The Phillips Curve and the Rise of Artificial Intelligence: A Changing Macroeconomic Landscape

The South African government's approach to employment as a macroeconomic design has relegated it to the department of labour, effectively removing it from the main economic actors in macroeconomics. This decision ignores the vexing question of the Phillips Curve, which addresses the relationship between unemployment and inflation. The question remains a policy debate, with some central banks, including the South African Reserve Bank, concluding that perhaps unemployment is not their mandate. This has significant implications for the way we understand the relationship between technology, employment, and the economy.

Key Takeaways:

• The development of productive forces, particularly in the form of information technology, has introduced the law of abundance, replacing the law of demand and supply as we know it. This law has a central feature, which is price decreases with demand.
• The rapid development of productive forces has led to non-rivalry in the use of economic assets, resulting in non-rival products being available on the shelves. This has introduced a new law of demand and supply in economics, which states that the more demand there is, the higher the push for lowering prices.
• The Phillips Curve, which was thought to be a key tool for understanding the relationship between unemployment and inflation, may be irrelevant in the face of rapid technological change. Central banks may have basked in the wrong vista, ignoring the real challenge of non-rivalry in demand of goods and services.
• Karl Marx's concept of Machinery and Modern Industry in Chapter 15 of Volume One of Capital has not received sufficient attention as a fundamental macroeconomic feature. This concept is crucial in understanding the impact of technological change on employment and the economy.
• The creation of surplus populations, who are supernumerary to society and the economy, is a socio-economic stage negated by laws of scarcity. This has significant implications for economic growth, employment, and social coherence.
• The Trump tariffs and subsequent trade wars may be a reversal of the trend of globalization and a return to protectionism, which could have significant implications for the global economy.

Statistics:

• 150 pages: The number of pages Karl Marx dedicated to Machinery and Modern Industry in Chapter 15 of Volume One of Capital.
• 2017: The year Vermeulen asked "whether the Phillips Curve is dead?"
• 15: The chapter number in Marx's Capital that discusses Machinery and Modern Industry.

Sources:

• Marx, Karl (Volume One of Capital, Chapter 15, Machinery and Modern Industry)
• Vermeulen, W. (2017) "Is the Phillips Curve Dead?"