alt Hacker NewsGDP = C + I + G + Xn = W + I + R + P
(To grossly simplify the single-nation macroeconomic picture, at least)
C = consumption I = investment (the first one) G = government Xn = net exports
W = wages paid to labor I = interest on capital R = rent on resources and real property P = profit to entrepreneurs
consumption ~= wages, so if wages go to zero, the economy massively shrinks unless government steps in with something like taxation to fund UBI, sovereign wealth fund distributions, or direct universal ownership.
Replies
Sure, what you describe is usually in the Macro textbooks. However in XXI century USA, Consumption has been detached from ‘wages’ for a while now (“since the 1970s”, ie 2 generations, per https://www.epi.org/productivity-pay-gap/)
In reality, the top income brackets are propping up Consumption numbers. This is part of what have become to understand as the ‘K’ shaped economy, together with the speeding up of capital accumulation/concentration.
https://www.dallasfed.org/research/economics/2025/1125-yang-...
Edits for clarity
Wages could go up, it's just in the form of trillionare paying another trillionare a trillion dollars a day. GDP would be looking rosy!