Technology, tasks, and production
Abstract
This chapter develops the theoretical core of the book by treating artificial intelligence as a production technology rather than merely as a collection of digital products. It explains why the standard language of aggregate production functions is too coarse for understanding AI and why the task-based approach provides a more useful analytical framework. AI matters because it changes which tasks can be performed by labor, which tasks can be performed by capital, and which tasks require new forms of complementarity between humans, software, data, and organizational routines. The chapter introduces AI as a general-purpose technology and develops a compact formal model of task allocation, task shares, displacement, reinstatement, and the elasticity of substitution between labor and AI capital. It distinguishes automation from augmentation and clarifies the economic conditions under which AI produces wage suppression or broad-based prosperity. The central claim is that AI does not enter production as a neutral multiplicative productivity term. It reshapes the task content of production itself.
