No, We Are Not Going to Beat Capitalism on the Stock Market

By Nathaniel Flakin

Republished from Left Voice.

Given the news over the past week, you would be forgiven for thinking that Occupy Wall Street had come back with a vengeance. Back in 2011, activists occupied a small park in front of a Lower Manhattan bank — now they seem to be “occupying the stock market” itself. Ten years ago, the bankers and brokers could just get their cops to arrest the pesky occupiers — but now, with the loss of billions of dollars at stake, armed thugs in blue are not going to do the trick.

The stock surge for GameStop has rattled financial markets. A motley horde of Internet users have been giving hedge fund managers a run for their money. Those who bet that shares of the retail chain GameStop would lose value (short sellers) have been thrashed as the stock price surged higher and higher, thanks to the targeted actions of thousands of small investors.

The bankers, who for more than a generation have been praising deregulation and the “invisible hand of the market,” are now calling on the government to protect them from losses. So have “little guys” taken over the stock market? Will the revolution be organized on Reddit?

Of course not. This was never going to take down the hedge fund system. At best, its greatest “hope” was to do some short-term mischief and maybe kill one small fund. Melvin Capital Investment is losing billions and might collapse — but Reuters has reported that Blackrock, the biggest asset management in the world, stands to earn $2.4 billion from the rising stock price. As Derek Thompson has explained in The Atlantic, Melvin Capital Investment was betting on GameStop’s stock to fall — and that was always a risky bet:

[GameStop’s] stock had already fallen from $56 a share in 2013 to about $5 in 2019. GameStop’s short sellers were essentially betting that a company publicly valued as “horrendous” should really be valued at a level commensurate with the notion of “truly horrendous.” They risked billions of dollars on the financial equivalent of a qualifying adverb. It’s really risky to aggressively short a company whose stock, having fallen 95 percent, is floating around $5; there just aren’t a lot of numbers under five.

A Rigged System

The discussion around GameStop has shown that the system is hopelessly rigged: even when small investors manage to exploit the rules to their advantage, those rules are simply changed to prop up the big capitalists.

But that’s only the beginning of how it is rigged. Virtually all stocks are controlled by a tiny minority of capitalists. How are all the working people in the world, even if they invested all their savings into the stock market, supposed to compete with the gargantuan sums owned by the likes of Elon Musk, Jeff Bezos, and their wealthy corporate cronies?

The rumblings have led Democratic Party “progressives” such as Elizabeth Warren to call for new regulations. She wants action to “ensure that markets reflect real value, rather than the highly leveraged bets of wealthy traders or those who seek to inflict financial damage on those traders.” Those “highly leveraged” traders,” by the way, are the hedge funds. Warren is worried about someone inflicting damage on them. 

How Capitalism Works

The entire episode is making lots of people wonder: Is this any way to organize an economic system? After all, as the back-and-forth trading has unfolded through these rather absurd machinations, who has been thinking about the effect on the livelihoods of tens of thousands of GameStop employees?

But this casino is how all decisions are made in the capitalist system. Where is housing built, and who gets to live in it? Which medical breakthroughs get funding? Which wars are waged? The same rules deciding the future of GameStop decide all these questions as well.

The stock market and its fictitious capital which condenses all the absurdities of the capitalist system into one small space. So much of the market is about “fictitious capital” — money lacking any material basis in actual commodities or productive activity. As the Marxist economist Rudolf Hilferding explained:

On the stock exchange, capitalist property appears in its pure form, as a title to the yield, and the relation of exploitation, the appropriation of surplus labour, upon which it rests, becomes conceptually lost. Property ceases to express any specific relation of production and becomes a claim to the yield, apparently unconnected with any particular activity. Property is divorced from any connection with production, with use value. The value of any property seems to be determined by its yield, a purely quantitative relationship. Number is everything; the thing itself is nothing! The number alone is real, and since what is real is not a number, the relationship is more mystical than the doctrine of the Pythagoreans.

A Way Forward

Within this absurd system, thousands of working-class people, investing their stimulus checks, might be able to steal a little something back from Wall Street — with the help of an app cynically named Robinhood. 

Yes, the ruling class is pissed that normal people are disrupting their casino. But the market remains their casino. The experience of this kind of “activism” will lead people to draw the wrong conclusions. We’re already seeing calls for more “democratic” and “fair” rules for the stock market, rather than for toppling the stock market itself.

And what happens if small investors are successful? Then some of them might become big investors. So, this kind of activism may create some new capitalists — but it’s no way to beat the capitalist class. In a fight over stocks, the rulers will always have an advantage.

But you’re in luck: Marxism is a 150-year-old science of how to eliminate the bourgeoisie and its exploitation and oppression. If we pool our money, we shouldn’t invest it in stocks; — we should use it to build up organizations that will fight for our interests —, not by trading stocks, but by organizing our strength in terms of material force.

A Problematic Ally

If you’re not convinced, consider one troubling figure who has been cheering on the small investors against the short sellers: pandemic profiteer and Internet troll Elon Musk. He understands the giant casino that passes for a global economy. After all, he has leveraged a small, almost completely unprofitable car company into a personal fortune of $180 billion. Musk is obviously not trying to bring down the system that is rewarding him with such vast wealth, nor does he have some personal vendetta against short sellers. Instead, Musk understands that this is capitalism at work.

Musk might have several hundreds of billions of dollars, but he’s a small part of the global capitalist system. We don’t need to buy him out, or beat his ilk at the stock market game. We can use our strength to take power and expropriate them. A workers’ government can put all those riches at the service of all humanity. Now that’s a project worth “investing” in.

Their Violence and Ours

By Nathaniel Flakin

Republished from Left Voice.

Capitalist politicians of all stripes are condemning “violence.” But they never mean the daily violence committed by the police. They are condemning resistance against state violence.

Bourgeois society has a very funny way of talking about violence. In the aftermath of the police murder of George Floyd, as thousands poured into the streets to demonstrate their anger and demand justice, the bourgeois press was publishing articles with headlines like this: “Violence erupts in Minneapolis following black man’s death in police custody.”

What a strange formulation! Not only does the headline conceal how this “death” happened. Apparently it is not “violence” if a state functionary chokes a restrained man to death. No, “violence” only began after that. 

This bias underscores the way that bourgeois society operates. A Black man being murdered by the state is just a normal day; but people taking things from a Target store without paying is a catastrophe. People are expendable; but property is sacred. 

Indeed, capitalist society treats all kinds of systemic violence as so completely natural that it does not even deserve the term. A police murder in broad daylight might, if there are sufficient protests, be condemned as “excessive force.” But what about when police do follow all rules and regulations? When they evict a family from their home, for example — is that not violence? What about a store preventing hungry people from getting food? What about a government allowing 100,000 people to die of a pandemic? Is that not violence?

The German communist poet Bertolt Brecht put it succinctly: “There are many ways to kill. They can stab a knife in your guts, take away your bread, decide not to cure you from an illness, put you in a miserable house, torture you to death with work, take you to war, etc. Only a few of these are forbidden in our state.”

In response to the protests, bourgeois politicians are speaking out against violence. But of course they do not mean the daily violence committed by the police. They are not referring to the massacres committed by the U.S. military or the economic havoc wreaked by American corporations. No, their main concern, almost inevitably, is property damage.

The U.S. Representative from Minneapolis, the progressive Democrat Ilhan Omar, for example tweeted out on Thursday: “We should and must protest peacefully. But let us end the cycle of violence now.” Atlanta’s Democratic Mayor Keisha Lance Bottoms said: “This is not in the spirit of Martin Luther King Jr.”

But what was the spirit of Martin Luther King Jr.? He was not a socialist, but he understood that oppressed people must stand up to their oppression. For this, he was condemned by the powers that be for his supposed “violence.” On April 12, 1963, a group of eight clergymen called on King to cancel planned demonstrations for civil rights in Alabama. They called demonstrations “unwise and untimely” because they  “incite to hatred and violence, however technically peaceful those actions may be.” They denounced the mobilizations as “extreme measures” and proposed that Black people should “peacefully obey” while relying on courts.

King, of course, did not follow this advice. He defended riots as “the language of the unheard” and went on to denounce the U.S. government’s horrific violence in Vietnam. It was only after his murder that King was transformed into a harmless icon — an angelic figure who supposedly preached nothing but passive resistance

Progressive Democrats like Omar are not calling for peace — they are calling on people to peacefully obey the system that is murdering them. Omar wants the U.S. federal government to investigate police murders. Yet decades of police “reforms” have only shown that this institution cannot be reformed. The Minneapolis Police Department is headed by a Black cop who once sued the department over its racist practices. And yet: the capitalist police, even with the most enlightened leadership, can have no other function than protecting capitalist property. This means oppressing the poorest sectors of the working class, especially Black people.

As socialists, we do condemn violence — we condemn the violence that the capitalist system commits against billions of people every day. We do not condemn it when working-class and poor people begin to defend themselves against the system’s violence.

A riot serves to get the attention of the ruling class. It might even force them to make concessions. But a riot cannot end the system of oppression and exploitation. For that, we need to combine the rage on the streets of Minneapolis with socialist organization. Democratic Party politicians (even the ones that call themselves “socialists”) will always call on people to accept the institutions that oppress them. Real socialists, in contrast, want to build up organizations that are independent of the ruling class, their state, and all their parties.

A tiny minority of capitalists exploits the labor of the huge majority of people. In order to maintain their rule, they maintain an enormous repressive apparatus, including police, jails, armies, judges, etc. — that is their state. The capitalists are driving our entire civilization to a catastrophe. But they will never relinquish power voluntarily. Throughout history, no ruling class has ever given up without being toppled. As Karl Marx wrote, “Violence is the midwife of every old society pregnant with a new one.” This is why the working class needs to confront the capitalists’ bodies of armed men.

When working people set fire to a police station, the capitalists’ media will call this “violence” — but it is nothing more than self-defense against the daily violence perpetrated by capitalism. We must get rid of the capitalists’ state, and replace it with a society run by working people themselves. That is the essence of socialist revolution. And the fires on the streets of Minneapolis show that the deepening crisis of capitalism is pushing U.S. society just a little bit closer to that end.