Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model

Pascal Stiefenhofer

Journal of Economic Analysis, 2025, vol. 4, issue 3, 142-183

Abstract: This paper develops a dynamic model of Artificial General Intelligence (AGI) capital accumulation and explores its implications for long-run economic stability, human labor, and the viability of the social contract. Extending baseline growth models, we introduce fixed and variable costs of AGI scaling, classify these costs, and analyze their impact on steady-state outcomes. We prove that sublinear costs allow unbounded AGI accumulation, ultimately driving wages and employment to collapse, while superlinear costs impose endogenous limits that preserve human economic relevance. Building on this foundation, we model redistribution and bargaining between human agents and AGI capital owners as a dynamic game, demonstrating the existence of stationary redistribution equilibria that stabilize welfare in the presence of AGI. However, the analysis reveals that excessive political concentration or unforeseen technological shocks can destabilize these contracts, endogenously leading to welfare bifurcation or collapse. We extend classical social contract theory to this novel context, arguing that in AGI-dominated economies, sustainable social contracts must be dynamically incentive-compatible for both human and artificial agents. The results show that without adaptive institutional mechanisms and explicit redistribution, AGI expansion threatens to sever economic reciprocity, erode human welfare, and destabilize macroeconomic and political equilibrium. Thus, the emergence of AGI necessitates not only technological governance but a reconceptualization of the social contract itself.

Keywords: Artificial General Intelligence; Capital Accumulation; Social Contract; Economic Stability (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.anserpress.org/journal/jea/4/3/115/pdf (application/pdf)
https://www.anserpress.org/journal/jea/4/3/115 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bba:j00001:v:4:y:2025:i:3:p:142-183:d:445

Access Statistics for this article

Journal of Economic Analysis is currently edited by Ramona Wang

More articles in Journal of Economic Analysis from Anser Press
Bibliographic data for series maintained by Ramona Wang ().