The Economics of Non-Formalization: Communicative Rationality, Consciousness, and Consensus Capital

Standard economic theory, built exclusively on instrumental rationality (means-end calculation for material efficiency), cannot explain the explosive growth of the digital social economy nor resolve the persistent Solow paradox: massivecomputing & AI investments have failed to deliver corresponding productivity gains; to address this, we develop a new ontological foundation for economics based on phenomenal consciousness (qualia)—ultimate source of value—grounded in mathematical logic & thermodynamics, proving no formalized system (including Turing machines & AI) can self-maintain (as it entails the unsolvable halting problem), introducing a hierarchical non-formalized capital structure (consciousness, tacit knowledge, consensus) residing in human minds and irreplicable by formalized systems, and showing consciousness is the only known source of negentropy (order) in economies, physical foundation of value. We construct a dual-rationality general equilibrium model integrating instrumental and communicative rationality (with a feedback loop: individual experience generates tacit knowledge, which aggregates into consensus, which shapes technological progress, transforming experience) and prove four core theorems: (1) Non-Substitutability—AI cannot substitute for humans as value creation subjects; (2) Structural Transformation—As AI automates the formalized instrumental sector, the non-formalized communicative sector dominates value and employment; (3) Solow Paradox—When formalized capital outgrows non-formalized capital, its marginal product declines without standard diminishing returns; (4) Consensus Capital Externality—Markets systematically underinvest in non-formalized capital; this framework explains Solow paradox—exponential formalized capital growth outpaces slow non-formalized growth, leading to sharply diminishing returns and formalization idling—and shows long-run growth is constrained not by technology or resources, but by limited human consciousness capital; the AI revolution does not eliminate labor—it makes human subjectivity more valuable than ever.