CONCEPT
The Representational Gap
The distance between what builders can produce and what institutions can recognize, value, and support — the analytical center of de Soto's extension to the AI age.
The representational gap names the specific institutional distance that AI tools have not closed. Capital is fundamentally a representational phenomenon: an asset becomes capital when a formal system captures its economic attributes and makes those attributes available for transactions that extend beyond the asset's immediate physical context. The representational system has specific components — documentation, licensing, deployment, financing, marketplace infrastructure — each performing a function analogous to components of the formal property system de Soto analyzed. AI has democratized the capacity to produce while leaving the capacity to capitalize as unequal as it has ever been. The gap between production and capitalization is the defining structural challenge of the AI economy.
In The You On AI Field Guide
De Soto identified representation as the mechanism by which Western capitalism generates wealth. The physical asset — a house, a factory, a piece of land — performs one function. The representation of the asset in a formal system performs many: collateralization, transfer across strangers, inheritance, participation in credit