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This publication was written for a Global Political Economy course taught in business schools offering undergraduate or graduate levels of education. The textbook focuses on select countries and regions which, in our opinion, will be the most important consumer and export markets in the next two decades.

Abstract

Objective: The main aim of the article is to send a message to the general public that Artificial Intelligence (AI) is no different than any inventions disruptive for the mode of production discovered before. In the past, Luddites looked with fear at steam-powered industry and mechanized looms; today we look at Artificial Intelligence (AI) with equal anxiety and fear of the unknown.

Methodology: We analyze the world literature on this subject and compare the main economic actors: the USA and China. We also use some historic analogies like discoveries of Thomas Edison and Nicola Tesla.

Findings: AI is a ground-breaking technology which will fundamentally change human relations to the outside world. It will disrupt all known paradigms or production, medicine, shopping and, generally, the exploration of human environment, blurring the barrier between virtual and real.

Value Added: The luddite-type fears are unfounded. AI will enhance the concentration power, polarize societies between winners and losers, capital and labor and enhance the gaps which were on rise with the industrial revolution. We are at the outset of another revolution which will give humans a better command of nature. The negative effects of the revolution should be addressed and resolved in the future.

Recommendations: AI was created by people and can be ultimately governed by the people who set it in motion. Perhaps AI will provide answers how to control ourselves from a runaway deep or general AI. But this is a subject of another paper.

STRUCTURED ABSTRACT:

Purpose – The paper aims to clarify the relationship between the rise of the sovereign debt in the G20 and the relative underpayment of labor versus capital.

Design/methodology/approach – The historic analysis of successes and failures of demand management in the leading market economies. Provide data to support and illustrate the claims made in the paper.

Findings – The argument presented in the paper is that the root cause of the rapidly rising sovereign debt lies in the demand deficiency originating in the cumulative effect of lagging labor compensation relative to productivity gains. Developed market democracies desperately need policies to mend the failing social contract between labor and capital. The real solution of the debt is to address demand deficiency, increase labor participation and wages, or basically, introduce a new social contract between labor and capital.

Research limitations/implications – The detailed analysis of demand management policies would have to be country specific which goes beyond the scope of the paper.

Practical implications – The paper implies that G20 policies go into a wrong direction and increase the risk of chain debt defaults in the leading market economies.

Originality/value – This paper fulfils an identified need to study the root cause of the demand deficiency syndrome and the need to introduce long term policies needed to restore growth in the market economies.

The impact of artificial intelligence (AI) on business, government, and society is getting more attention. The leading AI sectors have higher productivity but a lower share of GDP than those lagging in digitization and AI. There is a technological gap, with still unknown consequences concerning the social contract, the expected new digital welfare profile, as well as the business strategy about globalization. The hypothesis is that while digitization was already in motion (2000-2005), capital outflow from the US to MHGEs (market high-growth economies) in Asia negatively affected its productivity outcome. Additionally, it is expected that AI will give more market power to multinationals, reshaping the social contract. Thus, the current western social contract will no longer be able to cope with the consequences of the weakness of the nation-state, its policymakers, or the powerful profit-driven multinationals to deal with the overall effect of AI. We aim to look at the impact of this new state of technology on the social contract, focusing on the proper actions of government and business to deal with it. We used a descriptive approach based on desk research concerning productivity data, European government policies, trade model analysis, and business approach to AI. We expect to demonstrate the dynamic interaction of the K/L ratio within the prevailing status of global resources mobility, and the dangers unregulated AI represents to labor. Policy actions are needed concerning the legal status of AI and how to avert the collapse of the social contract and the rise of oligarchic cyber-autocracies. Our general conclusion is as follows: While capital investments, which would have contributed to improved total factor productivity (TFP) in the USA, went to MHGEs, increasing their GDP growth in less than a decade, the broad use of Artificial Intelligence (AI) will reverse massive offshoring, and new types of manufacturing processes will emerge in developed countries.

The impact of artificial intelligence (AI) on business, government, and society is getting more attention. The leading AI sectors have higher productivity but a lower share of GDP than those lagging in digitization and AI. There is a technological gap, with still unknown consequences concerning the social contract, the expected new digital welfare profile, as well as the business strategy about globalization. The hypothesis is that while digitization was already in motion (2000–2005), capital outflow from the US to MHGEs (market high-growth economies) in Asia negatively affected its productivity outcome. Additionally, it is expected that AI will give more market power to multinationals, reshaping the social contract. Thus, the current western social contract will no longer be able to cope with the consequences of the weakness of the nation-state, its policymakers, or the powerful profit-driven multinationals to deal with the overall effect of AI. We aim to look at the impact of this new state of technology on the social contract, focusing on the proper actions of government and business to deal with it. We used a descriptive approach based on desk research concerning productivity data, European government policies, trade model analysis, and business approach to AI. We expect to demonstrate the dynamic interaction of the K/L ratio within the prevailing status of global resources mobility, and the dangers unregulated AI represents to labor. Policy actions are needed concerning the legal status of AI and how to avert the collapse of the social contract and the rise of oligarchic cyber‑autocracies. Our general conclusion is as follows: While capital investments, which would have contributed to improved total factor productivity (TFP) in the USA, went to MHGEs, increasing their GDP growth in less than a decade, the broad use of Artificial Intelligence (AI) will reverse massive offshoring, and new types of manufacturing processes will emerge in developed countries. ; Sztuczna inteligencja musi być kontrolowana w bardziej skuteczny sposób. Dziś stoimy w obliczu wzrostu populizmu, postaw antyimigracyjnych i rozwoju nieliberalnych demokracji. Dowodzi to tego, że zachodnie umowy społeczne nie jest już w stanie poradzić sobie z konsekwencjami słabości państwa narodowego i rosnącej roli potężnych międzynarodowych korporacji nastawionych na zysk. Te ostatnie są silniejsze od państwa narodowego, podejmują autonomiczne decyzje o alokacji czynników produkcji na arenie światowej, zatrudniają maszyny zamiast ludzi, biorą odpowiedzialność za pracowników lub nie, decydują o zanieczyszczeniu środowiska toksycznymi odpadami czy nie. AI daje międzynarodowym korporacjom jeszcze więcej mocy.

The impact of artificial intelligence (AI) on business, government, and society is getting more attention. The leading AI sectors have higher productivity but a lower share of GDP than those lagging in digitization and AI. There is a technological gap, with still unknown consequences concerning the social contract, the expected new digital welfare profile, as well as the business strategy about globalization. The hypothesis is that while digitization was already in motion (2000–2005), capital outflow from the US to MHGEs (market high-growth economies) in Asia negatively affected its productivity outcome. Additionally, it is expected that AI will give more market power to multinationals, reshaping the social contract. Thus, the current western social contract will no longer be able to cope with the consequences of the weakness of the nation-state, its policymakers, or the powerful profit-driven multinationals to deal with the overall effect of AI. We aim to look at the impact of this new state of technology on the social contract, focusing on the proper actions of government and business to deal with it. We used a descriptive approach based on desk research concerning productivity data, European government policies, trade model analysis, and business approach to AI. We expect to demonstrate the dynamic interaction of the K/L ratio within the prevailing status of global resources mobility, and the dangers unregulated AI represents to labor. Policy actions are needed concerning the legal status of AI and how to avert the collapse of the social contract and the rise of oligarchic cyber‑autocracies.Our general conclusion is as follows: While capital investments, which would have contributed to improved total factor productivity (TFP) in the USA, went to MHGEs, increasing their GDP growth in less than a decade, the broad use of Artificial Intelligence (AI) will reverse massive offshoring, and new types of manufacturing processes will emerge in developed countries. ; Sztuczna inteligencja musi być kontrolowana w bardziej skuteczny sposób. Dziś stoimy w obliczu wzrostu populizmu, postaw antyimigracyjnych i rozwoju nieliberalnych demokracji. Dowodzi to tego, że zachodnie umowy społeczne nie jest już w stanie poradzić sobie z konsekwencjami słabości państwa narodowego i rosnącej roli potężnych międzynarodowych korporacji nastawionych na zysk. Te ostatnie są silniejsze od państwa narodowego, podejmują autonomiczne decyzje o alokacji czynników produkcji na arenie światowej, zatrudniają maszyny zamiast ludzi, biorą odpowiedzialność za pracowników lub nie, decydują o zanieczyszczeniu środowiska toksycznymi odpadami czy nie. AI daje międzynarodowym korporacjom jeszcze więcej mocy.