TheGuiggleMonster said:
I'm no expert on economics, but isn't this exactly what has been happening every few years since the industrial revolution? Can someone please explain to me how this works?
So basically, labour costs decrease as manufacturing techniques improve. This means that you need less manual effort, so yes, fewer man hours and hence fewer staff.
What's supposed to counterbalance this force is that the "Means of Production" also get cheaper. It in principle becomes much easier for Joe Bloggs to start up a manufacturing business, because all he needs is the technological base and a skeleton workforce. He generally gets less for his investment than used to be the case (since each manufacturer is subject to increased market competition), but that's okay, because he paid less for it anyway.
In practical terms, however, this doesn't really bear out. After all, nowadays unless you've come up with an original product idea, you are up against some very established brands no matter what area of production you move in to. Supermarket own-brands tend to bottom out the value market, while high-quality goods are subject to increased scrutiny and greater marketing demands.
One way out of this is franchising (which is why there are so many Starbucks around). Another is to play a very targeted or gimmicky marketing game. But broadly speaking, markets stabilise. And this is a problem when facing exponential technological growth, because people like the stable brands and there becomes less and less reason for anyone to want to challenge them, while at the same time the manufacturers require less and less manual labour to fulfil demand. If you prefer to have competition-mandating systems, then you can duplicate the number of stable brands involved - Pepsi and Coca-Cola are good examples of that.
What this ultimately means is that we either innovate or we inflate. If we wind up in a situation where all we do is do what we've always done, but get better at making it with less work, then we have a labour surplus, unemployment and more produce than consumption.
Whether this is a problem or not depends on the extent to which our economy is tied closer to essentials or to luxuries. Suppose, for instance, that we drive our economy towards self-sustainment. Then if we have a surplus, then that's great; we can produce enough to maintain our society whether the people that have been made redundant by technology work or they don't. But then societies can afford to become more selective, a la "Atlas Shrugged" - there is no reason for me to share a nation with someone when I contribute XYZ and get nothing in return for that investment, so people need to learn to bring something other than essential goods in order to earn their keep.[footnote]Alternatively, we might wind up with smaller social units, but that seems less interesting; we lose out on broader social goals like the arts and entertainment.[/footnote] On the other hand, if our economy is weighed too far in favour of services or luxury items, then we're in difficulty, because the only way we're going to get what we need is by buying off other economies through trading an exponentially weakening commodity.
The ideal situation is to balance the former with the latter - make sure our technology improves as regards basic necessities, so that we become less dependent on outside investment, while encouraging indivdual people to develop their own skills and trades and "Enrich" society. If you have that sort of set-up, then accelerating technological development is no real threat. Though it might shake things up a bit.
