Draft:Exponential Economy

Exponential Economy  is a theory that analyzes the influence and impact of exponential technologies, such as artificial intelligence, biotechnology, the internet of things, and blockchain  , on global economic development. It also examines their consequences on the labor market, income distribution, and business relationships. It is grounded in the exponential economic growth equation created by Eduardo Ibrahim, a global faculty member of Singularity University , in the book "Exponential Economy: From Disruption to Abundance in a World Full of Machines." .

Context
Economic growth models seek to explain the generation of resources through the relationship between production factors. The neoclassical growth model is at the root of contemporary economic systems, and one of the major criticisms of it is the treatment of technological progress (innovation) as an exogenous variable (external to the model). This fact makes production dependent on capital and labor, and the technology used in the model is just a variable that increases labor productivity, which is why it is also called knowledge or labor efficiency.

With the exponential advancement of technology, it's possible to observe self-increments in production and a consequent inversely proportional relationship to capital and labor. That is, the greater the use of exponential technology, the lesser the need for capital and labor, making this technology the determining factor of production .. The movements of digitalization, hyper-automation, and technological convergence have been causing frequent market disruptions, putting at risk countries and companies that have adopted the neoclassical model of growth and income distribution..

In this context, it's important to differentiate exponential technology from the technology used in neoclassical models. Exponential technologies can create smart devices capable of producing and innovating without the need for increased capital or labor (self-increment of production) and grow at rates observed by Moore's Law or other scales of exponential growth, potentially allowing, in the long term, for growth to be sustained exclusively through technology.

Implications
Neoclassical models can be derived or undergo variations to include more or less technological progress in their production function. However, just like in the history of economic thought, labor and capital remain as assumptions for encouraging production and income distribution. In light of this, during periods of accelerated technological advancement, periods of structural unemployment and consequent economic crises can occur until workers are retrained for new technology-based jobs and income can be redistributed through wages again.

As exponential technologies increase production and reduce the need for capital and labor, it is natural that companies and countries with the capacity to invest become holders of these technologies and distance themselves from others in terms of wealth production. Although the model of exponential economic growth is not formally adopted, it is already occurring through massive investments in self-producing technologies like artificial intelligence.

It's worth noting that the use of exponential technologies within a neoclassical model and the consequent reduction in the need for labor can create a vicious cycle of accumulation and hoarding of capital in companies that possess exponential technologies, increasing income asymmetries globally. This can lead to structural unemployment over longer periods, compromising income distribution and the economic well-being of workers, who ultimately constitute the consumer base of a country's production.

However, technological advancement creates a new framework of economic tools capable of mitigating the impact of agents' irrationality, showing alternative paths to political economy towards a technology- and science-based economy, orchestrated and managed more precisely through the intensive use of exponential technologies such as blockchain and artificial intelligence, which are beginning to form an integral part of global production chains.