The GameStop saga, for all the havoc it has caused to the global markets, is not just a tale of idealistic individual investors humiliating a bunch of arrogant hedge funds – even if the tides turned on Tuesday, with a plunge in GameStop’s shares. For one, it feels like an unannounced sequel to the 6 January riots on Capitol Hill: both have featured a horde of angry, foul-mouthed social media addicts laying siege to the most sacred institutions of the deeply despised establishment.
However, while the Washington rioters were universally condemned, those leading the virtual crusade on Wall Street have fared much better. Having defended the stocks of musty, struggling companies against greedy hedge funds, they have garnered some sympathy across the political aisle.
The main lesson of the two riots, for the digital counterculture at least, seems clear. Today, the true shamans of the anti-establishment rebellion ought to master the arts of trading stock options and derivatives, not those of climbing walls and waving Confederate flags. The revolution may be livestreamed, tweeted and televised – but it’s probably still a good idea to back up that Excel spreadsheet.
That the GameStop crusade seems dignified is partly a function of the hedge fund industry’s rather controversial – to put it mildly – reputation. There is, however, another, less obvious reason for its acclaim in the public sphere: many of us are enchanted by the rhetoric of “democratisation” 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 shares in companies for small amounts of cash on their phones. Its own mission, repeated by its founders almost ad nauseam over the past few years, has been to “democratise finance.”
At first, it may seem just a natural outgrowth of the lofty mission embraced 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 to invest into the stock market without having to accumulate much insider knowledge or expertise.
Robinhood, however, doesn’t fashion itself as just another boring and utterly forgettable brokerage firm from Wall Street. Rather, it wants to be seen as a revolutionary, disruptive force out of Silicon Valley. Being seen as just such a digital platform does wonders to one’s valuation: the benchmark being Amazon, not some unknown mutual fund.
Robinhood’s rhetoric of democratisation is thus to be seen in a somewhat different light. Its heritage points towards the likes of Uber, Airbnb, and WeWork rather than Vanguard or BlackRock. All these digital firms promised to “democratise” one thing or another – transportation, accommodation, office space – and to do it fast.
Soon, this nascent industry, with its sweet promise of democracy as a service, couldn’t quite contain itself: the global quest for democratising dog walking, babysitting, juice making and laundry-folding was on. This was pursued with the help of venture capitalists and various institutional investors who, squeezed by the low-interest rate legacy of the global financial crisis, were increasingly out of ideas on where to park their money.
This, however, wasn’t the whole story: the drive to democratise everything was also fuelled by such unflinching beacons of liberal democracy as the government of Saudi Arabia. By partnering with Japan’s SoftBank, it bankrolled this myth, pouring billions into the likes of Uber and WeWork.
This huge influx of money, combined with genuinely new business models that rendered certain previously chargeable services nominally free, created an illusion of progress and social mobility. Many digital platforms were either heavily subsidised by their deep-pocketed backers or charged nothing at all; the lost revenue was to be made up by monetising more advanced related services and user data.
The inevitable process of “democratisation” touted by all the platforms as evidence of their own socially progressive nature, was often the result of simple arithmetic. In cases like WeWork, the maths did not even add up. Whether Robinhood, which has now raised an extra $3.4bn, will be luckier remains to be seen.
For most of these companies, the sweet promises of “democratisation” have made such maths irrelevant, at least in the short term. This explains how the tech industry has emerged as the leading purveyor of populism around the globe.
This may seem an overstatement. While we tend to reserve the dreaded P word for the Bannons, the Orbáns and the Erdoğans of this world, can we think of Bezos or Zuckerberg – and the stock-trading Robinhood army – in those terms?
We can and we should. With everyone’s eyes fixed on Trump-style populism – primitive, toxic, nativist – we have completely missed the platforms’ role in the emergence of another, rather distinct type of populism: sophisticated, cosmopolitan, urbane. Originating in Silicon Valley, this “platform populism” has advanced by disrupting hidden, reactionary forces that stand in the way of progress and “democratisation” – all by unleashing the powers of digital technologies.
Platform populism is propelled by the almost conspiratorial insistence that the world isn’t what it seems. The incumbent firms – taxis, hotels, hedge funds – have changed the rules of the game in such a way as to favour their own interests. Only by disrupting them can one hope to harvest all the benefits made possible by digital technologies. To that end, the platforms promise to unleash the forces of capitalism in order to civilise these savage remnants of the earlier, pre-digital civilisation.
Much of the rigidity of the pre-digital incumbents is a result of the regulations imposed by democratic (even if capitalist) states. However, in the topsy-turvy universe of platform populism, resisting democratic regulations by subjecting them to the sustained economic pressure of capitalist competition is incontrovertible evidence of “democratisation”. Hence the resistance from some of them to legislation designed to get them to treat their gig economy workers as actual employees.
That much in the rhetoric of platform populism is fake and that its ultimate winners will be the likes of SoftBank and Saudi Arabia doesn’t matter either. Platform populism, featuring no coherent political ideology of its own, is all about process, not outcomes. The goal is to prove that, for all the machinations of government bureaucrats with their pesky regulations, our individual agency is still alive and kicking. It’s definitely not to deploy that agency to accomplish any particular long-term political agenda.
Thus, many of the angry crusaders taking on the hedge fund industry are certainly aware that their own gains are temporary and fleeting. But who could deny them the pleasure of reaffirming their own agency by “sticking it to the man”, all while knowing that the only long-term gains of this process would accrue to other hedge funds and asset managers, such as BlackRock, which is estimated to have made billions on the GamesStop rush? Far from deepening democracy, platform populism turns into a farcical – yet highly profitable – theatre performance.
Evgeny Morozov is the founder of the Syllabus, and the author of several books on technology and politics.