AI as Coordination-Compressing Capital: Task Reallocation, Organizational Redesign, and the Regime Fork

Alex Farach
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Alex Farach: Microsoft

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Abstract: Task-based models of AI hold organizational structure fixed. We model AI as agent capital that compresses managers' per-link coordination costs toward residual floors for consequential decisions. Positive floors bound spans of control; zero floors do not. For a fixed manager pool, proportional team sizes, equal mean team quality and fixed within-firm pay shares, and when every floor is positive, the floors determine long-run managerial wage dispersion, independent of execution-compression parameters. With a common positive floor, distinct skills and skill-biased execution savings, managerial inequality is purely transitional: zero at zero capital and in the long run, positive at every positive finite capital level. If every lower-floor manager approaches capacity faster than every higher-floor one, inequality exceeds its long-run level at sufficiently large finite capital and converges from above, a non-monotone path. Numerical illustrations, not estimates, include a simulation with skill-sorted workers, to which the wage and Gini results do not apply.

Date: 2026-02, Revised 2026-10
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