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When Memes, Money, and Myth Hold the Line

By Harrison Smith

The “short squeeze” of GameStop stock has given rise to predictions that we are on the verge of witnessing a revolution in finance capitalism thanks to the power of social networks, mobile platforms, and investing apps. The story goes that in late January of 2021 a subreddit called WallStreetBets mobilized its users to invest heavily in GameStop (GME) stocks in an effort to “squeeze” an attempt by elite hedge funds to “short” the value of the stock. Within two weeks GME stocks jumped some 500% due to the rapid mobilization of retail traders using mobile trading apps such as Robinhood. One Wall Street hedge fund, Melvin Capital, is reported to have lost some 53% of their fund in January and needed a $2 billion bailout from Citadel. While theories explaining why the GME short squeeze happened are mixed (fun, profit, and vengeance have become three main explanations), over at WallStreetBets a meme-driven ethos of resistance against hedge funds, finance capitalism, and the temptation to cash out has concretized into a singular message: “hold the line”.

I find this story illustrative of larger theoretical critiques of platforms, big data, and digital assets that have been the focus of my research for the past several years. How we come to understand trading within and through digital platforms may ultimately shape how people choose to invest and take risks with their money. Many questions are emerging from this squeeze, and media have been speculating about what role digital platforms such as Reddit and Robinhood might come to play in the future of stock trading. The history of Silicon Valley investment has been defined by booms, busts, and bubbles such as the famous Dot-com bubble of the late 1990s; and finance capitalism itself has been marked by numerous crises such as the subprime mortgage crisis, itself due in part to investors shorting the housing market. However, with GameStop, analysts have capitalized on various myths of digital media to predict a transformation in the structure and norms of investing. These are myths not because they are necessarily false over exaggerations but because they are alive and can shape how we come to understand and value emerging technologies. As Roland Barthes (1975) argues in Mythologies, myth is a type of language—a mode of pure signification that can make a difference in shaping how people understand the world, and, in this case, take financial risks.

One myth that has arguably emerged in the GameStop squeeze is that of “David and Goliath”. Commentators argue that the squeeze represents a transformative politic in financial markets where a new and seemingly weaker force of retail traders will come to beat hedge fund giants. This view is based on a structuralist interpretation that decentralized, networked collectives such as WallStreetBets are fundamentally different to centralized institutions of finance. These contradictory forces are locked in a struggle for control over the way financial markets are priced. The suggestion is that, like the myth of David and Goliath, the underdogs will prevail over the power brokers of Wall Street. Here we see how apparent technological distinctions are coded into a teleology of class conflict whereby collectives of anonymous or pseudonymous individuals can mobilize on digital platforms to circumvent and even challenge the authorities of institutional experts. 

Media have been quick to publish stories that hinge on this myth to suggest we are witnessing a transformation in the structural foundations of finance capitalism that will empower everyday traders and reshape the investment landscape. Often, we see stories that use evocative language, myth, and metaphor to suggest that the events of GME are merely the start of something bigger, even “a new era” of retail trading. American Financier Anthony Scaramucci, for example, likens this event to witnessing the “French Revolution in Finance”. The journalist Glenn Greenwald coined this the “Reddit Revolution”. Baffled Wall Street analysts have described this as “armies of average Joes” taking on Wall Street, a clear instance of the belief that the GME short squeeze is not about money, but politics. Others have described WallStreetBets as the “power of the swarm”: a meme-powered internet tribe of altruistic investors fighting against perceived injustices of the stock market establishment hedge funds that deliberately short stocks for their own selfish gain.

Photo by Michael Förtsch on Unsplash

Such myths are not unique to the GME short squeeze but are interwoven across a larger pattern of platform financialization. My own work has sought to understand how various myths and imaginaries of the future become embedded in narratives of platforms and investments in data analytics. For example, in a recent publication I develop the idea of the locative imaginary to help understand how marketers are investing in geospatial data captured from mobile devices and media to shape a collective vision of marketing futures (Smith 2020). Here, data analytics platforms are restructuring the way markets are organized that will allow users to access more relevant social resources. This has given rise to an entire industry of mobile marketers that analyze the everyday movements of people under the presumption that people genuinely want, and are empowered by, this kind of surveillance. These investments hinge on myths that because smartphones are seen as deeply personal devices, consumers will naturally come to expect a new level of targeted advertising that reflects how they value mobile media.  

Stories about emerging blockchain technologies and cryptocurrencies such as bitcoin also make claims that we are on the verge of a profound social change. These future imaginaries focus on the way money is produced and circulated and the implications this will have on nation states’ control of fiat currency thanks to blockchain ledgers and decentralized autonomous organization. In a forthcoming publication (Smith & Burrows 2021), we examine how architectures of platform decentralization are tied into beliefs of engendering much deeper socio-political change. This can include challenging the authority of nation states or exiting from them entirely in an effort to return to myth-laden ‘first principles’ of sovereignty. Such myths of decentralization fundamentally revolve around predictions that the structure of societies will eventually mirror platform architectures, and so too with the distribution of power and authority. 

Myths about emerging technologies can both reveal genuine social needs and desires for democratic change while also hiding larger concentrations of power (Mosco 2004). With GameStop, myths are deeply entwined with the valuation of assets where value could be generated out of thin air due to the sheer power of online communities to leverage memes to propel stock prices up irrespective of a company’s actual worth. These reactions demonstrate the variegated nature of digital platforms that can both potentially empower marginalized groups but also reinforce existing socio-economic distinctions in the way assets are priced and exchanged. These inequalities in investing matter. Trading platforms are not just for retail markets, but also hedge funds and investment banks. One important example is High Frequency Trading (HFT) where millions of dollars are sunk into sophisticated digital trading capital: the fastest computers, the best algorithms, and the newest data designed to accelerate the speed of buying and selling. Computers are placed as close as possible to stock exchanges, and the straightest fiber lines between exchanges have been laid in private networks devoted exclusively to HFTs. Saving even microseconds provides high frequency traders with an advantage, pushing finance capital to record decision-making speeds (and financial risks). Profit is generated not from some strategic investment plan or market savvy, but from computational speed

Following the GameStop squeeze, we also see billionaires and celebrity capitalists engage in mythmaking about the potential of some speculative investment to transform society leading to new meme stock frenzies. Dogecoin cryptocurrency, for example, subsequently skyrocketed in value after Elon Musk speculated will become the future currency of the Earth. For sociologists, it is necessary to develop research programmes that examine how myths are tied into larger predictions of platforms, their financial investment, and claims of empowerment and social change. These myths matter precisely because they are tied into material inequalities that make a difference in how people understand the market and financial risks. Socio-economic differences persist despite the celebratory accounts that the GameStop squeeze was ushering in a meme-driven revolution in finance. Within 2 weeks of the squeeze, GME’s stock has withered in value leading to countless losses for retail investors. While some defiant investors continue to hold the line, others have moved on, licking their wounds with a bitter taste that the “Reddit Revolution” was perhaps overstated. 

Photo by Dimitris Chapsoulas on Unsplash


Featured Image Credit: GameStop Pics by Mike Mozart. Accessed via Flickr.


References

Barthes, R. (1975). Mythologies (tr. Annette Lavers). New York: Noonday Press.

Mosco, V. (2004). The digital sublime: Myth, power, and cyberspace. Cambridge: MIT Press.

Smith, H. (2020). The locative imaginary: Classification, context and relevance in location analytics. The Sociological Review68(3), 641–658. https://doi.org/10.1177/0038026119878939

Smith, H. & Burrows, R. (2021, forthcoming). Software, Sovereignty, and the Postneoliberal Politics of Exit. Theory, Culture & Society.

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