The Great Zombification of Capital

Neijuan, or the Silent Involution Devouring East and West

The Chinese have a word for it.

Neijuan — awkwardly translated as “involution”: intense activity, massive deployment of capital, the appearance of vitality — and real returns collapsing until the moment they can no longer be concealed.

BlackRock limits withdrawals. Blue Owl loses a third of its value. In China, industrial profits are collapsing. Analysts speak of “poor underwriting,” of a “rate cycle.” No one pronounces the word. Yet it asserts itself on both sides of the Pacific.

China entered it from above: the state directed credit, manufactured overcapacity, exported deflation.

The West entered it from below: central banks flooded markets, funds refinanced the unprofitable, valuations survived reality.

Two opposing mechanisms. One identical dead end. One identical victim: those who work.

The Chinese Involution: Direction from Above

The word was born in lecture halls. In the early 2010s, Chinese students used it to describe that absurd sensation of working twice as hard to obtain exactly the same result.

Neijuan first referred to the educational competition of a zero-sum system: one more student at Tsinghua means one fewer elsewhere. It then slipped into economics, because what it described was not a university problem, but a system in which the intensification of effort no longer produces proportional returns.

In China, involution is imposed by the state: savings channeled toward investments with diminishing returns, massive overcapacity, persistent deflation.

The data for 2026 confirm it: growth at 4.5–5 percent, margins in electric vehicles falling from 7.8 percent to 4.4 percent, some manufacturers already in net losses. Downstream, the engineer accepts the “996” — 9 a.m. to 9 p.m., six days a week — simply to keep his job in a saturated market.

Neijuan is first experienced in bodies before it appears in statistics.

Yet one must resist an overly convenient symmetry. China’s overcapacity in electric vehicles, batteries, and solar panels is not an industrial accident; it forms part of a twenty-year strategy of domination.

Beijing accepts zero margins today in order to kill competition tomorrow. Involution there is as much a deliberate instrument as it is a symptom. What the West experiences as crisis, China may experience as geopolitical investment.

Western Involution: Illusion from Below

The West does not only import cheap goods — it also imports downward pressure on its real returns.

Post-2008 policies allowed structurally unprofitable companies to survive through perpetual refinancing. The private credit market has doubled since 2019 to reach $1.3 trillion. Defaults are rising, yields are falling from 10 percent to 6–8 percent, and withdrawals exceed available liquidity.

The dominant strategy assumed perpetual liquidity. It was not perpetual. It was merely abundant. That is not the same thing.

In France, a thirty-something executive spends 35 percent of net income on housing — compared with 18 percent for the previous generation.

A degree no longer buys access to capital; it buys the right to remain in the race. What Graeber called “bullshit jobs” — positions whose holders themselves doubt their real usefulness — is not a sociological anecdote: it is the symptom of an economy that produces activity without value.

China’s 996 and the Western bullshit job are not opposites. They are two faces of the same exhaustion.

GDP grows, assets soar. Certainly. For the person who works without owning capital, growth remains a story read in newspapers, never felt in a bank account.

This is not a cyclical injustice — it is the social signature of involution.

“Planning by Proxy”: Kaminska’s Verdict

Izabella Kaminska describes the Western system as “planning by proxy”: institutional incentives have dictated the allocation of capital in place of genuine profitability.

“The only difference lies in the source of the funding. Chinese repression draws on the deposits of households trapped within the banking system; Western private credit draws on institutional capital attracted by promises of stable returns.”

In both cases, each additional unit of capital buys less productivity — and more time.

Two systems opposed in principle. The same pathology in their outcomes. The same experience in their bodies.

Toward a Necessary Restructuring

The turbulence in private credit is not the cause. It is the collision between a decade of involution and the sudden demand for real returns.

Restructuring will require naming what no one dares to articulate: that post-Covid office real estate will not recover its former valuations; that certain sectors — overcapacity logistics, physical retail, parts of “fintech” — are zombies living on borrowed time.

Political choices will be brutal: who absorbs the loss? Pension funds — future retirees? States — taxpayers? Companies — employees?

If involution has a human face — the exhausted Chinese graduate, the Western worker growing poorer within a rich economy — restructuring cannot be merely accounting. It will have to restore meaning to effort, and admit that there was never a plan.

Involution is not a Chinese pathology imported abroad. It is the delayed consequence of a capitalism that for too long confused liquidity with prosperity, activity with value, asset growth with real wealth.

The question that remains — and that no one in trading floors or ministries truly wishes to ask — is this: if effort no longer produces proportional returns, neither for funds nor for citizens, what remains to make people want to keep playing the game?

Sources

This article draws on the analysis of Izabella Kaminska (The Blind Spot, March 2026), Goldman Sachs data on Chinese growth in 2026, and PIMCO reports on U.S. private credit.