Social media appears to be giving birth to a new kind of activism, which uses finance to achieve social change. Judged by the meteoric rise of recent campaigns, banks and corporations should pay attention.
The story of financial activism begins in 2004, when Max Keiser, an ex-Wall Street banker turned activist and international provocateur, set up Karmabanque. His idea: to enlist the support of hedge funds and activists alike and create a boycott campaign targeting brands which were behaving badly. The hedge funds, who would be in it for the profit, would short-sell the targeted stocks, bringing down their price on the stock markets. The activists would campaign for a boycott, and through a positive feedback loop, the short selling and the boycotting would reinforce each other until the brand caved in to the demands of the campaign.
This was at least how it was supposed to happen. Keiser had no trouble signing up hedge funds, who saw the profit opportunity. Zac Goldsmith, then editor of the Ecologist magazine, also endorsed the idea. However, the plan came unstuck when Keiser failed to convince the activists, who were skeptical of finance, and saw it as a weapon of the “establishment” they were fighting against. Activists and bankers were always going to be unlikely bedfellows: Keiser’s plan seemed little understood by those who were not in finance. The Guardian expressed its dismay that Keiser was trying to operate “beyond the normal forces and controls of society.” Karmabanque did not become the major success Keiser had hoped.
However, the idea behind “financial activism,” the use the power of markets to achieve political or social objectives, is going through a revival. Social networks and sharing sites like Facebook, Twitter and YouTube have all made it happen.
Eric Cantona has a Revolutionary Idea
Ten days ago, a video of Eric Cantona appeared on YouTube, where he called on the people to withdraw their cash from the banks en masse. “The system,” Cantona explained, “revolves around the banks.” The old style of protest, going out into the street and waving placards, was just “a way of getting swindled.” The best thing for millions of angry pension reform protesters to do was to cripple the banking system by taking their money out of it.
Cantona’s call for direct action received 140,000 views in less than ten days. It was subtitled into a dozen European languages, and started spreading outside of France. A campaign site began at bankrun2010.com inviting people to participate in a mass withdrawal on 7th December. Over 13,500 have pledged to take action on the campaign’s Facebook group. The Guardian reported on it here.
“Crash J P Morgan Buy Silver”
While Cantona’s plans to defang the banks sound ahead of their time, Max Keiser is already a step ahead. Withdrawing money from the banks is great, Keiser says, but it matters hugely what you do with it. One week ago, Keiser announced his latest plan while appearing on the Alex Jones radio show: a campaign to crash the prestigious American investment bank J P Morgan by “putting a firecracker under the silver price.”
J P Morgan is widely believed to have very substantial short positions in silver. Additionally, the bank is caught in a number of litigations, where it is accused of silver market manipulation through “naked short selling.” A naked short sell is essentially where a bank sells a contract for silver which it doesn’t physically possess, in order to suppress the price and make a profit.
Keiser says J P Morgan’s quants failed to plan for “civic unrest risk”: if the disgruntled populace buy enough silver coins, the metal traditionally seen as the “people’s money,” the price of silver could rise to a level where the bank would be forced into bankruptcy by its short positions. Keiser is using Google Bombing, a technique which involves getting followers to search for campaign keywords (“Crash J P Morgan Buy Silver”) to get them noticed in Google Trends.
Keiser’s TV appearances have received tens of thousands of views, and dozens of fans have uploaded videos of support to YouTube. Yesterday, a report emerged on financial news site ZeroHedge that wholesale suppliers of silver coins were having inventory shortages, with “two to four week” delivery delays. Keiser now claims that J P Morgan is applying pressure to have him thrown off Russia Today. Not a bad result for a week’s campaigning.
Whether campaigns like BankRun2010 and Crash J P Morgan Buy Silver can achieve tangible results remains to be seen. If Facebook fans and YouTube views are any indication, a new kind of activism is in the process of being born, propelled by social media. Mao would be proud.