Glad you asked! Once again, the question is, can a man who is hyper-conscious, who takes pleasure in his own degradation, possibly respect himself?
Before answering this question, the Underground Man assures us that he is not asking this out of remorse. In fact, he has never been one to ask for forgiveness at all, not because he's not capable, but because he's too capable. (This has much to do with his earlier conversation about blame. Look at it this way: for a man who believes he is to blame for everything, asking for forgiveness is like a default action. Which is why he makes a point of never doing it.)
So what he used to do, say, when he was a child, was shed tears and feel genuinely guilty – for a minute or two. But then he would stop and curse himself and realize that his feelings of remorse were all a lie.
Why, we may be inclined to ask, did the Underground Man do such a thing? To amuse himself, he explains. Because "sitting with one's hands folded" is an incredibly boring task.
His solution was to "invent adventures" for himself, to make up a life so he could live it.
For example, he could pretend to take offense at someone. If you pretend long enough, you really DO take offense.
For a second example, he could pretend to be in love. He tried very hard, he says – twice – to be in love. He even suffered, though he could tell his heart was mocking his own suffering.
And what drove him to pretend this way? Ennui (a combination of boredom and unhappiness) and inertia (as we saw earlier, the tendency for something to stay as it is).
What about the people who do manage to live genuine lives? The Underground Man says that these "men of action" are only able to function because…they're stupid. He says they take secondary causes to be primary ones, and this allows them to establish a basis for their actions.
(Huh? Remember back to the mouse vs. man slapping parable of Chapter Three. The normal man was able to exact revenge on his assailant because he thought justice was being served. He took justice to be the primary cause for action. The Underground Man realized that there was no primary cause for revenge, since there was no justice in revenge, so he was unable to act. That's basically what he's saying here.)
Because to begin to act at all, he explains, you have to remove all doubt from your mind. (Again the slapping parable works just great here. The idea is that to remove all doubt, you need to identify the original motive for an action – the primary cause.)
The problem with the Underground Man is that every time he tries to find a primary cause for his actions, he finds some other motive lurking behind it, and yet another, continuing on ad infinitum, which means no cause he identifies is actually primary and therefore can't be used as a basis for action. (If this seems confusing, just plow through it; remember that all of Part I is a basis for the concrete examples we get in Part II. So if you're feeling a little disoriented by all of these abstract thoughts, a respite is coming soon.)
The Underground Man says that, since he can't act based on primary causes, maybe he could act on spite. Unfortunately, as you remember from Chapter One, he's not even spiteful. He only lies about his being spiteful. In short: he's screwed. He can't act, at all, ever.
If he does try to act as a "normal, stupid man" does, by not over-analyzing and simply doing, he ends up hating himself later, knowing that his action rose out of self-deception.
In fact, the reason he knows he's so intelligent is the fact that, for his whole life, he has never been able to start or finish anything.
He then asks "what is to be done" if the only real occupation for an intelligent man is this sort of babbling.
Good question. Also, keep a look out for the phrase "what is to be done"; it's probably a veiled nod to Nikolai Chernyshevsky's novel, What Is to Be Done?, to which Dostoevsky will refer later when he talks about a "Crystal Palace." But hold your horses, we'll get there.