Deutsche Bank's Major Report: The Two Endgames of AI - Marx's Prophecy and Musk's Vision

Author: Chasing Wind Trading Platform

When discussing AI, the vast majority of people are still concerned about whether "jobs will be taken away." However, Deutsche Bank believes that this perspective might be a bit narrow.

According to Chasing Wind Trading Platform, the latest report written by George Saravelos, the global head of FX research at Deutsche Bank, extrapolates two extreme outcomes for the development of AI:

The first outcome is "complete replacement." Similar to Marx's prophecy over 180 years ago and Musk's vision today: in the factors of production in economics, "capital" itself transforms into "labor," the value of labor reaches zero, and capitalism becomes outdated. AI massively replaces human labor, wealth and income are highly concentrated in the hands of a few capital owners, the income and needs of ordinary people are weakened, and the economy falls into a predicament of "a lot of things, but no one can afford them."

Did Marx predict artificial intelligence? About 200 years ago, he wrote a work on "machines," envisioning a scenario of full automation. In this world, the problem of scarcity is resolved. However, as the value of labor approaches zero, capitalism will become outdated, and we will transition to a brand new world of great material abundance. The endpoint envisioned by Marx is remarkably similar to today's vision of Elon Musk.

The second outcome is "history repeating itself." AI, like previous technological revolutions, improves efficiency but does not completely replace human labor; it merely "empowers" humans, creating new jobs continuously, and the policy framework can still repair the shocks. In this scenario, the logic of economic operation is similar to that of the past few decades, with inflation, interest rates, and the stock market more likely to rise moderately.

Will we head towards the abyss, a paradise, or merely witness an ordinary industrial upgrade? This report from Deutsche Bank provides us with a new perspective.

When "capital becomes labor," why traditional economics may fail

To understand the ultimate destructive power of AI on the economy, we must return to the starting point of modern economics.

Starting with Adam Smith, all classical economists based their theories on a fundamental assumption: capital and labor are two completely independent factors of production. Whether capital or labor, their prices (interest rates and wages) are determined by their "relative scarcity" in the market.

Looking back over the past two hundred years, all previous waves of technological innovation generally fit this model.

For analogy, the invention of the steam engine eliminated coach drivers but created train conductors; the internet destroyed traditional printed media but created countless programmers and delivery personnel. In these historical cycles, labor always has work to do. Machines are capital, while operating, maintaining, and designing machines are still labor. Capital is merely a "complement" to labor.

However, fully autonomous robots equipped with artificial general intelligence (AGI) completely break this classification.

"In this case, capital becomes labor. It is no longer a supplement to labor, but a substitute." George Saravelos pointed out incisively in his report.

When an AI machine can think, produce, and iterate autonomously, this machine is both capital and labor. The foundational structure of modern economics fractures at this moment.

The report states clearly: "When capital equals labor, the value of work drops to zero, and wages also drop to zero. Economists call this an unacceptable equilibrium. Scientists refer to it as a singularity. Classical economic theory collapses. Consequently, capitalism as an institution will also become outdated."

When the law of "supply creates demand" fails, growth may face "secular stagnation"

Once labor is massively replaced, how will the gears of macroeconomics transform? Deutsche Bank introduces deeper theoretical extrapolation.

In a purely "AI replacing workers" world, wages drop, but material abundance increases unprecedentedly. Machines tirelessly produce vast quantities of goods and services for the market.

According to classical economists like Say, Walras, and Wicksell, "supply will automatically create its own demand." In their theoretical models, markets possess self-repair capabilities. Goods prices will decrease as production costs fall, and workers can ultimately buy more things for less money or find jobs in new fields.

However, Deutsche Bank warns that in a world of AI full automation, this self-correction mechanism will completely fail.

The logic is straightforward: automation will concentrate wealth and income extremely in a narrow class of "capital owners." In terms of economic laws, the "marginal propensity to consume" of the rich (capital owners) is far lower than that of ordinary workers.

For analogy: An AI factory can produce ten thousand cars a day at a very low cost. But all this profit goes to the AI owner. This owner cannot buy ten thousand cars alone; meanwhile, a large number of ordinary people who have lost their jobs and have zero income are unable to purchase even if the cars are very cheap.

"The transmission chain from supply to demand is broken." Saravelos writes.

This completely cleared market equilibrium will manifest as: structurally very low labor income, a deflationary price level, and massive "excess savings" replacing strong demand for goods. Deutsche Bank points out that this is precisely the "secular stagnation" phenomenon proposed by economists Eggertsson and Mehrotra, which could potentially trigger a Marxist-style revolution under extreme circumstances.

"Keynes can salvage the situation, but it may not be enough," key depends on government and institutional reaction speed

In the face of market failure, can the other major pillar of modern economics—Keynesianism—turn the tide?

Keynes' revolutionary contribution lies in acknowledging the failure of classical theory. Under the framework of Keynesianism, economic imbalances are not permanent, but cyclical. When price adjustments are slow and labor retraining fails to keep up, the government must intervene forcefully.

In the AI era, such intervention might manifest as: imposing high "AI taxes" on AI companies to create a funding pool for distributing "stimulus checks" or universal basic income (UBI) to the entire population. Through such strong fiscal transfers, the economy eventually reaches a new balance.

However, this logic faces significant real-world constraints.

The report cites renowned economists Acemoglu and Johnson's extensive research on the history of technology deployment. History shows that adjustments to policies and institutions are often extremely slow.

For example, in the early stages of the Industrial Revolution in England, due to the lack of corresponding institutional protections, workers' real wages were suppressed for decades.

To prevent a decline in living standards, Deutsche Bank lists the fundamental reforms that must be made: "More powerful labor negotiating institutions, competition policies that limit monopoly power of leading firms, tax and subsidy structures that do not artificially favor capital at the expense of labor, public investment in technological skill and creative tasks, and reforms and expansions of corporate governance."

If the pace of technological change outstrips the speed of government and institutional adaptation, Keynesian prescriptions will not take effect in time.

From Marx to Musk: the end of property rights and scarcity

Even with a highly proactive and responsive government, deeper political economy challenges still exist.

The report presents a profoundly philosophical phenomenon: nearly 200 years ago, Karl Marx's conception of "machines" and full automation in his writings is astonishingly similar to today's tech giant Elon Musk's ultimate vision for AI.

In this endpoint of full automation, humanity has resolved the ultimate issue of scarcity.

However, what follows is the disintegration of social consensus. "In this fully automated scenario, capitalism's essence collapses. Political issues are no longer centered around how to subsidize wages. They become more fundamental to social structure: if scarcity is solved, what is the meaning of property rights?"

As Keynes questioned in his famous 1930 article "The Economic Possibilities for Our Grandchildren": when humanity no longer needs to work for survival, what is the ultimate meaning of human existence?

Although these topics may seem grand, Deutsche Bank emphasizes that given the existential nature of these questions, they are absolutely relevant to current financial market pricing.

Deutsche Bank's two extreme extrapolations and pricing logic

For the market, it is essential to think simultaneously about the "transition period to the endpoints" and "the endpoints themselves." Deutsche Bank divides the future world into two extreme parallel universes and provides clear asset pricing logic.

Endpoint One: AI completely replaces labor (extreme disruption)

This is a world where AI can quickly and (almost) entirely replace human labor. From the perspective of living standards, this is a paradise where the economic scarcity problem is permanently solved. However, Deutsche Bank warns that the path to reach there will be "the most destructive and filled with uncertainty."

Macro-economic characteristics: Unemployment rates continue to rise, the government faces sustained intervention pressure, and social conflicts intensify. There will be endless games around resource allocation between capital owners and labor.
Market pricing logic: The macroeconomy will face extremely strong deflationary pressure, and real interest rates will show a structural, continuous downward trend. Due to AI's extremely high efficiency, corporate profitability will soar.
Stock market and foreign exchange market performance: Despite soaring profits, the stock market will be mired in long-term confusion and volatility. The logic is that the "risk of confiscation (such as extreme high taxes or nationalization)" faced by companies will significantly increase, and how profits are allocated among different stakeholders will always remain unsettled. In the foreign exchange market, Deutsche Bank clearly states: "Countries that can manage this smooth transition most successfully are the ones most likely to see their currencies gain the most."

Endpoint Two: AI is merely an empowering technology (history repeating itself)

In this world, AI does not trigger a singularity but serves merely as an augmentation technology, enhancing human capabilities, just like the various innovations of the 20th century.

Macro-economic characteristics: This is a coherent world. Limitations of technology adoption, gradual institutional evolution, and Keynesian counter-cyclical fiscal policies will work effectively. Despite the ongoing conflicts over distribution and the growing pains in the labor market, humanity can always find new work.
Market pricing logic: Contrary to the first endpoint, here the macro indicators will point upward.
Stock market and foreign exchange market performance: Inflation levels, real interest rates, and the stock market are more likely to develop towards higher directions. Deutsche Bank concludes: "History will not break but will rhyme, just like in the past few decades."

What to focus on now?

Deutsche Bank points out that the purpose of this report is not to provide an absolute prediction but to establish an analytical framework. In this extremely broad distribution of outcomes, the market debates over the macro impact of AI will certainly not stop in the short term.

From an investor's perspective, how should one observe the progress of the AI economy's evolution? Deutsche Bank has distilled clear "observation milestones":

Qualitative change in labor data: Are we beginning to observe rising structural unemployment rates? Has the share of labor compensation, which has been declining anyway, entered a rapid downward spiral?
Shifts in fiscal and antitrust policies: How willing is the government to take proactive fiscal and institutional actions? Are they starting to implement robust income redistribution? Are there substantive antitrust preventive measures taken against monopolistic concentrated capital groups (tech giants)?

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。