  Generative Artificial Intelligence (AI) stands as a transformative force that
presents a paradox; it offers unprecedented opportunities for productivity
growth while potentially posing significant threats to economic stability and
societal wellbeing. Many consider generative AI as akin to previous
technological advancements, using historical precedent to argue that fears of
widespread job displacement are unfounded, while others contend that generative
AI`s unique capacity to undertake non-routine cognitive tasks sets it apart
from other forms of automation capital and presents a threat to the quality and
availability of work that underpin stable societies. This paper explores the
conditions under which both may be true. We posit the existence of an
AI-capital-to-labour ratio threshold beyond which a self-reinforcing cycle of
recessionary pressures could be triggered, exacerbating social disparities,
reducing social cohesion, heightening tensions, and requiring sustained
government intervention to maintain stability. To prevent this, the paper
underscores the urgent need for proactive policy responses, making
recommendations to reduce these risks through robust regulatory frameworks and
a new social contract characterised by progressive social and economic
policies. This approach aims to ensure a sustainable, inclusive, and resilient
economic future where human contribution to the economy is retained and
integrated with generative AI to enhance the Mental Wealth of nations.
