Redefinition Capitalism: A Capital Allocation and Macroeconomic Theory of Future Value Creation in the Age of AI

This paper develops Redefinition Capitalism (RCap), a capital-allocation and macroeconomic theory for future value creation in the age of AI. Rather than assuming that capital markets systematically undervalue the long term, it argues that markets already price distant cash flows, measurable intangible assets, and observable growth options. The remaining informational frontier is the firm’s capacity to generate new options by redefining what it produces and why—what the paper terms redefinition capacity. Redefinition Capitalism is defined as a prospective regime in which this capacity becomes measurable and enters the price and capital-allocation system. The paper develops fourteen falsifiable propositions and examines complementarity, patient capital, defended time, disclosure architecture, and the institutional conditions required for capital to support future value creation.