The Recessionary Pressures of Generative AI: A Threat to Wellbeing.

Generative Artificial Intelligence (AI) stands as a transformative force thatpresents a paradox; it offers unprecedented opportunities for productivitygrowth while potentially posing significant threats to economic stability andsocietal wellbeing. Many consider generative AI as akin to previoustechnological advancements, using historical precedent to argue that fears ofwidespread job displacement are unfounded, while others contend that generativeAI`s unique capacity to undertake non-routine cognitive tasks sets it apartfrom other forms of automation capital and presents a threat to the quality andavailability of work that underpin stable societies. This paper explores theconditions under which both may be true. We posit the existence of anAI-capital-to-labour ratio threshold beyond which a self-reinforcing cycle ofrecessionary pressures could be triggered, exacerbating social disparities,reducing social cohesion, heightening tensions, and requiring sustainedgovernment intervention to maintain stability. To prevent this, the paperunderscores the urgent need for proactive policy responses, makingrecommendations to reduce these risks through robust regulatory frameworks anda new social contract characterised by progressive social and economicpolicies. This approach aims to ensure a sustainable, inclusive, and resilienteconomic future where human contribution to the economy is retained andintegrated with generative AI to enhance the Mental Wealth of nations.