On February 19, 2021, the U.S. House Committee on Financial Services was the stage for a virtual hearing on Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide. This hearing was convened in an attempt to address recent market activity around GameStop (GME) stock. In January 2021, GME went from roughly $20 USD to $350 USD per share, making some retail investors millionaires. Simultaneously, hedge funds that bet against the stock lost millions. GME would have surpassed the 1600% it reached if not for an online trading platform app called Robinhood – which many investors were using to purchase the stock – halting any trading of GME. The irony is that Robinhood robbed average investors of millions of profits, while saving rich hedge funds from losing hundreds of millions of dollars.
The Senate Committee was ‘searching’ for answers about the volatile stock. Cue the r/wallstreetbets community and its main protagonist, Keith Gill, aka “deepfuckingvalue” on subreddit, and “roaringkitty” on YouTube. Gill (likely to be played in a future movie by Christian Bale) is a retail investor, meaning he does not work for a hedge fund. Nonetheless, Gill started a live stream on YouTube in 2020 to talk about stocks, and subsequently became a guru for the wallstreetbets community for his detailed analysis of how GME was being undervalued. As a result of his perceived influence on GME, Gill was summoned to show before the Senate Committee. In an act of defiance towards the farce of examining the real problems of financial markets, Gill started his statement telling the Chair, ‘I am not a cat’.
This isn’t simply a case for MBAs and financial analysts to examine. Some see this as a new mechanism of anti-capitalist protest, by occupying Wall Street money. Even hedge funds see this movement as a ’direct attack on rich people’. What fascinates me is how this scenario offers an opportunity to think critically about ‘the commons’.
Commons are open access resources and spaces – digital, knowledge, natural, urban, etc. – that can be organized and claimed for both individual and collective gain. In large part, the dominant frame of thinking about commons is via game- and rational-choice theory, where people (actors) operate within a stable environment (institutional equilibria) that involves set rules and equal access to play the ‘game’. Through this lens, commons are ‘open to all’, but human nature inevitably slides towards the least optimal scenario, creating a ‘tragedy of the commons’. The reason is that people take more of the commons they are equally entitled to, and people are prone to free ride on the backs of other actors that maintain commons for the public good. Whether private markets like the NYSE are a public commons is debatable. In any case, the GME scenario offers potentially new considerations about the complexities of human coordination and action.
Presumably, when we think about a stock market, people are in it to get rich. But in the case of GME, something more is at play. Average people have and continue to buy the stock (anywhere from a few hundred bucks to thousands of dollars and whole 401k’s) and are holding it as a loosely collective movement. We can see this on r/wallstreetbets, which is a community of sorts. In the midst of the GameStop event which is still ongoing, this reddit forum serves as a space for support, guidance, and perhaps even coordinated action, for the people that have staked their own money on the line.
By most accounts, this should be the purest case study where self-interested behaviour would be the primary motivation for people’s actions. The so-called tragedy of the commons and the free-rider problem is akin to the rational self-interest of selling GME stocks that have radically appreciated. However, many people have been willing to ostensibly lose their invested money, rather than give into the hedge funds by selling their shares.
GME exposes tensions in our thinking about the commons. On the one hand, speculative markets might appear to be a ‘commons’ because theoretically anyone can access. The reality is more complicated, as not everyone can risk losing their hard-earned money. Furthermore, this specific commons (just like many others) is highly manipulated within a broader capitalist structure. It brings to the fore the reflection that commons are not simply equal and fair spaces for people to navigate, and use freely. People are unequal in their position within such imperfect commons. On the other hand, we are seeing random strangers and retail investors inspired by both Gill and reddit banding together to purchase and hold their bought stock, so as to force hedge funds to buy back shares at inflated prices.
One question going forward is: can GME be replicated in terms of pockets of the stock market commons being self-governed to the benefit of its loose community, despite the financial system being rigged? It is hard to say what can be made of GME and the r/wallstreetbets community, but it brings up something I personally have never considered – thinking about the stock market as a tool for democratic and even deliberative determination, where arguments are actively being shared for why certain investments are not only worth buying, but worth holding in the face of uncertainty and loss. This is a stretch because it is not about democratizing capitalism. Yet this event showcases some propensity for coordinated action with a simultaneous intention to disrupt poles of financial power and see sizeable returns on investments. Perhaps the best way to understand this situation is through Elinor Ostrom’s principles of common pool resource management, which challenges the tragedy of the commons and demonstrates that the commons can work efficiently, particularly where rules are written and agreed by the users. The distributed networking of new technologies can help foster new commons where least expected, allowing for autonomy of choice while in continuing participation.
Nick Vlahos is a Postdoctoral Fellow at the Centre for Deliberative Democracy and Global Governance at the University of Canberra. He is author of The Political Economy of Devolution from the Postwar Era to Brexit (2020). Nick’s research interests include the interconnection between political economy, decentralization and deliberative democratization. Previously, Nick worked in the public sector at the Toronto Community Housing Corporation and the Civic Innovation Office in Toronto.