In the short run, the marginal revenue product of labor in the gizmo industry falls to nearly zero (even as the average product of labor in that industry goes up). Think of a farmer who acquires a tractor. Now he can produce more by himself than he could previously with four farmhands. Higher average productivity for the farmer, but lower marginal productivity for the farmhands. (On the one farm, the fixed amount of land is what keeps marginal productivity low. In agriculture as a whole, inelastic demand is the factor that limits marginal revenue product.)What about the consumers of gizmos who do not have to spend as much on gizmos? In the short run, their wants are not connected to the skills of the workers freed from gizmo production. (Note that the consumers might want more leisure, and again this may even be true in the long run.) Entrepreneurs have to figure out a way to satisfy consumer wants using the resources freed from the gizmo sector. This is the process that takes time. Nobody knows what the consumers want (or might want if it were invented). Nobody knows the potential uses of unemployed workers. Instead, new products, services, and production methods have to be discovered, by trial and error. I would call this the recalculation problem, while Peter Howitt would call it the coordination problem. Again, see our articles inCapitalism and Society.
For humans it has been the sudden discovery of new patterns of trade, and they ain't like the old patterns. All of the big shocks since 1820 have been info tech shocks, bigger than war,volcano, or god; much bigger. The info shock always scares because it tells us, rather suddenly, what the future is. The revolutions have been lightweight, but their sudden demand for different transportation modality kills.
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