[A1kmm]

After a long rant, the chapter of that book comes to the core thesis that consumption will increase, and that consumptive increase will increase demand for labour.

The economy finds a way to efficiently use resources until constraints are hit. Historically, despite automation, the constraint (or rate limiting factor) that has been hit has been human labour. What if increasing population, increasing automation, and natural resource depletion mean that natural resources and land become the predominant rate limiting factor holding back the economy, rather than human labour? Then, we won't see full employment, we will see full natural resource utilisation instead.

That said, in the medium term, natural resource depletion is actually likely to inhibit automation - automation is largely dependent on energy derived from fossil fuels, and as we approach and pass peak oil and supplies dwindle, sustainable energy sources will need to take over.

The other problem is that it is not just employment that should be considered, but equality (see http://www.equalitytrust.org.uk/why/evidence for why equality matters). To see why this is a problem, lets take the reductio ad absurdum approach: suppose that we had the technology and natural resources to give everyone on the planet the capital they needed to live independently, sustainably and happily without having to do any work at all - everything is automated. In this perfect society, there is no inequality and no transfer of wealth. Now consider the exact same situation - still no workers, but a small percentage of people own most of the wealth, and everyone else pays rent to them for the equipment (this is essentially the current economy). Wealth transfer will continue to flow from the poor to the wealthy, and there will be very little economic mobility because the wealthy don't need the poor.

Obviously, in reality things are not quite so grim as in the hypothetical scenario because not everything can be automated, and there is still a need for labour. However, when pressed against natural resource limits and a lack of land, I think that something very similar is happening in the global economy.

[nate_meurer]

A bunch of excellent points about basic economics.

I would add, regarding this part:

  "The economy finds a way to efficiently use resources until constraints are hit."

... that "efficiently" is only true to the extent that resources are scarce. For resources that are not scarce, as was the case with oil until relatively recently, and as is the case with nat gas now in the U.S., the market optimizes for volume much more than efficiency. Hence the reason we're sucking the stuff out of the ground as fast as we possibly can.