Mechanization and Unemployment

From The Era of Dissolution:

Roosevelt’s policies didn’t get rid of the broader economic dysfunction the 1929 crash had kickstarted. That was inherent in the industrial system itself, and remains a massive issue today, though its effects were papered over for a while by a series of temporary military, political, and economic factors that briefly enabled the United States to prosper at the expense of the rest of the world. The basic issue is simply that replacing human labor with machines powered by fossil fuel results in unemployment, and no law of nature or economics requires that new jobs can be found or created to replace the ones that are eliminated by mechanization. The history of the industrial age has been powerfully shaped by a whole series of attempts to ignore, evade, or paper over that relentless arithmetic.

Until 1940, the Roosevelt administration had no more luck with that project than the governments of most other nations. It wasn’t until the Second World War made the lesson inescapable that anyone realized that the only way to provide full employment in an industrial society was to produce far more goods than consumers could consume, and let the military and a variety of other gimmicks take up the slack. That was a temporary gimmick, due to stark limitations in the resource base needed to support the mass production of useless goods, but in 1940, and even more so in 1950, few people recognized that and fewer cared. It’s our bad luck to be living at the time when that particular bill is coming due.