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Economic Analysis Letters

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

by Pascal Stiefenhofer a,*
a
Department of Economics, Newcastle University, Newcastle, UK
*
Author to whom correspondence should be addressed.
JEA  2025 4(3):115; https://doi.org/10.58567/jea04030007
Received: 5 February 2025 / Accepted: 19 May 2025 / Published Online: 5 July 2025
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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;
Copyright: © 2025 by Stiefenhofer. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
Cite This Paper
APA Style
Stiefenhofer, P. (2025). Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis, 4(3), 115. doi:10.58567/jea04030007
ACS Style
Stiefenhofer, P. Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis, 2025, 4, 115. doi:10.58567/jea04030007
AMA Style
Stiefenhofer P. Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis; 2025, 4(3):115. doi:10.58567/jea04030007
Chicago/Turabian Style
Stiefenhofer, Pascal 2025. "Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model" Journal of Economic Analysis 4, no.3:115. doi:10.58567/jea04030007

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ACS Style
Stiefenhofer, P. Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis, 2025, 4, 115. doi:10.58567/jea04030007
AMA Style
Stiefenhofer P. Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis; 2025, 4(3):115. doi:10.58567/jea04030007
Chicago/Turabian Style
Stiefenhofer, Pascal 2025. "Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model" Journal of Economic Analysis 4, no.3:115. doi:10.58567/jea04030007
APA style
Stiefenhofer, P. (2025). Artificial General Intelligence and the Social Contract: A Dynamic Political Economy Model. Journal of Economic Analysis, 4(3), 115. doi:10.58567/jea04030007

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