The article assumes AGI will emerge from AI coz "Sam Altman, the boss of OpenAI, has predicted that AI systems will probably start producing “novel insights” next year". Well he would, wouldn't he? As I understand it, most experts in the field don't think so. So the question it's addressing is more like What if some technology increased productive capacity by an order or two of magnitude? And the article says more about the The Economist than the economics.What if AI made the world’s economic growth explode?
Markets for goods, services and financial assets, as well as labour, would be upended
14 minute read!
What if AI made the world’s economic growth explode?
Markets for goods, services and financial assets, as well as labour, would be upendedwww.economist.com
The Economist has long been the evangelist of 'supply-side' or 'neoclassical' economics, i.e. the idea that growth in developed economies remains supply-constrained, rather than demand-constrained (per Keynes). Hence it maunders about "Baumol-disease" and quotes neoclassical economists like Cowen and Nordhaus (a doofus who reckons climate change will only affect outdoor work).
Even before the AI hype, we have been in a third industrial revolution - digital technology and the internet - for several decades. Supply-side economics says there should at least have been an increase in the rate of GDP growth. But there hasn't. It has slowed in most developed economies, and slowed globally despite China's meteoric growth. Yer supply siders excuse this as market "distortions" and "frictions" and "Baumol-disease" - basically markets just aren't free enough yet, because of interfering govts and uppity wokers.
The screaming obvious explanation that developed economies are demand-constrained. GDP is actually a measure of spending "on finished goods and services", not output. It's reasonable to take that as a proxy for output, but not to assume that more productive capacity = more output. Most developed economies already have persistent output gaps (actual GDP below potential GDP) because capitalism - esp the neoliberal variety pushed by neoclassical economics - cannot profitably distribute that much extra output.
