TThe GameStop saga, for all the havoc it has wreaked on global markets, is not just a story of idealistic individual investors humiliating a bunch of arrogant hedge funds. On the one hand, it feels like an unannounced sequel to the January 6 riots on Capitol Hill – both have featured a horde of angry and foul-mouthed social media junkies haunting the most sacred institutions of the deeply despised establishment.
Yet while Washington’s rioters were universally condemned, those who led the virtual crusade on Wall Street have fared much better. Having defended the actions of rusty and struggling companies against greedy hedge funds, they have gained some sympathy in the political arena.
The main lesson of the two riots, at least for the digital counterculture, seems clear. Today, the true shamans of the rebellion against the system should master the arts of trading stock options and derivatives, not scaling walls and waving Confederate flags. The revolution can be streamed live, tweeted, and televised, but it’s probably a good idea to back up that Excel spreadsheet.
That GameStop’s crusade seems worthy is in part a function of the rather controversial, to put it mildly, of the hedge fund industry’s reputation. However, there is another less obvious reason for its acclaim in the public sphere: many of us are delighted with the rhetoric of “democratization” that has accompanied the rise of cheap online brokerage platforms.
One such platform, Robinhood, has provided the crucial digital infrastructure behind the GameStop rebellion, allowing ordinary people to buy company stock for small amounts of cash on their phones. Its own mission, repeated almost ad nauseam over the last few years, has been “Democratize finance”.
At first, it may seem like a natural consequence of the noble mission adopted by index funds like Vanguard in the early 1970s. Back then, the idea was to create safe financial instruments that would make it trivially easy, and cheap, for ordinary people. Invest in the stock market without having to accumulate a lot of experience or internal knowledge.
Robinhood, however, does not present itself as another boring and completely forgettable Wall Street brokerage. Rather, it wants to be seen as a revolutionary and disruptive force in Silicon Valley. Being seen as a digital platform does wonders for your valuation – the benchmark is Amazon, not an unfamiliar mutual fund.
Therefore, Robinhood’s rhetoric on democratization must be seen in a somewhat different light. Its heritage points to Uber, Airbnb, and WeWork rather than Vanguard or BlackRock. All these digital companies promised to “democratize” one thing or another (transportation, accommodation, office space) and do it quickly.
Soon, this nascent industry, with its sweet promise of democracy as a service, could not be fully contained: the global quest to democratize dog walking, babysitting, juicing and folding clothes was underway. This was accomplished with the help of venture capitalists and various institutional investors who, squeezed by the legacy of low interest rates from the global financial crisis, were increasingly out of ideas about where to deposit their money.
This, however, was not the whole story: the drive to democratize everything was also fueled by such unshakable beacons of liberal democracy as the government of Saudi Arabia. By associate With Japan’s SoftBank, he financed this myth, investing billions in companies like Uber and WeWork.
This huge influx of money, combined with genuinely new business models offering certain previously nominally billable services, created an illusion of progress and social mobility. Many digital platforms were heavily subsidized by their wealthy supporters or charged nothing at all; the loss of revenue would be offset by monetizing more advanced related services and user data.
The inevitable process of “democratization”, touted by all platforms as evidence of their own socially progressive nature, was often the result of simple arithmetic. In cases like WeWork, the math doesn’t even add up. If Robinhood, who now has raised urgently an extra $ 1bn, you’ll be more fortunate, remains to be seen.
For most of these companies, the sweet promises of “democratization” have rendered this math irrelevant, at least in the short term. This explains how the tech industry has become the leading provider of populism around the world.
This may seem like an exaggeration. While we tend to reserve the dreaded P-word for the Bannons, Orbáns, and Erdogans of this world, can we think of Bezos or Zuckerberg, and the stock-trading Robinhood army, in those terms?
We can and we must. With everyone’s eyes fixed on Trump-style populism (primitive, toxic, nativist), we have completely lost the role of platforms in the rise of another quite different kind of populism: sophisticated, cosmopolitan, urban. Originating in Silicon Valley, this “platform populism” has advanced by destabilizing the hidden reactionary forces that stand in the way of progress and “democratization,” all by unleashing the powers of digital technologies.
Platform populism is driven by the almost conspiratorial insistence that the world is not what it seems. Established firms – taxis, hotels, hedge funds – have changed the rules of the game in such a way that they serve their own interests. Only by interrupting them can one hope to reap all the benefits that digital technologies make possible. To that end, the platforms promise to unleash the forces of capitalism to civilize these wild remnants of the previous, pre-digital civilization.
Much of the rigidity of pre-digital incumbents is the result of regulations imposed by democratic (even if capitalist) states. However, in the churning universe of platform populism, resisting democratic regulations by subjecting them to the sustained economic pressure of capitalist competition is incontrovertible proof of “democratization.” Therefore, the resistance from some of them to legislation designed to treat their gig economy workers like real employees.
Both the rhetoric of platform populism is false and that its final winners will be people like SoftBank and Saudi Arabia it doesn’t matter either. Platform populism, which does not present a coherent political ideology of its own, has to do with the process, not with the results. The goal is to show that despite all the machinations of government bureaucrats with their pesky regulations, our individual agency is still alive and well. It’s definitely not about deploying that agency to achieve a particular long-term political agenda.
Therefore, many of the angry crusaders facing the hedge fund industry are certainly aware that their own gains are temporary and fleeting. But who could deny them the pleasure of reasserting their own agency by “sticking with the man”, knowing that the only long-term gains from this process would accrue to other hedge funds, such as BlackRock, which is estimated to have made billions in the GamesStop fever? Far from deepening democracy, Platform populism turns into a farce, but highly profitable, theatrical performance.
• Evgeny Morozov is the founder of the syllablesand author of several books on technology and politics.
George is Digismak’s reported cum editor with 13 years of experience in Journalism