---
type: claim
domain: internet-finance
description: "Citadel Securities argues AI adoption will follow historical S-curve patterns — slow start, acceleration, then plateau — because expanding automation requires exponentially more compute at rising costs, creating a natural brake on displacement speed that exponential projections miss"
confidence: experimental
source: "Citadel Securities (Frank Flight) via Fortune, Feb 2026 — rebuttal to Citrini's '2028 Global Intelligence Crisis'"
created: 2026-03-08
challenged_by:
- Citrini argues there is 'no natural brake' because AI capability improves and cheapens every quarter — the S-curve argument assumes compute costs stay high, but historical GPU price/performance has dropped 10x every 5 years
related:
- ai-powered-support-infrastructure-enables-protocol-scaling-without-human-operations-headcount
- sovereign AI tooling is a viable displacement response only for the technically sophisticated top percentile which means it cannot serve as a macro-level solution to AI labor disruption
reweave_edges:
- ai-powered-support-infrastructure-enables-protocol-scaling-without-human-operations-headcount|related|2026-04-17
- sovereign AI tooling is a viable displacement response only for the technically sophisticated top percentile which means it cannot serve as a macro-level solution to AI labor disruption|related|2026-04-19
sourced_from:
- inbox/archive/internet-finance/2026-02-26-citadel-securities-contra-citrini-rebuttal.md
---

# Technological diffusion follows S-curves not exponentials because physical constraints on compute expansion create diminishing marginal returns that plateau adoption before full labor substitution

Citadel Securities' strongest counter-mechanism to the AI displacement doom loop: all prior general-purpose technologies — steam engines, electricity, internet — followed S-curve adoption patterns with slow initial uptake, rapid acceleration, then plateau as marginal returns diminish. The physical constraint is compute: expanding AI automation to cover the next 10% of tasks requires exponentially more compute than the previous 10%, because the remaining tasks are harder to automate. At some point, the cost of additional compute exceeds the labor savings, creating a natural ceiling.

This directly challenges the "self-funding feedback loop" framing where AI displacement accelerates without bound. If S-curve dynamics hold, the displacement crisis is real but bounded — there's a natural inflection point where adoption decelerates even without policy intervention.

The counter-argument: prior S-curves involved physical infrastructure (steam pipes, power lines, fiber optic cables) whose deployment was constrained by physical geography and construction speed. Software deployment has no such constraint — once an AI agent works for one company, it works for all companies simultaneously. The S-curve argument may be an analogy to an era with fundamentally different deployment physics.

Feb 2026 labor data supports the S-curve position in the short term: software engineering demand was still rising 11% YoY, and the St. Louis Fed Real-Time Population Survey showed AI workplace adoption "unexpectedly stable" with "little evidence of imminent displacement risk." But this data is consistent with both hypotheses — either S-curve plateau or pre-acceleration lag.

---

Relevant Notes:
- [[AI labor displacement operates as a self-funding feedback loop because companies substitute AI for labor as OpEx not CapEx meaning falling aggregate demand does not slow AI adoption]] — the claim this directly challenges
- [[the gap between theoretical AI capability and observed deployment is massive across all occupations because adoption lag not capability limits determines real-world impact]] — Anthropic data supporting the S-curve lag interpretation
- [[knowledge embodiment lag means technology is available decades before organizations learn to use it optimally creating a productivity paradox]] — organizational absorption as S-curve mechanism

Topics:
- [[maps/internet finance and decision markets]]