Will Technology Yield An Automated Economy?

As technology gets better and better at providing the basic needs (or more) of human existence, how does that impact the economy? An automated economy would be an economy that operated with very little human input, but satisfied our basic planetary needs.

Consider some scenarios.

Imagine that you could buy a device that could turn any organic matter into a nutrient rich food paste. Imagine that the energy needs for such a device, and other things, could come from solar cells on our roofs. Or perhaps we all have free access to output from neighborhood nuclear reactors.

Imagine that we can generate clothing from machines that download patterns and make our clothes for us, making clothing something like what music is today. Other physical things are provided by 3d printers that sit under our desks. The raw material for these machines is free, or close to it because it is essentially unprocessed.

Imagine that as the velocity of travel increases we will be able to use more of the vastly underused areas of this country, and indeed the planet. This drives down the cost of real estate, as people can live far away and still conveniently access their family, friends and necessary resources. Concurrently, imagine that transportation costs fall as materials improve, engines become far more energy efficient, and costs of energy plummet.

I predict all of this will happen within the next 100 years, and perhaps far sooner than that. But even if you don't buy it at all, play along.

What is the effect on our economy, of a world where all of our basic needs, including real estate, food, and energy are inherently inexpensive or free because we have created technology that removes all of the inefficiency that gives value to these things in our current economy?

Our economy is driven by paying people to apply energy to matter to change that matter's form and/or location for easy consumption. When that conversion can be automated, and when capturing energy becomes ultra efficient, what role do we humans play in our economy? Will large numbers of people be able to just opt out? Is this good or bad?

The thing is, on some level this is already happening. Technology is creating enormous efficiencies that are eliminating many of the manual labor jobs we used to euphemistically call "good jobs." That meant a job that paid well that could be executed by someone with no more than a high school degree.

As a result of technology, the number of things people need to do to keep the economy moving is shrinking. This process will continue indefinitely. Software will continue to get better. Energy production will continue to get more efficient, et-cetera.

How does modern economic theory deal with wringing of all inefficiencies out of the system. Is economic theory more like newtonian physics in that it describes physical behaviors given a certain set of conditions, but not entirely. Will we need the equivalent of quantum mechanics or string theory in economics to explain the behavior of economies and people in a hyper efficient universe?

The current recession is really what got me thinking about all of this. I wondered to myself whether technology is already playing a role in the current economic upheaval. I decided that the current recession is probably just a result of the housing bubble, but I suspect the growing disparity between rich and poor in this country is indeed related. I think the fact that we have had awesome economic expansion for the last three or four years but that major portions of our society have not benefitted may be related to this increase in efficiency, which has benefitted businesses but not yet consumers as my thesis would suggest will happen in the future.

I'd really love to hear what smarter people than me think about all of this. So please speak up. And if you know someone who thinks about this kind of stuff and might have some thoughts on this, it would be great if you would forward this post to them. I am just really curious if anybody has any interesting ideas about how the acceleration of technology plays out economically. How does it affect the rich? The poor? The middle class? Lets talk.