Post-AGI Economies: Autonomy and the First Fundamental Theorem of Welfare Economics

TL;DR

This paper examines how the First Fundamental Theorem of Welfare Economics applies in post-AGI economies with varying agent autonomy levels, proposing an autonomy-qualified version of the theorem.

Contribution

It introduces an autonomy-conditioned welfare model and establishes conditions for autonomy-Pareto efficiency in equilibrium.

Findings

Classical theorem recovered in low-autonomy limit

Conditions for autonomy-Pareto efficiency derived

Model incorporates delegation and verification institutions

Abstract

The First Fundamental Theorem of Welfare Economics assumes that welfare-bearing agents are autonomous and implicitly relies on a binary distinction between autonomy and instrumentality. Welfare subjects are those who have autonomy and therefore the capacity to choose and enter into utility comparisons, while everything else does not. In post-AGI economies this presupposition becomes nontrivial because artificial systems may exhibit varying degrees of autonomy, functioning as tools, delegates, strategic market actors, manipulators of choice environments, or possible welfare subjects. We argue that the theorem ought to be subject to an autonomy qualification where the impact of these changes in autonomy assumptions is incorporated. Using a minimal general-equilibrium model with autonomy-conditioned welfare, welfare-status assignment, delegation accounting, and verification institutions, we set out conditions for which autonomy-complete competitive equilibrium is autonomy-Pareto efficient. The classical theorem is recovered as the low-autonomy limit.