  Work is fundamental to societal prosperity and mental health, providing
financial security, identity, purpose, and social integration. The emergence of
generative artificial intelligence (AI) has catalysed debate on job
displacement. Some argue that many new jobs and industries will emerge to
offset the displacement, while others foresee a widespread decoupling of
economic productivity from human input threatening jobs on an unprecedented
scale. This study explores the conditions under which both may be true and
examines the potential for a self-reinforcing cycle of recessionary pressures
that would necessitate sustained government intervention to maintain job
security and economic stability. A system dynamics model was developed to
undertake ex ante analysis of the effect of AI-capital deepening on labour
underutilisation and demand in the economy. Results indicate that even a
moderate increase in the AI-capital-to-labour ratio could increase labour
underutilisation to double its current level, decrease per capita disposable
income by 26% (95% interval, 20.6% - 31.8%), and decrease the consumption index
by 21% (95% interval, 13.6% - 28.3%) by mid-2050. To prevent a reduction in per
capita disposable income due to the estimated increase in underutilization, at
least a 10.8-fold increase in the new job creation rate would be necessary.
Results demonstrate the feasibility of an AI-capital- to-labour ratio threshold
beyond which even high rates of new job creation cannot prevent declines in
consumption. The precise threshold will vary across economies, emphasizing the
urgent need for empirical research tailored to specific contexts. This study
underscores the need for governments, civic organisations, and business to work
together to ensure a smooth transition to an AI- dominated economy to safeguard
the Mental Wealth of nations.
