The Great Deflation: Artificial General Intelligence, Autonomous Robotics, and the Restructuring of the Global Economy

This paper examines the macroeconomic implications of the convergence of Artificial General Intelligence (AGI) and autonomous robotics, arguing that their combined deployment will trigger a structural deflationary shock of unprecedented scale. Unlike previous waves of automation, which displaced labour in specific sectors while creating new employment elsewhere, the simultaneous emergence of cognitive and physical automation closes the traditional refuge of human comparative advantage. The paper analyses the mechanisms through which this transition will compress wages, suppress aggregate demand, concentrate capital returns, and destabilise existing fiscal frameworks. It further considers the distributional consequences across skill levels, geographies, and generational cohorts, and evaluates the adequacy of proposed policy responses including universal basic income, robot taxation, and working-time reduction. The paper concludes that current policy frameworks are structurally insufficient to manage the transition and calls for a coordinated international response grounded in new economic institutions capable of redistributing productivity gains at scale.