ICCK Journal of Applied Mathematics | Volume 2, Issue 3: 195-203, 2026 | DOI: 10.62762/JAM.2026.366725
Abstract
This paper develops a dynamical systems model of an economy with recursively self-improving artificial intelligence and financialization. The model features quadratic self-amplification in both AI capability ($\lambda A^2$) and financial capital ($\gamma_F K_f^2$), coupled through investment flows. It is shown that under mild conditions, the system exhibits a finite-time singularity where AI capability, AI capital, and financial capital diverge. Near the singularity, the wealth ratio between capital owners and workers diverges super-exponentially, with financialization amplifying the exponent by a factor $\gamma_F/\eta$. Introducing taxes on AI returns ($\tau_{ai}$) and financial gains ($\ta... More >