More resources split among fewer people only really works well if your economy is capital-bound in almost all lines of work. If there was anything where you really needed labor, you're fucked.
Every year labor is becoming less and less necessary for economic production and capital is becoming a better and better substitute for labor, so our economies /are/ capital-bound.
Judging by prices, we have gluts of both labor and capital, a systemic shortage of aggregate private and public demand, and yet consistently increasing employment and rock-bottom productivity growth. To me it seems like cheap labor is being used to substitute for capital.