The mechanism operates through logic that economic models capture poorly but that anyone who has watched a skilled professional confront obsolescence will recognize immediately. A wage is a number; it can be adjusted, supplemented, replaced. The worker who accepts a pay cut loses income but retains identity. An identity is not a number. It is an architecture built through years of investment — cognitive, emotional, social — that determines not what the individual earns but who the individual is.
The senior engineer who has spent fifteen years writing Python has not merely accumulated a skill. He has accumulated a world: a community of practice, a vocabulary, aesthetic judgments about what constitutes good code, a reputation among peers, a daily experience of competence that organizes his relationship to work and, through work, to himself. When AI commoditizes Python execution, the prescription 'move up the value chain' asks him to dissolve not a skill but a self.
The period between the dissolution of the old identity and the construction of the new — the interval in which the individual is neither who they were nor who they are becoming — is the most psychologically dangerous period of the transition. It is the interval in which exit to the woods becomes attractive, in which denial and anger harden into refusal, in which the broader economy loses the labor participation it needs to generate aggregate demand.
Keynesian analysis of identity stickiness yields a direct policy implication: the institutions supporting identity reconstruction — retraining, income bridges, communities of practice for people in transition — are not welfare expenditures. They are macroeconomic investments. They determine the ratio of fighters to flighters, which determines the depth and duration of the contractionary phase, which determines whether the transition produces broad expansion or concentrated gain with widespread suffering.
The sticky-wage framework is Keynes's (General Theory, 1936). The extension to identity is proposed in this volume as the critical bridge between Keynesian macroeconomics and the AI transition.
Identity as architecture. Professional identity is a built structure of competence, community, and meaning.
Not a skill but a self. The prescription to migrate up the value chain asks for dissolution, not adjustment.
The dangerous interval. The period between old and new identities is where psychological injury concentrates.
Fight or flight at scale. The ratio of adaptation to withdrawal determines macroeconomic outcomes.
Institutional response required. Markets cannot support identity reconstruction; institutions must.