What does this research mean for the field?

Economic systems, including markets, bubbles, inequality, and AI labor displacement, function as collective Bayesian inference engines that implement the Information-Theoretic Unification (ITU) axiom at the social scale. Novelty: ClaimNovelty.METHODOLOGICAL. Consensus alignment: ConsensusAlignment.SUPPORTS_CONSENSUS.

What question did this study set out to answer?

This research aims to apply the Information-Theoretic Unification framework to economic theories, addressing market dynamics, inequality, and labor displacement.

May 17, 2026Open Access

ITU and Economics: A Single-Axiom View of Markets, Bubbles, Inequality, AI Labor Displacement, and the 2026-2050 Roadmap

Key Points

This research aims to apply the Information-Theoretic Unification framework to economic theories, addressing market dynamics, inequality, and labor displacement.
Utilized the Information-Theoretic Unification framework to evaluate economics across multiple phases.
Identified structural dynamics in markets using historical data on bubbles and crises spanning several centuries.
Simulated economic outcomes under different GDP scenarios with detailed analyses on inequality and labor displacement.
Predicted economic scenarios indicate potential GDP ranges from $44T to $113T by 2050, driven by AI advancements.
Demonstrated that market mechanisms lead to significant inequality, with top 1% holding 19% of wealth.
Showed that 26.2% of jobs are at risk from AI, with UBI costs estimated at 11.1% of GDP initially.

Abstract

We apply the Information-Theoretic Unification (ITU) framework (Terada 2026, DOI 10. 5281/zenodo. 20109210) to economics. Markets are reframed as collective Bayesian inference engines implementing the ITU axiom dS = d at the social scale. This is Tier 1 paper #8, opening the social-sciences axis of the ITU programme following the completed engineering rectangle (#1-#4) and medicine triangle (#5-#7). Pass-1 progress reaches 74 of 220 planned phases (33. 6%). Phase 71: ITU foundation. EMH (Fama 1970) is shown as the idealised case; reality shows fat-tailed returns (4x EMH prediction for >3% daily moves). Akerlof's lemons reproduces market collapse (1000 -> 1 seller) via Kᵢ mismatch. Kahneman-Tversky prospect theory with lambda = 2. 25 quantifies Kdecision asymmetry. Prediction markets (Polymarket Brier 0. 16, Kalshi 0. 20, Manifold 0. 19) beat polls (0. 25-0. 36) in 2024 US election. Phase 72: Bubbles and crises. Minsky 3-stage instability (hedge -> speculative -> Ponzi) is Kₘarket structural degradation; crash triggers when Ponzi exceeds 40%. Information cascades (BHW 1992) reduce collective wisdom below independent voting. Nine historical bubbles from Tulipmania (1637, -99%) to FTX (2022, -100%) span -58% to -100% drawdowns. LTCM (1998), Lehman (2008), FTX (2022), SVB (2023) illustrate distinct ITU breakdown modes. Phase 73: Inequality and AI labor displacement. Pareto wealth distributions emerge naturally from ITU steady state (top 1% 19%, top 10% 58% in our simulation). Piketty r > g produces unbounded Kcapital divergence without redistribution. AI labor exposure (Eloundou et al. 2023 OpenAI) inverts traditional risk: translators 76%, mathematicians 63%, programmers 60% exposed; plumbers 4%, nurses 5%. Weighted 26. 2% of 22. 5M jobs affected. UBI cost: 1000/month US UBI = 11. 1% of GDP (declining to 6% by 2050). Phase 74: 2026-2050 roadmap. Three GDP scenarios: bear (44T by 2050), base (60T), AGI-bull (113T = 4. 1x 2024). CBDC adoption from Bahamas 2020 to USA pilot ~2031. Sectoral evolution: AI/Data 3% -> 15% (+12pp), Health/Bio 10% -> 18% (+8pp), Manufacturing 16% -> 12% (-4pp). EU ETS carbon price EUR 70/t (2024) -> EUR 350/t (2050). Ten falsifiable predictions issued covering S markets, bubbles, inequality, AI labor effects, CBDCs, and carbon transition are all Kₘarket structural dynamics. Honest framing: this is a Pass-1 interpretive paper that reframes classical and contemporary economics (Akerlof, Fama, Kahneman-Tversky, Pareto, Piketty, Romer, Minsky, BHW 1992) in ITU language. Numerical results match established patterns; predictions overlap with industry consensus. This opens the social-sciences axis, completing 8 vertices of the ITU polytope: engineering rectangle (Quantum Computing 10. 5281/zenodo. 20139391 + Machine Consciousness 10. 5281/zenodo. 20150501 + Cryptography 10. 5281/zenodo. 20151059 + Semiconductors 10. 5281/zenodo. 20174036) + medicine triangle (Cancer 10. 5281/zenodo. 20174318 + Aging 10. 5281/zenodo. 20175663 + Psychiatry 10. 5281/zenodo. 20177427) + social sciences first vertex (Economics, this paper). Includes 4 theory documents, 4 Python numerical experiments, 4 figures, 4 JSON summaries. Total runtime ~25 seconds.

Read Full Paperexternally

Mark Helpful

Bookmark

Relay

View Full Paper