Involution, Competition, and a Good Life

Xunliang Huang

What is Involution?

Imagine you are taking a class in which you are graded based on a series of essays without an upper word limit. There is an underlying assumption that the longer you can write, the more details you can put into the essay, translating to a better grade. The teacher recommends that everyone should aim to write 1000 words for their essays. Grades are awarder in step with a student’s relative performance (top 10% receive 90; top 50% passes etc.). Most students write 1000 words; however, a student wrote 1500 words and received the best grade. Soon enough, students learn that to get better grades, they need to write more. What follows is that writing 1500 becomes the unspoken standard. However, as students write 2000, 5000 words, they are rewarded with better grades. Hence, the amount of effort students put into their essay continues to climb.

Students will compete against each other for a better ranking and hence a better grade, despite knowing everyone would be better off if each student stuck with 1000 words. Students receive the same surplus disregarding the amount of effort. Theoretically, students will keep trying to top each other in what they write until they are exhausted and reach what we refer to as Nash Equilibrium in Game Theory.

	Writing 1000-word essay	Writing 2000-word essay
Writing 1000-word essay	(good rest, good rest) Same result	(good rest, no rest) (bad result, good result)
Writing 2000-word essay	(no rest, good rest) (good result, bad result)	(no rest, no rest) same result

We can think of this phenomenon of inflation of “efforts”. This concept translates to the phenomenon of involution, in which working more becomes normalised as people try to match with the same standard.

Involution refers to the phenomenon, when an entity or closed economy has already reached an ultimate state, where it cannot stabilize nor transform into a new state, yet continues to become more complicated internally.

This phenomenon is most significant in China, especially in the education system and labour market, where agents in the same (entity) spend more time or pay more effort to fight for scarce resources, which results in reduction in total surplus as well as individual surplus. “The young continue to feel if they don’t work hard or participate in competitions they will be ousted by society, but they don’t see a breakthrough for themselves despite their repeated efforts,” said Professor Biao Xiang from the University of Oxford.

How did this happen?

Since China began to open up and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of abject poverty. To meet the strong growth in the economy, the demand for in education among new generations swelled. This was followed by the introduction of University Entrance Exams, emphasising the importance of a university education. As people recognised the prestige and money a university degree could confer, more parents encourage their children to work hard and go into university. Despite GDP growing the quickest in the late 1970s to early 1980s, the number of students admitted into university only started to dramatically increase in 2000. This is also the result of the establishment of new universities and existing universities admitting more students.

The students admitted into universities increased by 600% in between 1999-2003.

GDP fluctuated most significantly in between 1960 and 1980.

However, in the 2000s, the growth of Chinese economy has steadied and tapered off. As a result, the labour market cannot adjust for the huge increase in graduates pumped out of universities each year. Demand for labour is fixed to some extent, as there are only so many graduate positions that relate to the undergraduate degree opening up each year. The students who graduate from undergraduate degrees who are unable to find employment are left with three choices:

Continue studying for a master’s degree or PhD.
Settle for an undesirable path unrelated to their degree studied, such as entrepreneurship, manual labour or retail.
Give up the search and remain unemployed.

Despite competition being a good thing and incentive for individuals to reach their potentials and economies to grow, involution is not an entirely pointless pursuit, yet nor is it a state of healthy competition. From the individuals’ perspective, students are often forced to study and most often not out of passion but enter a degree to pursue a career pathway that is easier to find employment in. According to the laws of diminishing returns, the amount of effort and time students put into their education does not justify the results. From the economy’s perspective, the time and effort students put into “perfecting their crafts” could be used to pursue something otherwise more interesting with better outcomes, such as innovation in other fields, which would boost the economy even more. Despite people in China working harder and longer than those in other developed countries such as US and Australia, their average annual salary is no match for even the salaries of workers on minimum wage in Australia. Is a Happiness index needed to address exhaustion?

Are existing Chinese policies really effective?

The Chinese Government is already putting policies in place, hoping to slow down involution. One such policy is the banning all profit-oriented academic tutoring in K-12. The desired outcome is to reduce the amount one could study. To relate to our first example, putting a “word limit” on the essay submission. However, this is merely a bandage-solution. Unlike a word limit, where exceeding that limit people would be punished, the rule is not very enforceable. Firstly, despite tutoring companies may be hit hardest, there is little to no enforcement against private tutors. As a result, wealthier families that are able afford private tutoring are unaffected by the introduction of such policies. This would result in greater gap between the wealthy and the poor, a very serious side-effect. Secondly, policies such as this one only focuses on the surface of the problem, it does not tackle the formation behind involution, nor offers an effective solution that would lead China out of its vicious cycle.

How can we end involution fundamentally?

To end involution, the core issue- a lack of demand for jobs, must be tackled. Government needs to create more job opportunities for university graduates, including in existing industries as well as inventing new industries, reducing China’s technological dependence on developed countries such as US. Gen Z live in the shadow of the great economy boost of its previous generation. They are awfully skilled with no opportunities to exercise their strengths.

Furthermore, government should focus on encouraging flattening the gap between social classes and the artificial categories of “superior” white-collar jobs and “inferior” blue-collar jobs. The fundamental drive behind people who study well is not their desire to pursue a white-collar job because of their passion, but because of the level of comfort, material compensation, power, and respect they receive. However, if blue collar jobs and white-collar jobs receive a similar income, then more those not interested in academia will turn their attention away from pursuing a university degree, but choose to pursue a down-to-earth pathway, reducing the amount of competition in academia. Whereas people who are genuinely interested in acquiring new knowledge could pursue white collar jobs and potentially progress to jobs in top notch fields. To illustrate, if janitors and rocket-scientists make the same amount of income, whereas janitors do not need to study 30 years to gain credentials, only those truly passionate physicists would pursue a career in science. In the meantime, government should also encourage small businesses, innovation and reduce technological dependence on other countries. If the government could avoid rewarding meaningless hard work with only the potential of getting acknowledged, perhaps involution would die out itself. However, you might have noticed that I conveniently avoided the practical side- that Chinese society is not able to provide enough salary for those in the working class. However, I do not see it as a major concern in the long run, as long as corruption is properly handled, and GDP continues to grow steadily.

Is “Lie flat” really not an option?

If the government is not able to react quickly, we can change ourselves. “Lie flat”, what people refer to as their only way to avoid involution, is to give up the “rat race” and not participate at all. Despite the surface negativity associated with ‘lie flat’, is there more to this passive solution for us to investigate? Firstly, we need to establish that simply giving up the fight, giving into drugs and alcohol is not a good solution. Doing nothing is not doing something. However, what if we approach it in a different way? Most people subscribe to a hedonist viewpoint where they try to maximise pleasure by making more money. A good metaphor for people’s behaviour in the 21^st century under the capitalist, consumption-based society is Sisyphus’ tale in Greek Mythology. Sisyphus is punished to push a rock uphill, however, every time he reaches the peak, the rock would roll down and he is trapped in the fate of fruitless labours. Similarly, we are trapped under the curse of consumerism, naively unaware, enjoying the process, wasting our lives away. However, if we take a step back and break the fixation that monetary enjoyment would lead to living a good life, things are looking up. As Socrates famously argued in ‘Gorgias’ against Callicles, there are good and bad pleasures, and people need to learn to distinguish those material desires from intellectual pleasure to lead a fulfilling good life. Instead of deriving enjoyment from purchasing merchandise, maybe the goal of the society should be producing sustainable goods with long user-life. We should downscale and lead modest lives and gain intellectual pleasure from reading and creation.

Other implications?

No doubt other countries will face the same issue in the future. If China is able to stop involution, the experience will be invaluable and will bring other developing countries who are labour exhaust, out of their vicious cycles, and improving the living standard worldwide.

Xunliang Huang is a Research Analyst with the University Network of Investing and Trading.