As artificial intelligence races ahead, fears about machines replacing human workers are spreading quickly. A recent prediction by the research firm Citrini even suggested that AI could wipe out most white-collar jobs by 2028. But according to renowned economist Raghuram G. Rajan, the future may not be that simple.
Rajan believes the forecast is partly exaggerated – yet in some ways, it may also underestimate the deeper risks AI poses to the economy.
AI won’t replace jobs overnight
In his opinion piece named “Are We Facing AI Nightmare”, which he also shared on his LinkedIn, the former governor of the Reserve Bank of India says technological change rarely happens as quickly as people fear. Even when technology exists, adoption takes time due to regulations, costs, and organisational inertia.
“The small equity-research shop Citrini recently sent a panic through financial markets when it outlined a scenario in which AI ends most white-collar employment by 2028,” Rajan noted. “But this forecast is surely too pessimistic in some respects.”
History offers examples. Automated telephone exchanges were possible in the 1920s, yet human operators remained in service for decades. As Rajan points out, “although automated telephone exchanges were possible in the 1920s, the last human telephone operator in the United States was not replaced until the 1980s.”
echnology alone, he argues, does not determine outcomes.
“The technology itself is always only one variable. There also must be processes and structures around it to assure customers of reliable service,” Rajan noted.
AI could also create new work
Another reason Rajan is cautious about extreme predictions is that new technologies often create unexpected jobs. Even if some companies are displaced by AI-driven firms, the economic changes triggered by lower costs and higher productivity can open entirely new industries.
“The new opportunities created by AI-induced cost reductions and productivity enhancements need not lead only to more AI. They may also require the work of humans – as with the internet and the rise of influencers,” he explained.
The bigger fear: AI power concentrated in a few hands
However, Rajan warns that the real economic danger may not be automation itself but the concentration of power in a few AI companies.
Imagine a future where a handful of powerful platforms – such as Anthropic or Meta Platforms – develop highly advanced general AI systems that far outperform rivals.
In that scenario, these firms could charge high prices to businesses that rely on their AI tools. The platforms would generate enormous profits while employing relatively few people because AI would replace many of their own workers.
At the same time, companies using these AI systems would become more productive and might reduce their own white-collar workforce. The displaced workers would then search for employment elsewhere.
A downward spiral in wages
Rajan outlines a troubling possibility: unemployed professionals may flood lower-skill service jobs.
Workers previously employed in offices could compete for positions as gardeners, shop assistants, or waiters. This influx of labour would push wages down in those sectors as well.
“These unemployed workers would then look for work in adjacent industries where AI has not yet rendered their skills useless. But if those jobs are few, they will join lines for work as gardeners, waiters, and shop assistants, further depressing wages for these occupations,” Rajan noted.
A more hopeful scenario
Rajan also describes a more optimistic possibility: intense competition among AI companies.
If multiple platforms produce similar AI tools – instead of one or two dominating the market – prices could fall sharply. That would allow businesses to benefit from AI without paying huge fees to a few technology giants.
“Consider another ‘competitive’ scenario in which no platforms ‘win’ because there is little differentiation between ChatGPT 33.2, Gemini 25, and all the others.”
In such a world, productivity gains would spread across the economy rather than being captured by a handful of firms.
Companies could lower prices, increase production, and potentially create jobs in other sectors.
“There would be far less pain than in the first scenario, because lower-priced goods and services would allow pre-existing worker savings to go further.”
Governments may eventually step in
According to Rajan, governments could play a key role in determining which of these futures emerges. Authorities might regulate AI prices or refuse to give strong legal protection to companies trying to prevent competitors from copying their models.
“Would-be AI oligarchs should not assume that society will defend their enormous profits even as their products cause widespread job losses and hardship,” he said.
But such regulation will not come easily. Powerful AI firms are likely to lobby aggressively to protect their interests.
“AI incumbents will lobby aggressively, corrupting some legislators to block regulation. They will mount public campaigns… arguing that regulation will harm efficiency and innovation.”
Still, Rajan believes political pressure will build if the technology causes widespread job losses.
“If the AI-induced pain is indeed widespread, the political impetus for intervention will remain strong.”
Rajan’s analysis suggests that the debate around artificial intelligence may be asking the wrong question. The key issue may not be whether AI will replace jobs – but who will control the technology and who will benefit from the productivity it creates.