From Firms to Computation: AI Governance and the Evolution of Institutions

The integration of agential artificial intelligence into socioeconomic systems requires us to reexamine the evolutionary processes that describe changes in our economic institutions. This article synthesizes three frameworks: multi-level selection theory, Aoki's view of firms as computational processes, and Ostrom's design principles for robust institutions. We develop a framework where selection operates concurrently across organizational levels, firms implement distributed inference via game-theoretic architectures, and Ostrom-style rules evolve as alignment mechanisms that address AI-related risks. This synthesis yields a multi-level Price equation expressed over nested games, providing quantitative metrics for how selection and governance co-determine economic outcomes. We examine connections to Acemoglu's work on inclusive institutions, analyze how institutional structures shape AI deployment, and demonstrate the framework's explanatory power via case studies. We conclude by proposing a set of design principles that operationalize alignment between humans and AI across institutional layers, enabling scalable, adaptive, and inclusive governance of agential AI systems. We conclude with practical policy recommendations and further research to extend these principles into real-world implementation.