Agency-Driven Labor Theory: A Framework for Understanding Human Work in the AI Age

Abstract: This paper introduces Agency-Driven Labor Theory as a new theoretical framework for understanding human work in AI-augmented environments. While traditional labor theories have focused primarily on task execution and labor time, ADLT proposes that human labor value is increasingly derived from agency - the capacity to make informed judgments, provide strategic direction, and design operational frameworks for AI systems. The paper presents a mathematical framework expressing labor value as a function of agency quality, direction effectiveness, and outcomes, providing a quantifiable approach to analyzing human value creation in AI-augmented workplaces. Drawing on recent work in organizational economics and knowledge worker productivity, ADLT explains how human workers create value by orchestrating complex systems that combine human and artificial intelligence. The theory has significant implications for job design, compensation structures, professional development, and labor market dynamics. Through applications across various sectors, the paper demonstrates how ADLT can guide organizations in managing the transition to AI-augmented operations while maximizing human value creation. The framework provides practical tools for policymakers and educational institutions as they prepare workers for a labor market where value creation increasingly centers on agency and direction rather than execution.