Technological Advance, Economic Growth, and the Distribution of Income

Starting in nineteenth century Western Europe, technological change fostered by private enterprise operating within the framework of a competitive pricing mechanism promoted an unprecedented growth in total output and brought about a favorable system of income distribution. The effective operation of the automatic price mechanism depended critically on the nature of nineteenth century technology, which strengthened the dominant role of labor in the production process. The new wave of technological change--computerization, automation, robotization--is progressively reducing the role of labor in production, leading to increasing technological unemployment, and exerting a socially undesirable effect on income distribution. In developed countries, the situation can be remedied by government actions ranging from unemployment relief to full-fledged "income policies" of the Swedish kind. In less developed countries, where direct income transfers can seldom be managed efficiently, more traditional income-maintenance measures--public works programs, employment of supernumerary hands--will be necessary.