"eliminating many jobs and concentrating wealth in the hands of the owners of the manufacturing lines, although this would seem to be a self-defeating outcome as fewer people would be able to purchase the output."

Modern economic theory is a fig leaf over the raw reality of resource allocation. A better fig leaf than most, but still a fig leaf. In particular, there are many macro metastable equilibrium points, post-WW2 middle-class America being the exception rather than the rule. Fewer people, true, but with vastly higher purchase power than the masses.