The Intelligence Transition - White Paper

This paper argues that the institutional frameworks governing employment, economic participation, and social stability were designed for a world in which human labor is the irreducible input to economic production — and that artificial intelligence is removing that assumption faster than those institutions can adapt. Built from six axioms about human nature (bounded rationality, obligate sociality, perceptual group membership, reciprocal value, systematic self-interest divergence, and institutional time-horizon extension) and three propositions about institutional design within the Western democratic tradition, the analysis traces four convergent dynamics: functional displacement of human labor by AI at current capability levels, market-driven inevitability of that displacement, an emerging crisis of perceived human utility, and reflexive social dynamics — including radicalization, institutional distrust, and AI social surrogacy — that compound faster than the displacement itself. The paper proposes a three-phase policy framework: stabilization through output-based taxation and retraining infrastructure (2026–2030), redistribution through direct material support during acute displacement (2030–2035), and institutional redesign centered on a Sovereign Productive Trust that converts AI-generated economic surplus into broad-based citizen equity (2035+). The framework is presented as prescriptive, not predictive — a proposal for how democratic societies might begin to address displacement, not a claim of certainty about how it will unfold. The argument depends not on AI achieving general intelligence but on where AI capability already is, and on the observable mismatch between market incentives, democratic timescales, and institutional inertia. It addresses counterarguments including hype-cycle skepticism, regulatory capture, historical labor-market resilience, and Japan's demographic counter-case.