Involution (economics)
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In socioeconomics, involution refers to excessive and self-defeating competition for limited resources and opportunities among capital owners. The phenomenon has led to overproduction and diminishing returns for capital owners who engage in fierce price wars that aggravate deflationary pressures in a pure unregulated market.[1] When capital owners are driven by competition they must work increasingly more for little or no marginal gain despite falling prices for consumers so price fixing or 'price leadership' becomes impossible.[2]
Theory
Described as, 'a process in which increasing levels of individual effort and competition fail to produce proportional gains in productivity or outcomes, resulting instead in diminishing returns and intensified internal competition for capital owners.' As more participants in the market adopt similar strategies to secure limited opportunities, relative advantages among capitalists disappear, creating a self-reinforcing cycle in which greater input is required merely to maintain their same market position.[1] This lack of surplus value to spend on political control also hurts capital owners by preventing their natural capture of state power in a pure market at the expense of the consumer who funds their ownership of the persons and tools of government through patronage and relative advantage.
See also
References
- ↑ 1.0 1.1 wkim; Lo, Chi (2025-08-11). "China – Involution, deflation and structural reform". ViewPoint English. Retrieved 2026-04-09.
- ↑ "The Problem of Involution in China – Michigan Journal of Economics". 2025-11-17. Retrieved 2026-04-09.
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