Preventing Involution Phenomenon and Promoting Economic and Social Development
By Special Commentator, Professor Chen Xian
In recent years, the words "卷" (fold) and "内卷" (involution) have become hot topics, frequently appearing in everyday conversations. These two words reflect various phenomena in current social and economic life, deserving closer examination.
"卷" typically refers to competition. Xiaomi Group founder Lei Jun once said, "Is the price war in the automotive industry more intense than that in the smartphone industry? We from small to big, we are kings of competition and fear no one?" Here, "卷" figuratively describes the intensity of market competition. The "price war" as a common form of inter-enterprise competition occupies an important position under market economy conditions. Although textbooks and experts advocate non-price competition, such as service competition, price competition still remains the main means for enterprises to compete. Through price competition, companies are forced to improve product quality, increase product functions, and provide better services, thereby allowing consumers to obtain products or services at a lower price with higher value.
Encouraging non-price competition is not unreasonable; it is indeed a direction worth promoting. If we define "卷" as the synonym of price competition and non-price competition, then it is a concept inherent in market economy, rather than one that should be devalued. Competition itself is neutral, being the core of market mechanisms, and plays a decisive role in resource allocation and economic development.
So, what is "内卷" (involution)? Taking into account various uses, it typically refers to excessive competition and disorderly competition. In what situations does competition become excessive or disorderly?
One situation is where the price war reaches a point where most enterprises in an industry have no profits or extremely low profits. Several years ago, the "price war" in the television industry seemed to have reached this point. Currently, whether the automobile and smartphone industries have reached this level is unclear. However, regardless of the outcome, such competition is clearly excessive.
Another situation is where competitive principles are introduced into public domains and social fields, causing chaos in these areas. This type of disorderly competition is particularly evident in the education sector, especially at the compulsory education stage. The famous educational expert criticized the many "anomalies" in the compulsory education sector, particularly the huge differences in school conditions and levels between different regions. These differences are caused by man-made factors to a great extent and are typical of involution phenomena.
The concept of "内卷" originated from sociology, with the English translation being "involution," meaning regression. In English, the prefix "in-" and the suffix "-e" are antonyms, with "involution" being the opposite of "evolution" (progress). Evolution refers to the process and trend of material systems evolving from disorder to order, or low-order to high-order, while regression is the process and trend of material systems evolving from order to disorder, or high-order to low-order. Scientific research has shown that evolution and regression are inseparable and dialectically unified. Regression may appear during certain stages of evolution, which is a normal phenomenon.
As an economic concept, competition is neutral and has no positive or negative connotation. Competition is the core mechanism of market systems, playing a decisive role in resource allocation and economic development. Economics also uses various concepts and scales to measure the degree of competition and monopoly, such as industry concentration. When the head enterprise occupies too high a proportion, it may even be subject to legal procedures to split this company to increase the competitiveness of the industry and reduce the level of monopoly. This is to say that in real economic activities, we often need to rely on legal regulations to lower the threshold for the flow of factors and entry/exit of enterprises to maintain and ensure a fair competitive order.
Due to the driving forces of benefits and technological progress, market competition may often lead to non-rational phenomena, resulting in disorderly and excessive competition. This is an issue that regulatory bodies and industry organizations need to closely monitor and effectively prevent through various means.
The concept of "内卷" vividly reveals the situation where people seek to obtain some unfair commercial benefits by introducing market competition into public domains and social fields. This is regression, not competition. Only by recognizing the essence of involution can we find a solution. Involution exists not only in economic sectors but also in education, healthcare, and other social areas. To solve these problems, government, enterprises, and society as a whole need to work together to create a fair and just competitive environment, preventing excessive competition and disorderly competition from destroying the social order.
"卷" is normal market competition, while "内卷" is excessive competition and disorderly competition, which is regression rather than evolution. We should distinguish between these two and correctly evaluate the role of competition while preventing involution phenomena to promote economic and social development.
(Author: Professor Chen Xian from Shanghai Jiao Tong University Antai College of Economics and Management)