. Now, while this could be used as an argument for technological determinism, uh, I E technology provides our lives with suggested meanings where we cannot fully conceive of our own.
[00:27:26] It is our society, which changes the meanings of our. Depending on the context we find ourselves in good design seems to cause the tools of practice to fade away out of our view. As Martin Heidegger described it, when a hammer is functional, it becomes simply an extension of the arm and ready at hand.
[00:27:49] It's only when the hammer breaks that we notice it present at. What this implies is a kind of waking hypnosis where well-designed technology becomes a conduit for our will to change our environments, to flow through us. Unobstructed. This puts an incredible Infosys on what creates our wills in his book.
[00:28:10] The whale in the reactor Langdon, winter states technologies are not merely aids to human activity, but also powerful forces acting to reshape that activity. And it's. There's a cyclical nature between humans, willingness to shape their environments and their environments affects on shaping human will.
[00:28:29] I've not been able to find who the quote is attributed to, but the phrase that best illustrates this point to me is quote to herd cats, tilt the floor. When one's only tool is a hammer, the world seems made of nails. And when that hammer is well designed, we feel as though we are there. There seems to be a contradiction between democratic values and a system of commodification underlying the internet today, since this was not always the nature of the internet, it follows that it must have been influenced at sometime from an external force.
[00:29:05] You know, it's not known fact, but up until about 1995, it was illegal to advertise anything on. This susceptibility to influence by external forces is not specific to the internet. It's inherent to technology itself. A piece of technology is designed with a use in mind, it's designed to solve a societal problem.
[00:29:31] Societal problems are deemed as such by society or our existential experiences at large, which came first human subjugation of. Or the problem of hunger, the overpriced commodity, or the social construction of trade itself. We languish over our addiction to our smartphones and screens as if chained to them by some alien race.
[00:29:57] When we buy a stock, there is a Rube Goldberg machines worth of ideological apparatuses under our action that shape the way we perceive the transaction. As fair I use. Which derives its value from exchange value. It's a material object constructed to trans and dentals. We stand in for any alternative object of human desire.
[00:30:23] I use it to buy a stock, a virtual object, the value of which reflects confidence in a particular corporation. When I view this transaction as just, I accept the corporation itself as a valid entity, the stock as a valid unit of measure. And not only the dollar as a stand in for desire, but the desire that it's standing in for as well, when I buy a stock, I'm betting either on a corporation's will being expressed within the hegemony of the society.
[00:30:56] I find myself in or against its will being expressed in the hegemony of the society. I find myself. Inherent in my bed is a trust in the market system that enables the corporation who stock on purchasing the platform, which authorizes me to purchase set asset, even the society, which has created the terminal through which I order my transaction, a computer, which as of the most recent models includes a biometric finger scanning device in order to more safely authorize transactions.
[00:31:32] What is. It's the way in which society is constructed, that has necessitated my playing of these games, the creation of the slot machines and the tilting of these floors. When wall street Betts comes together to get rich while getting revenge, they're not necessarily behaving of their own. They've been guided here by the same system that has guided their perceived enemies to this moment in time, through the very architecture they both exist in it's the same architecture that allows them to utilize collectively what the hedge funds utilize with large reserves.
[00:32:12] By getting down into the mud with the hedge funds, they accept the swamp as. Perhaps, this is what the wall street bets game stop micro revolution failed to grasp the contradiction that led to the disillusion of the sentiment for change. It was never really about the attendees. It wasn't even fully about getting revenge on the colossal financial apparatuses that gambled the way their futures on intangible assets.
[00:32:43] They'd never see the benefits from it was about finding their next. It was about finding meaning it was about participating in a community that seemed to truly celebrate them and their being alive, even when it led to financial ruin members of the forum were more than simply acquaintances. Unlike the society outside of their basements, that seem to only value them so far, is it could extract value from the.
[00:33:12] Their fellow wall street, bets, comrades. We're helping them build financial capital and social capital for themselves by doing nothing more than sharing jokes, financial woes, and which stock they were thinking of buying next, ask yourself why the measure of success in the early days of cryptocurrency was whether or not one had held long enough to afford a Lamborghini.
[00:33:38] It's because the imported car is a status. It commands respect, but only within the hegemony, it gives identity where none can otherwise be found outside of community. That genuinely cares for one another. That is, I think what the wall street betters were really seeking in the world and found amongst themselves.
[00:34:02] That's why lamb bows were replaced with tinnies wall street. Bets only asked for the bare minimum. But failed to see the world around them that required them to act. So enamored by their reversal of the tools given to them by the status quo, where they, that they failed to see that total victory would mean becoming exactly what they fought against.
[00:34:28] They banded together to become a de-centralized hedge fund and sanctified the hedge fund model in the process in organized sports upsets can happen, but the outcome of a single game will never dismantle the league. The Denisons of wall street bets found themselves at the black Jack table of online retail brokerages cards.
[00:34:52] Ready at hand. They saw the house that had taken all of their chips. Now on the verge of. They're only course of action was to hit an alternative. Could not even be conceived in that instant. They won the hand, but in their ecstasy forgot that they were still inside. The casino .