Carnivalesque Economics and Game Stop

Anyone following my blog posts will discover soon that I am a fan of the Russian philosopher Mikhail Bakhtin, and his theory that Carnival (in the medieval street carnival sense) inherently carries revolutionary impetus. The idea is that there is a “world upside down” message to the carnival. It is like Mardi Gras, with local people performing as Kings and Queens on the street, while the local authorities watch from the sidelines, and often see their positions of authority mocked. The order of the world is turned upside down for a moment, and we play King and Queen for a day. Bakhtin remarked in 1972 that, “the gospel is carnival.” That is, it turns the world order on its head.

The subreddit Wallstreetbets kicked off a storm of stock buying on the typically underperforming company Game Stop, a place for the gamer, that a lot of gamers didn’t care for in recent years. Well, that didn’t matter. Big hedge fund groups were selling short on GME (Game Stop), and when that was presented to the Wallstreetbets subreddit, all hell broke loose. Gamers and kids and people who have felt disenfranchised by the system of the rich getting richer started buying Game Stop stock in mass and playing it like a video game. Hundreds of thousands of little people, and a handful of people with significant money jumped on board and the under $20 stock soon rose over $400. Madness ensued. Hedge funds started losing billions, and had to be bailed out by other companies.

It lasted a couple weeks, and then it has fallen back to “reasonable” numbers. At this point, Game Stop is down 43% today alone, and is just above $50.

The point of this blog post is too point out the world upside-down dynamics of this historic stock market run. A large number of loosely related small investors put up enough money together to show that they could determine market values, and do so against the money of the big guys. They ruled as economic kings and queens for a day. They talked and joked about it over Reddit throughout the event, and spoke of sticking it to The Man. They looked at it as a revolution of the little people, and though some of the big money guys turned to make a profit on it, the little people did make a point, and scared the bejeebers out of the market. Things will never be the same. There may only be small adjustments, but Carnivalesque economics has been made possible. It perhaps is appropriate that Robinhood was the company that gave the small investor the power to do something like this in the first place.

The Game Stop run was a laugh. It was a wild ride in a clown mask, and we may not have seen the last of it.

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