The Demand Factor in the Age of AI: fiscal principle, measurement architecture, and financing horizon

Frontera, Mr. (2026): The Demand Factor in the Age of AI: fiscal principle, measurement architecture, and financing horizon.

Abstract

If artificial intelligence advances toward structural substitution of human labor — one of two trajectories that dominate the current debate — it could erode the wage channel that for more than a century distributed purchasing power and sustained effective demand. Economies would then generate unprecedented productive capacity while employment-based wage income declined in relative terms, opening a structural gap between what can be produced and what the market can realize. This work argues that, in such a scenario, the human being does not disappear from the economic circuit: the function changes. From a central producer the human being would become the indispensable bearer of the demand factor — the human capacity to absorb production through purchasing power, which would transform automated production into realized market value. From this Copernican turn, the IRIS framework articulates three interconnected instruments: the Market Access Tax (MAT), which captures the uncompensated incidence of AI on domestic production; the Market Access Right (MAR), which extends the same logic to access from outside the jurisdiction; and the Market Access Dividend (MAD), its distributive counterpart. The architecture is reinforced by the institutional efficiency dividend generated by the new efficiency of the AI-assisted public sector. Entitlement to the MAD is recognized in the social body that sustains the effective demand of the market — not as an assistance category defined by need, but as factor compensation for a collective contribution. By principle, that title extends to the citizenry as a whole, whose economic function as consumers should not, by definition, place its structural position below the subsistence threshold. The paper further develops a transitional measurement architecture that evolves from technical, economic, and declarative proxies toward an enterprise interpretive agent assisted by AI. And it confronts squarely the structural limit of the fiscal horizon: even a complete MAT-MAR-MAD system, enhanced by institutional efficiency, may prove insufficient to rebuild broad effective demand in a deeply automated economy. Linking automation, longevity, pension sustainability, and the care economy, IRIS is configured as a bridge architecture: it buys institutional time for an orderly transition toward new forms of human work while preventing the collapse of demand. The question it leaves open is no longer merely fiscal: it concerns how to articulate institutionally a productive capacity expanded by AI with an effectively distributed purchasing power.

• Item Type: MPRA Paper
• Language: English
• Keywords: Artificial Intelligence; Automation; Technological Unemployment; Labor Displacement; Effective Demand; Demand Factor; AI Taxation; Market Access Tax; Market Access Dividend; Public Finance; Income Redistribution; Basic Income; AI Dividend; Functional Finance; Purchasing Power; Care Economy; Longevity; Pension Sustainability; Future of Work; Industrial Policy, UBI.
• Subjects: D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy

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