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The GameStop Fiasco Exposes the Fantasy That Capitalism Can Be Democratic

When tech platforms, regulatory agencies, and social media companies conspire to swat down share purchases that get in Wall Street’s way, they’re doing us all a favor: they're showing us the ruthlessly hierarchical reality of neoliberalism behind the friendly mask.

The GameStop stock saga exposes the fallacy of a democratic capitalism. (Spencer Platt / Getty)

Among its many successes, the neoliberal revolution’s greatest triumph may have been convincing people that capitalism could be democratic. With the tyrannical fetters of taxes and state regulation removed, neoliberalism’s ideological advocates claimed, the individual would be free to realize their authentic self. The forum in which that flourishing would take place, of course, was the market — a naturally efficient and self-correcting mechanism in which everyone could compete, own property, and ultimately become a capitalist in their own right.

Ridiculous as it always was, particularly after the crash of 2008, this rhetoric has taken on a whole new life in the age of apps, consumer reviews, and e-commerce. Robinhood, one of the companies at the center of the ongoing GameStop fiasco, is a case in point, having been founded in 2011 on a promise to “democratize access to the financial markets,” an ethos its founders say was inspired by none other than Occupy Wall Street. One obvious irony of this claim is that Robinhood’s business model is actually premised on the sale of its users’ trading information to larger firms — their “freemium” investment tool in effect a kind of direct market research that allows companies like Citadel Securities (which boasted $6.7 billion in revenue last year) to generate more profit for themselves.

As plenty have also noted, the app’s role in shutting out the Reddit-based trading of GameStop and other stocks alongside Wall Street players like TD Ameritrade clearly gives the lie to its promise of radically democratized finance. Less closely examined, however, has been the role of social media platforms in aiding this crackdown. Two days ago,Nasdaq CEO Adena Friedman announced the exchange’s willingness to halt trading on the basis of social media chatter, telling CNBC:

If we see a significant rise in the chatter on social media channels . . . and we also match that up against unusual trading activity, we will potentially halt that stock to allow ourselves to investigate the situation, to engage with the company, and give investors a chance to recalibrate their positions.

The same day, digital messaging site Discord banned the server of r/WallStreetBets, the subreddit at the center of the chaos, on the grounds that it contained offensive language. (For what it’s worth, at least two new servers have since emerged and have yet to be taken down.) Less consequential, though nevertheless astonishing, was a massive purge of negative reviews of the Robinhood app left on the Google Play store.

As The Verge reported this week, Robinhood found itself flooded with a deluge of one-star ratings courtesy of users irate that it had blocked the purchase of GameStop, AMC, and other stocks at the center of the ongoing controversy. No matter: Google had soon deleted nearly one hundred thousand of these negative reviews, bringing the app’s rating into a near tie with the 4.7-star average it still enjoys at Apple’s store. Though Google assured The Verge that companies are not themselves empowered to delete negative reviews, the actual reasoning behind the deletion process, which it said “combines human intelligence with machine learning to detect and enforce policy violations in ratings and reviews,” remains inscrutable at best.

As Edward Ongweso Jr has observed, the David vs. Goliath narrative being applied to the whole episode is more than a bit misleading, with large investment firms like BlackRock — hardly the vanguards of a populist people’s front — being the biggest winners so far. Given the way it’s played out, it’s also quite likely to inspire yet another round of demands for a more inclusive stock market, a response that decidedly misses the point.

Regardless, the GameStop stock saga exposes the fallacy of a democratic capitalism whose markets are free, welcoming, and open to all. Like a roulette wheel at an Atlantic City casino, those who run the table and have the keys to the vault always get to determine the rules of the road and who’s allowed to play. In the rigged game of American capitalism, by the same token, a small few at the top decide what counts as legitimate market activity — while the mods of social media and digital storefronts stand ready to deal with any patrons who complain.