Market Mania

Radio Open Source
6 min readFeb 7, 2021


This week: conversations about GameStop and market mayhem, with Mark Blyth, Joseph Stiglitz, Matt Taibbi, and Zachary Carter. Listen today at 2 pm, or anytime at our website.

Recently, retail traders on Reddit’s WallStreetBets helped drive up the price of GameStop stock astronomically, thwarting hedge fund pros who had bet against the videogame retailer. Popular stories emerged of Davids triumphing over a Wall Street Goliath. But it’s also been reported that institutional investors were behind much of the spike, and a hedge fund is among the biggest victors of the whole thing. It may be that in the stock market casino, as in any other casino, the house generally wins.

On this week’s show, political economist Mark Blyth (and Open Source legend) pointed out that this is an old, familiar situation:

We have seen this loads of times before. It’s called a pump and dump. Now, it doesn’t matter if there’s no real organization, no nefarious guy who’s leading everybody off the edge of the cliff if it’s just a collective mania. But the result is the same.

Mark Blyth.

The result: “This always ends badly with the little guy who’s pumped all the way up losing his shirt as the professional investors clean up.” And Blyth goes on to dispel other major stock market myths, starting with the myth that stock market activity has much of any place in mainstream American life:

Let me put this simply, nearly 60 percent of Americans earn less than 20 dollars an hour. They’re not involved in the stock market, right? This is a rich person’s game. And the second great myth is: the stock market exists for companies to raise capital. No, it’s not. Most companies use retained earnings for their investment and they use the stock market to do things like buy back their own stock to boost the value of it. So the whole thing is: it depends on what you think the purpose is. If you think this is kind of a portfolio allocation game for the rich to bet on various indices and various companies to become even more rich, and that’s it, then yeah, the stock market’s awesome. But that also explains why it has nothing to do with the real economy.

Zachary Carter.

Zachary Carter, who wrote an excellent biography of John Maynard Keynes (we talked about it last year with Carter), joins our conversation and expands on the critique with the words of Keynes himself:

John Maynard Keynes in 1936 wrote his magnum opus, The General Theory of Employment, Interest and Money, and he said, “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.” And I think this part is really critical: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Over on his Substack, Matt Taibbi described a cathartic defeat of Wall Street titans and a nation frustrated with those titans. And on our show, Taibbi keeps attention on a grim sort of schadenfreude:

We have to be in a pretty advanced state of decline and collective depression for people to respond to this story and laugh at it as though it’s something enjoyable. I mean, in a normal country, something like this wouldn’t happen, where you would have an enormous quantity of people getting together and actively betting up the value of a stock that they probably know in the end isn’t worth a whole lot — just to spite somebody.

And to make some money. To be fair, they are actually trying to squeeze these short-sellers. But the emotional aspect of it is satirical in a way that only makes sense to a country in an advanced state of frustration, decline, and helplessness. It’s a kind of a gallows humor situation.

Matt Taibbi.

Nobel laureate Joseph Stiglitz joined us to explain the causes of the decline, the sorry reality of a country that’s given so much of itself to financialization:

There’s been a process sometimes we call financialization. It began around 1980, 40 years ago. There was a process of deregulating the financial markets. If you go back in history, the Great Depression highlighted the excesses of the financial markets during the Roaring ‘20s. There were these things of short sales like we just saw in GameStop. There were all kinds of financial shenanigans that went on. And one of the things that happened after President Roosevelt took office: Congress, the administration looked at what had set off this terrible Great Depression, and one part of it (it’s only one part, but one part) was financialization.

Introduced regulations on banks, they introduced the Securities and Exchange Commission. They tried to create, you might call a level playing field and a well regulated playing field. And we kept that framework for, you know, 40 years. And it served us well. We didn’t have another major economic downturn until the end of the ‘80s. But when Reagan took office, there was this whole agenda of liberalization, financialization, and unleashing markets from the regulations that they claimed were dampening the economy.

Joseph Stiglitz.

Well, we now have 40 years of that new experiment, as I’ll call it. . . . The real economy has not done very well. After we “liberalized and unleashed the economy,” growth actually slowed down . . . What happened was rather than devoting more resources, human talent (which is really our most scarce resource) to making better products, meeting the needs of ordinary citizens in a better way, more and more the talent, as it were, went into extracting profits out of financialization.

Read: Henry George

One of Stiglitz’s major contributions to economics is his formulation of the Henry George theorem, named after the nineteenth-century American political economist. The theorem holds that public spending leads to increases in land rent. Thus we can finance public spending by taxing those increases in rental values.

Henry George, like Stiglitz today, addressed the problem of inequality’s persistence alongside Gilded Age wealth. Rising land rent due to speculation, George found, was one of the major problems behind the problem; here’s an excerpt from George’s Progress and Poverty:

the influence of speculation in land in increasing rent is a great fact which cannot be ignored in any complete theory of the distribution of wealth in progressive countries. It is the force, evolved by material progress, which tends constantly to increase rent in a greater ratio than progress increases production, and thus constantly tends, as material progress goes on and productive power increases, to reduce wages, not merely relatively, but absolutely. It is this expansive force which, operating with great power in new countries, brings to them, seemingly long before their time, the social diseases of older countries; produces “tramps” on virgin acres, and breeds paupers on half-tilled soil.

Read more about Henry George in Edward O’Donnell’s Henry George and the Crisis of Inequality.

This week’s ephemeral library

DeLillo at the Super Bowl. Nina Katchadourian at sea. Ed Park on a consideration of Octavia Butler. On the Biden era and the question of whether America can recover.

Back next week. Stay well and don’t slip on the ice!

Your OS money managers.



Radio Open Source

An American conversation with global attitude, on the arts, humanities, and global affairs, hosted by Christopher Lydon.