AGI and the Limits of Value Production

2026-06-04

AI Summary

This study examines the structural impact of artificial general intelligence (AGI) on the system of value production when it approaches near-complete substitution of human labor. Drawing on a Marxist political economy framework, the paper constructs a dynamic model that incorporates both technological substitutability and actual adoption rates, thereby introducing a rigorous theory of value into AGI economic analysis for the first time. The analysis reveals that as AGI becomes widespread, the organic composition of capital rises while the source of surplus value contracts; absent compensating expansions into new domains of labor, living labor, surplus value, and the average rate of profit all tend toward zero. This challenges prevailing techno-optimism by demonstrating that AGI represents not merely an efficiency-enhancing transformation but a boundary condition for the capitalist value-production system itself.

Abstract

This paper develops a political-economy model of artificial general intelligence (AGI) as a technology that progressively substitutes living labor with machine-based productive systems. The model studies the transition from the first moment at which AGI becomes economically capable of replacing labor to the later moment at which AGI becomes technically and actually capable of near-complete replacement. The central distinction is between technical substitutability and actual adoption. Technical substitutability is the feasible replacement ceiling implied by the state of AGI capability, whereas actual adoption is the realized replacement share chosen under cost, profitability, and adoption frictions. Under the strict value-theoretic assumption that AGI transfers value but does not itself create new value, deeper AGI adoption raises the organic composition of capital, reduces the quantity of living labor when adoption outpaces the creation of new labor fields, compresses the source of surplus value, and places downward pressure on the social rate of profit. In the limiting case in which actual AGI adoption approaches complete substitution and new labor fields fail to compensate for displaced labor, living labor tends to zero, surplus value tends to zero, and the profit rate tends to zero. The model therefore identifies near-complete AGI substitution not merely as an efficiency transition, but as a boundary case for value production under a strict political-economy theory of value.

Problem

• Artificial General Intelligence
• value production
• labor substitution
• rate of profit
• political economy

Innovation

• artificial general intelligence
• value theory
• labor substitution
• organic composition of capital
• rate of profit