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This paper develops a stylized production model of recursively self-improving artificial general intelligence (AGI) within a Veblenian framework of institutional evolution. AGI is conceptualized as an autonomous entity that reinvests output to expand capital without human input, thereby altering the logic of accumulation. Extending the Cobb--Douglas production function, we show that once an activation threshold is crossed, recursive accumulation generates rapid growth that sidelines labor not because its productivity disappears, but because capital feedback loops exclude participation. The marginal product of labor remains positive, yet effective wages decline as substitution advances, decoupling production from consumption demand.
Pascal Stiefenhofer (Wed,) studied this question.