jmherbenerIn the market economy, people devote resources to developing technology and embodying it in capital goods only when it improves efficiency. As a result labor becomes more productive. In other words, real wages or standards of living rise. With higher standards of living people can choose to take more leisure. If economic progress makes it possible for people to produce the same set of consumer goods with eight hours of labor a day instead of twelve, that’s a good thing. And this is precisely what has happened under capitalism over the last 200 hundred years. The work day and work week keep getting shorter and our standards of living keep getting higher. That we are “out of work” for four extra hours a day and one extra day a week compared to people 200 hundred years ago is a good thing.
Technological advance and economic progress do not make people unemployed even if it reduces the number of people working in some line of production. (They won’t necessary reduce the number of workers since the greater efficiency reduces costs and permits a lower price and therefore, a greater volume of sales and production.) In a market economy, they shift into other lines of production in which their labor is relatively more valuable. While their nominal wages might be lower, their real wages might be higher because of the greater productivity from the technological advance and economic progress. Whether their real wages rise or fall, society at large has more and better consumer goods.
Wages and prices adjust in a market economy to bring about the array of production processes that best satisfy our preferences.