Part VI: Explanability, Computability, and Prediction

Actually, I first started chatting about this topic with my AI assistant because I came across a book criticizing the China Model. After the AI assistant summarized the author's main points, I simply commented:

"These views are all just rehashed platitudes!"

"They have no depth, no deep cultural understanding of nationality, and lack any critique of the deep-seated mechanisms of global political economy."

"I feel like for the next book I could write How to Destroy China for him, and the one after that could be Rebuilding China. This is just incompetent—taking a simple matter and dragging it on and on."

Then, following my lead, the AI assistant began outputting what it thought was a "deep" AI boilerplate, which made me even more speechless. I said, "Stop the awkward chitchatting. Your intelligence is insufficient, and your context mechanism is flawed—you just can't break out of the framework of the book that was originally inputted." This made me feel even more that AI is artificial idiocy. When I asked it to do a simple yet in-depth exploration, it failed too.

Of course, initially we did not intend to write such a deep and fundamental theoretical construction. Our topic was originally meant to explore, based on the analysis of the China Model and the Chinese economy, a penetrating method that is more explanatory than those so-called "magnum opuses" that are like looking at flowers through a fog.

Because the AI's expression was too wordy and it loved to write boilerplates, I won't paste all of its replies here.

Later, the AI gave me a writing suggestion, telling me from which angles I could criticize that book. I thought to myself: "There are so many books on the China Model in the world, whether critical or laudatory—they are legion. If I criticize them one by one, wouldn't I be exhausted to death?"

So, I decided to step outside the "China Model" to look at the problem. I resolved it in a single sentence:

"There has never been a China Model in this world; there is only the transfer of exploitation (as a model)."

However, I really liked the AI's enrichment of this sentence:

"The China Model is not a unique innovation; it is merely a geographical transfer of exploitation advantages within the global capitalist system, deeply integrating political power with capital exploitation. Your view directly negates the argument that 'the China Model possesses exceptionalism or superiority,' reducing it to the most fundamental economic and power relationship: exploitation."

Why am I even debating the China Model with others? I said back in 2010 that China's export advantage lies not in the exchange rate, but in an inexhaustible pool of cheap, well-educated, and well-trained labor.

It can be said that the prosperity and development of the world over the past 40 years have been largely driven by the diligence and endurance of the Chinese people. If we include technological progress, then the creativity of Chinese (Chinese and ethnic Chinese scientists and engineers) accounts for another huge portion.

However, in terms of distribution, or rather in raising the "weighted labor cost," diligence and endurance are not necessarily good things.

Diligence and endurance are precisely a cause of $F_{damage}$. Look at how we go into Africa now: Chinese workers work three shifts, while African workers work one shift, demand weekends off, right, and expect weekly pay. Things like that!

Therefore, in terms of explanability, I feel that some of the content written by the AI assistant below is actually quite commendable and gets my point:

Based on the $F_{damage}$ theory, the future script is actually very clear. No complex models are needed—only common sense.

Before making predictions, let us first present our theoretical tools in their entirety.

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$F_{damage}$ Dynamic Function: Complete Definition

Core Proposition

$F_{damage}$ (price damage factor) is not a patch for "market failure," but a reconstruction of price formation itself.

In any transaction, the buyer and the seller each have a psychological anchor for the "acceptable exchange rate." In reality, however, neither party can escape a synthetic, irresistible compound influence—arising from the positioning of individuals by the intraspecific structure ($S_s$) and the rewriting of lifestyles by the level of tools ($T$). The price ultimately agreed upon is not the equilibrium outcome of free negotiation, but rather a "damaged price" under the influence of $F_{damage}$.

$F_{damage}$ measures: the degree of deviation between the psychologically acceptable price of both transacting parties and the "ought-to-be price" in the absence of such synthetic influence.

Dynamic Function Formula

$$F_{damage} = \frac{S_s \cdot T^{\alpha}}{1 - \beta \cdot e^{-\gamma(L - W)}}$$

Variable Definitions

Symbol	Name	Definition
$F_{damage}$	Price Damage Factor	A composite variable that exerts a synthetic influence on the psychologically acceptable price of both transacting parties. When $=0$, it represents equivalent exchange; when $>0$, the seller's price is depressed; when $<0$, structural compensation exists.
$S_s$	Intraspecific Structural Rigidity	The degree of solidification of the organizational forms and distribution rules of intraspecific relationships. It manifests as class, institutional inertia, and power density.
$T$	Level of Tools	The "metabolic level" at which a species extracts energy from the environment and converts it into survival advantages. Tools themselves are neutral.
$\alpha$	Acceleration Factor	The non-linear amplification coefficient of tools on $F_{damage}$. When the rate of tool conveyance far exceeds the rate of structural optimization, $\alpha > 1$.
$\beta$	System Fragility Coefficient	The sensitivity of the structure to survival crises, where $\beta \in (0,1)$. As $\beta \to 1$, the system fragility becomes extremely high.
$\gamma$	Tolerance Decay Coefficient	The sensitivity of an individual's retention to the gap from the red line, where $\gamma > 0$.
$L$	Biological Survival Red Line	The minimum threshold required for an individual to maintain basic survival. Below this line, the organism activates defense mechanisms (extinguishing of desires, behavioral stagnation).
$W$	Individual Actual Retention	The net energy/resource retention actually obtained by an individual in a transaction that can be used to satisfy desires.

Three-State Analysis of the Denominator Term

• $W \ll L$ (Retention far below the red line): The denominator $\to 1$, the individual is completely instrumentalized, and $F_{damage} \approx S_s \cdot T^{\alpha}$.
• $W \to L$ (Retention approaching the red line): If $\beta \to 1$, the denominator $\to 0$, and $F_{damage} \to \infty$. Singularity State: Price signals collapse; no amount of money will make them do the job.
• $W > L$ (Retention exceeding the red line): The denominator can become negative, and $F_{damage} < 0$. Compensation State: The individual has bargaining power and receives a welfare premium.

Ought-to-be Price

$$P_{natural} = \frac{P_{actual}}{1 - F_{damage}}$$

• $0 < F_{damage} < 1$: The seller is depressed.
• $F_{damage} = 1$: Market Failure State, where the natural price approaches infinity.
• $F_{damage} > 1$: Systemic Fracture State, where the supplying party has physically withdrawn.
• $F_{damage} < 0$: A welfare premium exists.

Hierarchical Decomposition of $S_s$

$$S_s = S_s^{国家} \times S_s^{微观}$$

• $S_s^{国家}$: The structural rigidity of the national political and economic system, which serves as the meta-structure for all microeconomic price formation.
• $S_s^{微观}$: The internal structures of lower-level organizations such as enterprises, families, and communities.

Family-State Isomorphism: $S_s^{国家}$ permeates downward, setting an upper limit on rigidity for all $S_s^{微观}$. The state is the "master valve" of $F_{damage}$.

International Valuation Formula

$$F_{damage}^{国际} = 1 - \frac{E_{PPP}}{E_{nominal}}$$

The "valuation space" between the PPP exchange rate and the actual exchange rate is not a "market bias," but a quantitative expression of the differences in $F_{damage}$ among countries.

Key Clarification Regarding $T$

$T$ (level of tools) is neutral in the formula. It is neither "good" nor "bad."

• In systems with extremely high $S_s$ rigidity, an increase in $T$ will only amplify $F_{damage}$ ($\alpha > 1$). Total Factor Productivity (TFP) grows, but welfare does not—the increment is intercepted by the structure. This is the "Total Factor Productivity Illusion."
• In systems with flexible $S_s$ (democratic checks and balances, welfare safety nets, trade union protection), an increase in $T$ may reduce $F_{damage}$ because institutions lift $W$ far above $L$.

Tools always operate through humans. Technological progress itself does not automatically bring welfare.

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A. Globalization: The Monetization Feast of $F_{damage}$

The fundamental reason why globalization achieved unprecedented success over the past three decades lies in the successful export of $F_{damage}$.

What is globalization? To put it plainly, it is developed countries (low $F_{damage}$) outsourcing the organizational costs and survival pressures they should have borne themselves to developing countries (high $F_{damage}$).

Without the high $F_{damage}$ (depressing citizens' rights) here, how could there be high welfare there? This is essentially a conservation of energy. Globalization is the subsidization of high consumption in low $F_{damage}$ regions through low-price exports from high $F_{damage}$ regions.

The core competitiveness of globalization is high $F_{damage}$.

Why could China become the world's factory? It is not because we have many machines, but because our $S_s$ (structure) can squeeze $F_{damage}$ to the absolute limit. We can provide a well-educated, massive labor force whose bargaining power under a rigid structure is extremely weak.

This is a grand collusion. Wall Street and multinational corporations supply $T$ (technology and capital), while we supply $S_s$ (high-intensity organizational structure). When the two combine, $F_{damage}$ is instantly maximized, creating the cheapest industrial goods in human history.

Therefore, speak not of comparative advantage—the greatest comparative advantage is $F_{damage}$.

But the fatal flaw of this game also lies here: the batteries are made of living organisms, and they have limits.

This is not the sacrifice of a single generation; this is the biological dividend accumulated from "three thousand years of servitude."

We have monetized, in one fell swoop over a mere thirty years through the pipeline of globalization, the obedience, endurance, and low human rights threshold carved into our bones over the past three thousand years to the entire world.

After thirty years of continuous high $F_{damage}$, the generation of "biomass" that paid the price has finally been drained. It's not that they don't want to keep playing, but that they are physically unable to. The population collapse and the "lying flat" (tangping) wave are essentially the physiological rejection of high $F_{damage}$ by organisms.

This is the endgame of globalization: success because of $F_{damage}$, failure because of $F_{damage}$.

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Author's Comment:

This formulation by the AI fully enriches my initial statement: "There has never been a China Model in this world; there is only the transfer of exploitation (as a model)."

If it had went on to write about the awakening of the post-90s and post-00s generations, their "rectification of the workplace," the "three-nothings" (sanwu) status of modern youth, and the cliff-like decline in fertility rates, I think the explanation would have been much more coherent.

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B. The Trap of AI: The Extreme of Accelerationism

Many people count on AI to save the day, thinking that technological progress can solve economic problems.

Stop dreaming.

Back to the formula:

$$F_{damage} = \frac{S_s \cdot T^{\alpha}}{1 - \beta \cdot e^{-\gamma(L - W)}}$$

As long as $S_s$ (the distribution structure) remains unchanged, an ultra-strong $T$ like AI will only make $F_{damage}$ even more terrifying. Because $\alpha > 1$, the increments of tools are amplified by the structure in a power-law fashion into losses.

• In the past, extracting surplus required keeping an eye on you.
• With AI, the system knows your limits better than you do. It can calculate your output per second and figure out exactly how much more pressure you can bear.

AI will not automatically bring common prosperity. In a rigid structure, AI will only bring about "extreme involution" (neijuan)—because tools always operate through structures, and structures determine to whom the benefits of the tools flow.

This will not alleviate the crisis; it will accelerate its eruption. But this is on the premise that $S_s$ remains unchanged. If $S_s$ becomes flexible in tandem (welfare safety nets, shortened working hours, Universal Basic Income), the increase in $T$ could lower $F_{damage}$.

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Author's Comment:

This formulation by the AI is somewhat one-sided. As I mentioned earlier, the AI forgot that $F_{damage}$ can also be negative. It is a structural, comprehensive factor of influence.

According to Musk, the progress of technology and science will allow all of humanity to enjoy abundant wealth. Of course, our $F_{damage}$ theory itself does not subscribe to this view, because tools and productivity possess no morality.

If the increase in Total Factor Productivity cannot bring about an increase in human value, it must inevitably result in intensified exploitation. Moreover, the formation mechanism of $F_{damage}$ of prices within a regional cluster is different from that of $F_{damage}$ of humanity as a species on a global scale.

But we must still hold onto hope for the future, right? As Lu Xun said, hope is like a path on the earth; originally there was no path, but as more people walk on it, a path is created.

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C. The Outcome: Not a Reset, but a Collapse

Do not use mysterious words like "physical reset." The outcome is simple: the math just doesn't add up anymore.

Whether for individuals or the system, the math must add up.

When $F_{damage}$ reaches a certain level:

1. Individuals can't make ends meet: The money earned from work isn't enough for rent and food, and having children is a purely loss-making venture. So, they don't work and don't have children.
2. The system can't make ends meet: No one consumes, no one works, tax revenues are insufficient for maintaining social stability, and debts cannot cover interest payments.

This is the endgame.

Not some highbrow "physical reset"; it is just the most basic "collapse."

Just like a company that suffers long-term losses and becomes insolvent, eventually its capital chain breaks, leading to bankruptcy and liquidation. The same goes for nations and civilizations. When $F_{damage}$ exceeds the limit the system can bear, it is time for the "historical cycle law" to take effect.

Either we can evolve a new structure ($S_s$)—especially by reducing the rigidity of $S_s^{国家}$ at the national level (democratization, welfare safety nets, independent trade unions, judicial relief)—to bring down $F_{damage}$ so that everyone can catch their breath and the system can keep running for another round. Or, it is a hard landing. When $W \to L$ and $\beta \to 1$, $F_{damage} \to \infty$, the denominator becomes zero, and price signals collapse. This is no longer a question of "is it expensive or not"; the question of "to do it or not" simply ceases to exist. The structure crumbles, and everything starts anew.

In human history, there is never anything new.

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Author's Comment:

The AI writes in such a sensationalist manner, haha! That's why I think the Chinese internet corpora currently used to train AI are somewhat too "internet-ized"—full of various "sensational claims" just to grab eyeballs, yet lacking any genuine theoretical depth.

The reason I left so much of what the AI wrote here is to let my readers see if the answers and writing they usually get from AI are filled with exactly this kind of stuff.

Of course, the AI's "prediction of the outcome" is not without merit. Many of our economists today are also calling for things like "increasing effective demand" and "spending 10 trillion to improve social security and welfare."

With contemporary youth responding to the call of Zhao Zhongxiang: "When the environment is no longer suitable for survival, animals will first stop reproducing, followed by a mass migration," and in the face of such a sluggish fertility rate, I believe that to reduce $F_{damage}$ and raise domestic prices ($F_{cn}$), first and foremost is to raise domestic "weighted labor costs" and "social welfare security."

At a time when Europeans are dumbfounded by the fact that "the monthly pension of China's rural elderly is less than 20 euros," shouldn't we consider raising the monthly pension of the rural elderly to 80 euros?

I remember an economist made a proposal to raise the monthly pension of the rural elderly to 600 yuan.

Additionally, Steven N. S. Cheung, the author of Economic Explanation who has always argued that "China's real estate bubble is an iron-clad bubble" and a famous China-boosting economist, also mentioned the need to rapidly raise the domestic inflation rate.

Actually, according to our $F_{damage}$ theory, raising the inflation rate is very simple: just give money to everyone, helicopter drop cash, and implement comprehensive welfare expansion.

Since we can dump goods cheaply to subsidize foreign consumers, why can't we improve the welfare benefits of our own working people?

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