The Tragedy of Productivity: A Unified Framework for Diagnosing Coordination Failures in Labor Markets and AI Governance

2025-12-01

AI Summary

This paper identifies a common root cause—structural coordination failure—in labor markets and AI governance—underlying two paradoxes: rising productivity without reduced working hours, and accelerated AI development alongside governance failure. Methodologically, it employs game-theoretic analysis to formulate five necessary and sufficient conditions characterizing a “structural tragedy,” establishing a cross-domain analytical framework and introducing the novel “Tragedy Index” to quantify coordination difficulty. Results show that inter-firm strategic interactions prevent productivity gains from translating into shorter workweeks; meanwhile, AI governance faces eight-dimensional escalation pressures, rendering its coordination challenge substantially greater than those of nuclear arms control or climate change mitigation. Empirical evidence from the Russia–Ukraine drone war reveals emergent features of rapid, uncontrolled escalation. The study provides a unified theoretical lens for diagnosing institutional failure amid technological advancement.

Technology Category

• Game Theory and Economic Paradigms: Coordination and Collaboration
• Philosophy and Ethics of AI: AI & Jobs/Labor
• Humans and AI: Other Foundations of Human Computation & AI

Application Category

• Economics, Online Markets and Human Computation: Trust and reliance of crowd workers and data experts on GenAI
• Responsible Web: Machine-in-the-loop, human agency and autonomy
• Social Networks and Social Media: Generative AI / large language models and their impact on social systems

Abstract

Despite productivity increasing eightfold since Keynes's 1930 prediction of 15-hour workweeks, workers globally still work roughly double these hours. Separately, AI development accelerates despite existential risk warnings from leading researchers. We demonstrate these failures share identical game-theoretic structure. We synthesize five necessary and sufficient conditions characterizing structural tragedies: N-player structure, binary choices with negative externalities, dominance where defection yields higher payoffs, Pareto-inefficiency where cooperation dominates mutual defection, and enforcement difficulty from structural barriers. We validate this framework across canonical cases and extend it through condition intensities, introducing a Tragedy Index revealing AI governance faces orders-of-magnitude greater coordination difficulty than climate change or nuclear weapons. Applied to productivity competition, we prove firms face coordination failure preventing productivity gains from translating to worker welfare. European evidence shows that even under favorable conditions, productivity-welfare decoupling persists. Applied to AI governance, we demonstrate development faces the same structure but with amplified intensity across eight dimensions compared to successful arms control. The Russia-Ukraine drone war validates this: both sides escalated from zero to thousands of drones monthly within two years despite prior governance dialogue. The analysis is diagnostic rather than prescriptive, identifying structural barriers to coordination rather than proposing solutions.

Problem

• Diagnoses identical game-theoretic coordination failures in labor markets and AI governance
• Proves firms face structural barriers preventing productivity gains from improving worker welfare
• Shows AI development faces amplified coordination difficulty compared to climate change or nuclear arms

Innovation

• Game-theoretic framework diagnosing coordination failures
• Tragedy Index quantifying AI governance difficulty
• Validated across labor markets and AI development