Settling with Our Past

As the Empire declines, as the myths binding together US economic power, social harmony, and international prestige dissolve, many people want answers.

Why is the US political system dysfunctional? Why does inequality of wealth and power march to ever greater heights? Why does the US government assume unwanted governance beyond its borders, while turning a blind eye to the sins of its allies?

These questions appear challengingly complex and intractable. Politicians, academics, and hordes of pundits offer numerous wide-ranging, but unsatisfactory answers. 

But few, very few, are disposed to face the twin towers of ignorance that left their indelible stamp on US political progress. Racism and Anti-Communism remain the greatest obstacles facing those hopeful of a better, more just future for the US. 

Since its revolutionary, but contradictory beginning as an uninvited settler-colony parting company with an oppressive mother country, the US has been cursed by its reliance on the institution of slavery at the core of its early economic life. That institution could only be justified with a racist, dehumanizing ideology of white supremacy. 

After the institution of slavery was violently overturned, the legacy of racism remained deeply embedded in the US, remaining as an often-used tool of class division by the US ruling class. Race as a weapon of distraction and super-exploitation proved invaluable to the maintenance and domination of capitalism throughout the twentieth century.

Likewise, anti-Communism, applied with a broad brush and used against challenges to capital and steps toward racial unity, has been a consistent tactic of the rich and powerful. Red-baiting, like race-baiting, casts a veil of ignorance over the protagonists of progress. By placing a people or an ideology beyond any acceptance, by making them dangerous, barbaric, or adversarial, mass manipulators can conjure fear, stir hatred, and shape behavior contrary to the interests of a vulnerable majority. Fear of the manufactured “other” fosters divisions, distraction, and demobilization, rendering the masses confused and impotent.

Fresh Air  

Despite the oppressive weight of years of relentless indoctrination, there is a welcome skepticism, a growing questioning of the inherited ideas on race and revolution. 

For most people in the US, the Cold War was the source of an enormous body of myths attached to the US and its role in the world. But there are many people hard at work in terminating those myths. A recent event sponsored by Code Pink, Witness for Peace, and Addicted to War is a fine example of that effort. Rachel Bruhnke and Frank Dorrel moderated a ten-hour online COLD WAR TRUTH COMMISSION - A Day of Education, Testimonials & Action on Sunday, March 21. Billed as “putting the Cold War on Trial,” the event engaged over fifty testimonies, challenging the entire spectrum of US Cold War fictions. 

The Commission billed the leadoff session as “The Roots of US Anti-Communism and Cold War,” a bold announcement that the organizers were not going to bend a knee before the national dogma of unthinking anti-Communism. Where far too many liberals will condemn the “excesses” of McCarthyism while turning a blind eye to the repression of actual Communists, this event made no such compromise. 

The sessions can be viewed here. 

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Another welcome development is a growing academic “rediscovery” of the essential role of African American Communists in the struggle for both Black equality and the emancipation of the US working class. 

The ruling class has gone to great lengths to hide the role of Communists in laying the foundation for the modern-era Civil Rights Movement, anti-imperialist action, and subsequent anti-racism struggles. Moreover, they have sought to erase the leadership of the earlier struggles by Black US Communists. The myriad organizations initiated and/or led by Communists have been buried in the past: Council on African Affairs, Civil Rights Congress, National Negro Labor Council, National Negro Congress, Committee for the Negro in the Arts, and a host of other organizations. 

Similarly, the role of figures like WEB Dubois, Paul Robeson, Lorraine Hansberry in founding, participating, and advancing these organizations has been side-stepped by mainstream scholarship.

As the Cold War receded, historians like Nell Irvin Painter, Robin DJ Kelley, and Mark Naison-- part of a “revisionist” wave reconsidering the role of the Communist Party USA-- began to reveal the historical symbiotic relationship of the Communists, associated radicals, and Black liberation.

Mary Helen Washington’s 2014 book, The Other Blacklist, does a similar service for Black cultural and artistic figures who moved within or in the orbit of the Communist Party.

No scholar has and continues to plumb the close trajectory of Communism with the Black freedom movement more thoroughly or more diligently than Gerald Horne. Horne’s research has produced over a dozen books on Communists, the Cold War, and radical African American struggles. Horne summarizes the target of his research: “It is easy to see why future generations will be displeased with much of the present history that has been written to this point about the Communist Party because it has been incredibly biased, one-sided, deeply influenced by the conservative drift of the nation – not unlike pre-Du Bois histories of Reconstruction – and, fundamentally, anticommunist.”

And, today, scholars are linking the role of Communism with anti-racism and feminism, importantly through the life and works of deported US Communist leader, Claudia Jones. Scholars like Charisse Burden-Stelly and Denise Lynn are fairly and sympathetically chronicling the contributions of Communists, especially African American Communists, without genuflecting to Cold War shibboleths. See their work (Burden-Stelly) here, here, here and (Lynn) here, here, here. 

Also, scholar Melissa Ford has done important research, including Black Women, Black Radicalism, and the Black Midwest.

Much of this research finds its way to the estimable Claudia Jones School for Political Education, an essential source.

Doubtless the pursuit of these forgotten histories will encourage and embolden others to consider Marxism-Leninism as a beacon illuminating the road ahead in the direction of finally defeating racism and achieving socialism.

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Equally welcome is a growing hunger among workers-- in the labor movement-- for something more nourishing than the simplistic slogan of “Throw the bums out” directed at the labor leadership.

Reports grow that workers are discovering the writing of William Z Foster, the mastermind of class struggle unionism as practiced in US labor’s most militant days. Foster’s history in organizing workers in the early twentieth century and in crafting the US Communist Party’s labor strategy until his death in 1961 has been largely smothered by anti-Communism. But, as long-time union activist Chris Townsend reminds us, his ideas are available today with the reissue of his book, American Trade Unionism (International Publishers). 

International Publishers now offers another reissue of an essential labor classic, Roger Keeran’s The Communist Party and the Auto Workers’ Union. Keeran’s scholarly book gives the true account of the building of unionism among auto workers without a Cold War spin or the usual Reuther brothers hagiography.

As an eye opener for union militants, Toni Gilpin’s The Long Deep Grudge joins the Keeran book to show how militant, multi-racial class-struggle unionism can be achieved and maintained. What Keeran does for the UAW, Gilpin does for the United Farm Equipment Workers of America in Louisville, KY. 

If history is to be a guide to the future, it must be shorn of the illusions, deceptions, and distortions imposed upon it. We must move beyond Cold War myths, restore the missing chapters of race and labor militancy, and reject hysterical anti-Communism, if we are not to be participants in the death throes of a racist, exploitative empire. 

We are fortunate that the quest for the truth is an irresistible force.

Greg Godels 

zzsblogml@gmail.com

Marxism’s Missing Link

Etymologies tell us that the word “exploitation” was first used in a morally, politically, and socially neutral way. In its original French and English, it described the productive use of beasts of burden, inanimate objects, and other resources, but not humans. Humans exploited, but they exploited things, living and material.

But in the nineteenth century, with the rise of industrialization and the widespread development of chattel slavery, the term “exploitation” took on new meaning. Writers began to use it in a negative way to describe the severe conditions of factory workers and the inhuman treatment of slaves. 

Perhaps it was the regard of humans as non-humans (inhumane treatment) while engaged in productive activity that caused many to apply “exploitation” to what were then contemporary social relations. In any case, the word was exported into the moral, political, and social realm.

Where taking advantage of draught animals, machines, or natural resources bore no special moral, political, or social import, taking advantage of humans by other humans commonly conjures negative moral, political, and social judgement.  

In England, with industrially organized manufactory growing in importance and the employment of men, women, and children in miserable conditions, the word “exploitation” came into general use by workers and their advocates to condemn the industrial system. Early death, disease, infirmity, poverty, and inequality were seen as the result of brutal exploitation brought on by the rise of capitalism.

As David McNally (Against the Market) ably describes, critics, Chartists, and early socialists pointed to exploitation as the source of the social ills of the day.

It was against this backdrop that Marx and Engels sought to take the intuitions of social critics like Charles Dickens, Charles Hall, or Robert Owen and advance them from an expression of moral sentiment to a statement of scientific truth. They took on the task of giving “exploitation” a firm, rational, and objective foundation, just as they hoped to advance socialism from utopian to scientific. Indeed, much of the Marxist program was to bring clarity and precision to the ideas surfaced by the vague, unsettled opposition to the brutal industrial system. In more modern terms, they sought a rational reconstruction of popular, but inexact and emotional terms like “socialism,” “working class,” and “exploitation.”

Marx and Engels, in their most developed thinking, placed the idea of exploitation at the center of their work. Exploitation is the key social relation that explains how those who create value through labor are separated from the rewards of that labor. Exploitation exposes how a tiny minority can accumulate and retain the wealth created by others without stealing it or directly coercing it. 

The migration of exploitation from a relation between people and things to an established, seemingly consensual relation between people and other people entails a conceptual leap: the idea of human labor as itself a commodity. And for labor to become a commodity, Marx and Engels recognized that there must, in fact, be a difference between labor power, which can be exchanged in the market, and the actual, unique, variable labor that people expend day to day for themselves or others.

Thus, the exploitation nexus is a vital, definitive foundation of the capitalist system. Marx’s formal exposition of the rate of exploitation in Volume I of Capital recognizes that importance. That the rate of exploitation is formally identical with the rate of surplus value in the Marxist system underscores that vitality.

For most of the next century, resistance to capitalism drew more and more on Marx’s theoretical legacy. And the idea of exploitation became a cornerstone of that legacy, an idea that married a worker’s ready, intuitive grasp of the injustice of capitalism with revolutionary theory.

By the end of the nineteenth century and throughout the early decades of the twentieth century, Marxism dominated the workers’ movement, with “ending the exploitation of ‘man’ by ‘man’” the defining slogan of the era (later Marxists, like Victor Perlo, enriched that understanding by linking national, racial, and gender differences to “super-exploitation”).

While the Marxist movement, specifically the World Communist Movement (WCM), continued to pay routine homage to the idea of exploitation, it receded in tactical and strategic importance. 

The era of monopoly capitalism-- with the dominance of finance capital, a burgeoning middle stratum, a growing international division of labor, a rising service sector, immaterial commodification, and an increasingly complex and separated labor process-- made the exploitation nexus appear increasingly murky and indefinite. In addition, the concurrent rise of imperialism shifted the emphasis from exploitation in the industrial workplace to the domination of one advanced capitalist country over another: imperial exploitation. The exploiters of workers were hidden behind a curtain of joint stock ownership and the exploited were more distant from the commodity that they produced. Consequently, the essential link between labor exploitation and inequality became increasingly opaque.

In the twentieth century, Marxists became more and more attentive to capitalist crisis and the attendant death, destruction, unemployment, and impoverishment. War and capitalist economic crisis, especially the Great Depression, radically destabilized the capitalist world, strengthened the left, while prompting an even more radical capitalist response: fascism. Perhaps, it was understandable that these developments overshadowed attention to the day-to-day exploitation of workers under capitalism.

Moreover, the social democratic response to capitalist crisis further distanced the workers’ movement from the commonplace of exploitation. Social Democrats sought to ameliorate the symptoms generated by exploitation-- inequality and impoverishment-- through reforms and modest income and wealth redistribution. Opting to manage capitalism rather than overthrowing it, they neglected the fundamental relation of exploitation. Instead, they used the Keynesian toolbox to smooth the disruptions of the capitalist system and soften the sting of exploitation. Sadly, some Communist and Workers Parties chose the same road.

Among the so-called Western Marxists-- a self-styled collection of largely academic theoreticians-- the Marxist idea of exploitation was supposedly put to death by the writing of John Roemer, one of its leading lights. Roemer insisted, contra Marx, that a rigorous foundation for exploitation can only be found by assuming the posture of “methodological individualism” and can best be revealed through rational choice theory. Intimidated by Roemer’s facility with the logical calculus of rational choice, “Marxists” surrendered the battleground to Roemer and his colleagues. 

Roemer concludes that, given a minimalist, thin conception of exploitation, other commodities besides labor power could be said to be exploited, a conclusion of little more than marginal academic interest-- a peripheral curiosity. 

In addition, Roemer demonstrates that inequality of initial assets will generate Roemer-exploitation, a kind of exploitation that results in unequal outcomes for those who labor more than those others who have greater assets, assuming that agents act out of self-interest. In essence, Roemer constructs a model that begins with inequality and results in further inequality favoring those on the privileged side of initial conditions: those who are richer on the Roemer model, get richer over time. And richer at the expense of those with less initial resources-- interesting, but both practically and theoretically barren.

Roemer makes much of Roemer-exploitation and purports to show that our interest in exploitation, when conceived as inequalities generated from inequalities, entails certain anomalies that render exploitation theory incoherent.

But that is not Marx’s understanding of exploitation. Marx gives historical reasons for the conditions that allow labor exploitation to emerge, not as theory, but as fact. Roemer’s analysis is an interesting academic parlor game, clever, but of no relevance to the specific task that Marx sets: exposing the social relations and their historical conditions that enable exploitation of labor in the era of systemic and dominant capitalist social relations. Because Roemer begins with a presumption of the primacy of individuals in human affairs, he does not and cannot understand exploitation as a fundamentally social phenomenon grounded in social structures; he mistakes the question of how a socio-economic formation can generate a pervasive, systematic, and sustainable practice of exploitation (Marx’s problem) with how exploitation can be generated between individuals (Roemer’s problem). Despite the insistence of Western Marxists, Roemer does not slay Marx’s dragon.

Of course, there is another way to understand exploitation based, not on a narrow, academic perspective, but on actual paradigmatic cases: my uncle, who raised me, worked twenty-seven years in coal mines. On his work statement of September 30, 1936, he was credited with digging over 60 tons of coal, paid at the rate of 68 cents a ton (see below). 

A union coal miner at the time paid for the tools and supplies that he used in the mine which were deducted from his earnings. In essence, the owners-- the coal operator-- provided miners access to the coal face (tipple, elevator, coal cars, etc.) while the miners supplied the labor power. 

Miners functioned then, except for the negotiated United Mine Workers contractual conditions of work and compensation, as independent contractors (Tellingly, this “independent contractor” model appears to be the capitalist class’s preferred status for workers’ futures in the twenty-first century). They were “allowed” in a mine and were paid a portion of the value of the product that they delivered to the operator. In this case, the miner earned slightly more than 68 cents, before deductions, for the use of his labor power in producing a ton of coal, while that same ton of coal delivered to the marketplace sold for about 8 dollars in 1936. 

Coal miners understand this glaring gap between what their labor power-- a commodity-- costs the operator and what the product of their labor garners when appropriated and sold by the operator. Inevitably, workers grasp that they must fight for a greater share (trade unionism) or, in the case of the most visionary workers, overturn this bizarre arrangement (revolution).

                                    

For Marx and his contemporaries, the striking disparity between what the producer receives for his or her efforts and what his or her product sells for in the marketplace cries out for explanation. How does such a seemingly irrational exchange exist? How does it become conventional and universal? Why do the producers of wealth accept it? Under what conditions will the producers rebel against this conventionally accepted practice-- exploitation-- and establish a new social order?

Why is Exploitation Important?

Today, the exploitation relation is often obscured. The product of the worker is often something non-material, a service or information, for example, and difficult to measure. Often, it is not clear how a non-material product is commodified, how it is exchanged, and what market value it acquires.

Workers, especially in the formerly high-wage, advanced capitalist states are distant or obscured from their relation to commodity production because of an international division of labor. Their job titles are “professionalized” to mask their status as exploited workers. In short, their sense of being exploited is far removed from that of a miner at the coalface.

Nonetheless, most workers are exploited by their employers.

Primary labor exploitation takes place within the process of production, creating, as a consequence, inequality in the distribution of income and wealth. Social democrats and other reformists commendably advocate the redistribution of wealth, arguing against the growth of inequality or for the reduction of it, but not for the elimination of its source under capitalism, exploitation in its entirety. They stand for regulatory or redistributive policies such as taxation or moral suasion, while leaving the engine of inequality, capitalist exploitation, untouched. 

The principle locus of exploitation continues to be the place where wealth is created, the workplace, whether it be a factory, a shop, an office, or at home. Wherever there is the selling of labor power (employment), there is exploitation. Where the object of work is commodity production, exploitation is direct.

Where the object of work is aiding commodity production, its distribution, or otherwise of use to sustain commodity production, it is indirect.

The question of exploitation is the issue dividing the reformist from the revolutionary left. The reformist left has nowhere abated the existence or forward march of inequality in the context of capitalist social relations. It remains, as prominent social democrats like Thomas Piketty affirm, the greatest challenge to the future. They cannot and will not meet this challenge without eliminating the exploitation of humans by other humans.

Only a revolutionary breach with capitalism and the construction of socialism will achieve that end.

Greg Godels

zzsblogml@gmail.com

Is the New Normal the Old Normal?

One month after President Biden’s inauguration, a crushing sense of déjà vu is settling in, an unsettling feeling that we have seen this all before. 

Key campaign issues that Biden stood by are now diluted, postponed, or simply neglected. The fate of once urgent issues like the minimum wage, student loan debt, immigrant rights, health care reform, etc. now seem less pressing, more subject to study, deliberation, bipartisanship, or revision. 

Democratic Party politicians are taking their priorities from the headlines: squeezing the last bit of Trump-distraction from a trial with no prospect of victory and scrutinizing a silly stock market prank billed as a rebellion against the rich and powerful.

Without Trump, the media is returning to the old, trusted practices of celebrity fetish and ‘gotcha’ politics-- Lady GaGa’s stolen dogs. 

Meanwhile, intense Democratic Party fundraising shamelessly continues with the last election barely settled.

While the Trump administration policies remain largely intact, there seems to be less outrage boiling. Things take time, we are told (except for bombing, killing, and maiming in Syria). The patronizing rebuke of impatience issues from Biden supporters. 

Where have we seen this before?

Recall the euphoria that sprung forth a little over twelve years ago with the defeat of John McCain and the election of Barack Obama. Liberals and the soft-headed left took the event as singular. One lefty famously wrote in a fit of gross exaggeration:

"...hundreds of millions-Black, Latino, Asian, Native-American and white, men and women, young and old, literally danced in the streets and wept with joy, celebrating an achievement of a dramatic milestone in a 400-year struggle, and anticipating a new period of hope and possibility."

In this space, I responded incredulously: “Hundreds of millions? Literally? A dramatic milestone? Of course, there were not hundreds of millions even voting, nearly half of which voted against Obama! And ‘dramatic milestones’ should be reserved for truly world shaking events like the Civil War, The Great Depression, and possibly the economic catastrophe now looming. This dramatic overstatement is precisely the kind of puffery that contributes to isolating the left from working people.”

But this unhinged faith in “a new period of hope and possibility” was not uncommon, though seldom so wildly exuberant. Zealotry for Obama ranged across the Democratic Party, infecting the “progressive” left even more deeply.

A month before Obama’s inauguration, disenchantment began to set in, as his cabinet and staff took shape and some policy positions became clear. 

I reminded readers of a statement once made by popular liberal columnist, Walter Lippmann, in response to a similar idolatry of Franklin Delano Roosevelt: "Franklin D. Roosevelt is an amiable man with many philanthropic impulses, but he is not the dangerous enemy of anything. He is too eager to please.... Franklin D. Roosevelt is no crusader. He is no tribune of the people. He is no enemy of entrenched privilege.” And what was attributed to him-- historically progressive and significant New Deal legislation-- was largely the result of pressure from mass movements of workers, farmers, the unemployed, African Americans (who got little), and small business people. 

And that proved to make all the difference. 

After the election, instead of holding Obama to the meager “progressive” agenda on which he campaigned and demanding even more, “the leadership of the broad left - much of the peace movement, liberals, environmental social justice activists, etc. - surrendered their critical judgment, independence, and influence to a blind trust in a fictitious movement for change. In the history of social change in the US, every real advance was spurred by independent organization and struggle unhampered by the niceties of bourgeois politics. From the Abolitionist movement to the Civil Rights movement, from the Populist movement to the Great Society, from the Anti-imperialist League to the Anti-Vietnam War movement, the initiative for change sprung from committed, independent activists who defied the caution and inertia of elected officials.”

Even with a supermajority in the Senate and a majority in the House, Obama showed the “caution and inertia of elected officials.” And the euphoric left went to sleep, the antiwar movement waned, and labor leaders delighted in their access to White House social events. The fiction that social change can come from dangling the carrot of support and trust in front of Democratic Party elected officials failed the left once again. 

After two years, and the loss of the Senate supermajority and the House majority, Obama’s administration lost the initiative with little accomplished. 

Writing in December of 2010, I recalled an article that I posted in the fall of 2008 suggesting that Obama’s presidency might “reprise” the disappointing Carter term. I then asked the pertinent question: “The promise of 1976 was squandered by the Carter Administration. Will the opportunities for change afforded by Republican failure be wasted again in 2008?”

With the honeymoon over, the truth about the Obama administration became clear, and is even more clear today, that the answer is a resounding “yes!” -- another lost opportunity.

Will the opportunities afforded by the defeat of the odious Trump administration be wasted also? Will the Biden administration turn liberals and those tied umbilically to the Democrats against advocating for any real change? Will the “responsible, practical” left entrust change to a Party with a history of betrayal? Will Biden follow Obama, Clinton, and Carter-- 20 of the last 46 years of presidential administrations-- down the rat hole of unfulfilled promises?

Today, with the left shackled to foundation grants, NGOs, and think tanks, as well as lacking the will to escape the gravity of the Democratic Party, the prospect of a truly independent political movement grows dimmer.

Yet the need for independence has never been greater!

As the crises of US capitalism mount, the argument for moderation and compromise becomes the argument for surrender. If it seems daunting to build a militant, independent left, surely it is even more frustrating to invest time and energy into an immovable instrument of capital, an institution that has shown, for most of our lifetimes, to be capable of only serving the interests of ruling elites, unless prodded by a determined, independent, militant movement.

Trump is gone, but Trumpism will return, if we fail to overcome the inertia of a lifetime of Democratic Party betrayal of meaningful reform.

Greg Godels

zzsblogml@gmail.com

Games People Play

Our corporate media has been in a frenzy. The unprecedented January 6 assault on the Capitol in Washington, DC has conjured widespread interpretation and unbridled speculation. Conspiracy theories abound, from fascist coup attempts to murderous assassination attempts against our beloved leaders. Whatever its actual meaning, it has long since become a gambit in the political games played in the two-party casino, a move shaped by the advantage thought to be gained by our high-stakes politicians.

Speaking of casinos, the new year has brought us a different high-stakes game playing out dramatically in the stock market. The last few weeks have seen an escalation in the war between some financial hedge funds-- private investment clubs for “sophisticated” investors (big money!), utilizing arcane, complex strategies and exotic investment instruments-- and a gaggle of day traders organized to act in concert through popular internet discussion sites.

Hedge funds are like the gambler who enjoys both the benefits of having a larger stake and a greater insight in the game; the hedge fund manager/gambler can shape the direction of the game as well as predict its course. With the growth of hedge funds in the 1990s, participation in a prominent hedge fund became a mark of exclusivity and prestige for the very rich.

Because they digest market information better and faster, hedge funds accelerate the accumulation of capital in the hands of the very rich, greatly increasing inequality. Their market advantages make them appear to represent less risk, but the competition between them for the favors of institutional investors often leads them to risky ventures. Their “private” status largely keeps regulators off of their backs.

Until recently, these big players have had their way in financial markets.

Other innovations have produced new players in the stock market. The introduction of impersonal internet companies that facilitate individual stock purchases without fees have enabled a renegade cabal of new day traders (estimates range from 6 million to 20 million) who communicate with each other about stock purchases over forums like WallStreetBets.

Despite the fact that the battle between short-selling hedge funds and rebel investors has only been noticed by the sensation-seeking mainstream media in recent weeks, the conditions for its escalation have long been noticed by the financial press. I wrote in late September 2020:

Some would be surprised to learn that in the modern era, individual investors-- day traders and the like-- only account for roughly one in ten trades. The rest are made up by institutional investors, funds, etc. But, in 2020, the number of trades by individual investors has doubled, accounting for about 20% of equity market action.

With social media tipsters and discussion boards, the born-again investors have accounted for many stock valuations that puzzle and concern wiser investors. Tesla, for example, has gained 438% this year, establishing the maverick car company as the highest valued auto company in the world and the eighth largest corporation in the US by market value.

Fed by social media gossip, investors jacked up share prices of Eastman Kodak by as much as 614% before losing most of the gains! This kind of euphoria-driven investment has mature investors and advisors shaking in their boots.

While few outside of Wall Street noticed this phenomenon, it nearly sank some prominent hedge funds that specialize in a particular form of options purchases-- the opportunity to sell a stock short. 

Hedge funds like Melvin Capital Management typically purchase an option to surrender a stock to a buyer at a set price. Convinced that the stock price will fall in the negotiated time frame, they hope to buy the stock at a lower price to exercise their option, pocketing the difference between what they committed and what they actually paid (for a remarkably short, but clear explanation of this process, see this article in FightBack!NEWS).

Short-selling hedge funds function like financial sharks-- they exploit market weaknesses and turmoil to manufacture a financial advantage at the expense of wounded corporate enterprises like GameStop, AMC Entertainment, Bed, Bath, and Beyond, BlackBerry, and others. Smelling blood in the water, they use their strategy to extract profit from the decline of the stocks of these companies, repeating their short selling until they drive the share prices to oblivion.

These hedge funds were akin to the financial vultures who profited by driving the cost of debt of European countries, like Greece, into the stratosphere after 2009.

But a strange thing happened in January.

Organized around the common goal of making money and utilizing the reach of social media, a substantial group of day traders pooled their collective power (a lesson for the tame US labor movement) to pillage the short-sellers. With the verve of sports fanatics, internet cheerleaders like newly-born celebrity investor Keith Gill fomented an uprising against short-sellers to buoy the prices of the targets of the short-selling vultures, especially a company called GameStop.

Consequently, GameStop shares rose 1600%. Another company’s-- AMC Entertainment-- share prices advanced 301.2% in one day, January 27!

Short-sellers, betting on share-price collapses by these damaged companies, were hammered by the increases engineered by the renegade day traders. They made money, but some hedge funds lost a lot of money. It is estimated that one hedge fund, Melvin Capital Investments, lost 53% on its investments in January from the collective action of day traders. On GameStop alone, hedge funds lost nearly $25 billion at one point in January.

The mainstream media pounced on the “battle” between day traders and hedge funds, projecting a David-versus-Goliath story. Congress members reacted predictably, some siding with David, some with Goliath.

When the no-fee trading platforms supporting the day-trading rebels stopped trading on the key stocks, odd-bedfellow politicians Senator Ted Cruz and Representative Alexandria Ocasio-Cortez reacted indignantly. AOC-- the master tweeter of the celebrity-left-- saw an injustice in denying the “heroic” retail traders from buying shares, “while hedge funds are freely able to trade the stock as they see fit.” This might appear to some to be an odd concern for a self-avowed “socialist.”

Multi-billionaire Elon Musk joined Cruz and AOC in sympathy with the upstart investors, tweeting “Get Shorty” to his 40 million followers. Of course it is worth noting that these same investors have created a frenzy of buying behind his company, Tesla, making him the world’s richest person.

Despite the popular, media-driven narrative of good rebels versus rapacious hedge funds, the truth is that this dust-up has very little to do with the fate of working people in the US. Capturing even sectors of the US left, the quaint story of an army of amateurs bringing down powerful hedge fund managers spread far and wide. Some saw the events as a populist rising, an exaggeration in the same league as the hysterics decrying a coup attempt on January 6.

Behind the facade of righteous anger directed at the flesh-eating hedge funds was individual lust for easy money corralled into a surprising market force and targeting a small, but vulnerable corner of finance capital. Portraying this as a populist rebellion, as an assault on the forces of economic tyranny is… simply absurd.

With Toto pulling the curtain back from Oz’s wizard, one finds a couple of relatively small-time fund managers who “sowed seed for frenzy” over GameStop, according to The Wall Street Journal. Both made millions off of sparking what is being sold as a rebellion.

And then there is Citadel Securities, the trading firm owned by a billionaire hedge fund manager and the largest player in facilitating retail stock trades. Citadel, more than any other company, supports the trades of the fee-less brokerages that attract the day-trading crowd. Accordingly, it makes vast sums from the explosion of new retail investors who collectively exploit the short-sellers.

At the same time, Citadel helped bail out a victim of the day-trading frenzy, participating in a $2.75 billion loan to Melvin Capital Management. Talk about working both sides of the street!

As The Wall Street Journal prominently noted (February 4, 2021), hedge funders Richard Mashaal and Brian Gonick jumped on the GameStop mania in September, cashing out at $700 million and making a hedge fund, Sunvest Management LLC, one of the big winners.

There is little heroics in this farce, and little justice.

In any case, forces within finance capital smashed GameStop on Monday, February 1, with the stock dropping 100 points and losing over 30% of its value. On Tuesday, another devastating blow was delivered. Game over for the GameStop rebellion.

We learn from this farce that there is no "peoples’ capitalism."

We learn that the stock market is, today, divorced from the real economy (though it cannot remain divorced forever). In fact, it is currently functioning as a casino for the wealthy, almost wealthy, and wannabe wealthy.

We learn that the stock market operates apart from the interest of working people and can offer no solace for those working for a living. And if we study history, we learn that investment mania, like that making headlines today, generally precedes a serious crisis. The similarity with the lead-up to the Dotcom bubble is uncanny.

Less than a month into the post-Trump era, with the Republican Party divided and the Democratic Party scrambling to separate from its weak-tea campaign promises, the corporate media is busy searching for a reality TV replacement for Trump’s antics. They have tried to transform an over-the-top tailgate by Trump’s camp followers into a coup attempt in DC.

And now they have sought to raise a mischievous, self-serving financial maneuver into a populist attack on the bastions of wealth and power, a media story akin to promoting a pick-up basketball game at the YMCA during the NBA finals.

Both stories serve as distractions from the destruction and insecurity faced by those who work for a living, by those distant from the rulers nested in Washington, DC and the financiers and their admirers tied to Wall Street.

Facing joblessness, eviction, foreclosure, and a broken, ineffective health care system unable to deliver hundreds of thousands of US citizens from a death sentence, the public needs more than an entertaining, sensationalist narrative.

In the shadows of these media circuses lurks the real story, a story of a politico-economic system bringing misery and despair to millions of US citizens, corrupting US politics, denying a solution to a wrenching health care disaster, and spurring inequality. Dare I say the word that eludes the corporate media?

Capitalism.

Now that would be a story worth telling.

Greg Godels
zzsblogml@gmail.com