While I see your point when you mention how government policy hastened and encouraged the replacement of human workers with machines, at the same time you admit that this development was "likely inevitable." I would agree--even without minimum wage laws and other regulations, machines still don't get sick or make (as many) mistakes as human workers do. Thus, it seems probable that the lower classes would become economically valueless even without government intervention of any sort, though it would have just taken a longer time.
This being the case, though, I would ask, what *could* have been done to stave this off? Again, I think you're probably right when you say policy from both the right and the left hastened the economic obviation of many laborers. However, as far as I can tell it only hastened the inevitable. Would there have been any way of staving off this phenomenon absent government intervention? I mean, given the pace of technological progress, it was only a matter of time before people invented machines which can do everything better than even the cheapest and most skilled human laborer. How could we have protected the lower class without doing something like prohibiting research on automated machines or something like that?
It’s a funny thing about markets: they have a tendency to encourage adaptation. What’s often overlooked, though, is that adaptation doesn’t usually occur instantaneously. As such, the government policies that hastened the economic obviation of lower class workers did so not simply because lower class labor tends to lack intellectual capital (which it does) but because it didn’t give lower class labor enough time to adapt.
The recent developments in computer technology should suffice to explain why the time component of market adaptation is important. About ten years ago, the most popular OS was Windows 98. This was the OS I cut my teeth on, and I remember it being quite a bugger to use. The User Interface was labyrinthine, to say the least, and troubleshooting felt like an exercise in futility (usually I would give up and force a reboot). Fast forward to now, and Windows 7 appears to be the most popular OS.* The UI is considerably cleaner and more straightforward, and troubleshooting is generally a breeze. The difference between using a Windows 98 machine and a Windows 7 machine is that the latter is considerably more dumbed-down.
This tends to be the way of all technology. The car, in its first incarnation, was incredibly complex to operate, relatively speaking. Now any idiot 16-year-old can climb in the driver’s seat and drive more competently, at higher speeds, than the first drivers ever could. Technology dumbs down over time.
The problem with governmental interference in the labor markets is that, assuming the interference raises the price of labor, the government provides businesses to make the switch from worker to technology sooner than would ordinarily be the case. While the switch may be inevitable, the timing is not. And timing, they say, is everything.
If there was more time between switching from humans to technology in production, human labor would have more time to adjust. This could mean that labor becomes proficient at performing maintenance on the new technology; it could mean that labor switches to a different submarket, or it could mean that labor finds a way to “move up the ladder” in light of the increased production possibilities. The ability to adapt, though, makes time of the essence, and regulation essentially steals that from lower class workers by encouraging businesses to switch to technological alternatives earlier.
One thing that seems likely is that the lower classes would shift from production to service (e.g. one would stop working at the factory and start working at McDonald’s). The simplification of technology enables this because technology becomes increasingly simple. Handling orders at a fast food restaurant is decidedly simple in spite of menu complexity because the technology behind the cash register has improved to the point where registers now have highly customized context menus and remarkably simple interfaces. This is but one example; more abound in other industries.
As technology penetrates larger segments of production markets, replacing human labor, that human labor will move out to the margins of other markets. Technology will likely penetrate into the broader markets as well (think self-checkout lanes, e.g.), but that simply means that humans will expand even further. The thing is, though, that these sort of things simply take time. It takes time for technology to develop to the point where even an idiot can use it properly, and it takes time for idiots to learn new systems. The government’s mistake, then, has been interfering with the time-table set by businesses and labor alike.
In sum, doing nothing would have been sufficient to protect the lower classes because it would have given them time to adapt. As it is, government interference has stolen from the lower classes the most precious commodity of all: time.