The 20th century topped the previous two centuries in economic growth. These last three centuries produced virtually all the per capita economic growth the world has ever seen. That growth, driven by the dual liberations of democracy and innovation, is evident in and is a result of the spectacular betterment of the standards of living in the world industrialized nations. The most accurate definition of economic growth might in fact be increasing standards of living because all economic activity is ultimately consumption or funding producing things for consumption.
The growth spurt of the last one-third millennium, a spurt in the collected economic history of mankind, is said by some to be coming to an end. Indeed, much of the economic growth of this latest century has been driven by easy credit making up for near zero growth in wages as a slice of the economic pie. The illusion of growth driven by that easy credit was substantially erased when consumer credit dried up and the markets for housing and jobs fell apart in 2008.
We built up the housing market bubble on a credit bubble and it burst. They always burst. The gravity of the underlying economy pulls us all back to economic reality. That reality is that in order for prices to be sustained consumers have to have the wherewithal to pay them or to pay the debts incurred to pay those prices.
For those that would blame consumers for taking on more debt than they should I would remind the critic that in no time since the New Deal era have Americans not enjoyed wage growth outpacing their debt burdens. In other words you could count on paying a marginally affordable debt more easily in the future due to your salary increasing. By the first decade of the 21st century, this was no longer a dependable American reality.
In our economic past, the longer you lived and worked, the higher was your standard of living. That came to an end with globalization. Exploitation of wage differentials between nations has made raises and even job security a thing of the past. In the bargain it has made economic growth a thing of the past.
Consumption is the sole driver of economies. If one consumer makes a dollar less per year the economy is, filtered through all the import/export, government expenditures and investment terms of the GDP, a dollar smaller per year. Export a job from a higher wage country to a lower wage country and the global economy shrinks by the net loss of the wages for the more highly paid worker.
Making and selling a product more cheaply is a good thing economically, but not when it comes from exploiting wage differentials. Exploitation of international wage differentials dilutes wage pricing power of domestic labor leading to lower domestic wages and so a shrinking real economy.
In our new borderless world economy, multinational corporations are overseeing the destruction of the global wage base. Multinationals think that's a good thing. It is a good thing for them individually in the short term. In the long term, collectively, it's a terminal illness. If one company does it, it's a competitive advantage. If every company does it it's no longer a competitive advantage and simply creates a self accelerating trajectory of global wage destruction. It's almost as if the international community of CEOs has now come to think of global wage destruction is a good thing.
A boat rudder stuck in one position is not a rudder. Multinationals have, so far, shown zero concern over the fact that the ultimate outcome of the direction in which the global rudder is stuck is toward destruction of the global economy to the level at which no one will care about the profits of multinationals, capitalists or bankers. That destination has a name. It's called communism.
Don't think that since communism has been discredited for now that capitalism can't bend the curve of history back on itself to the point where communism looks relatively attractive again. The "Y" generation is already showing the signs. After all, a share of a cooperative has only to be proved better than a share of nothing. So far, governments are either unable to understand the inevitable result of a rudderless global economy or are unable or unwilling to do anything about it. We may actually need a one world government, other than the WTO, to fashion a new working rudder for the world economy.
We are in the midst of a global economic experiment testing Ayn Rand's hypothesis of rational self interest. The design of the experiment is whether the multinationals will realize the folly they have undertaken in time to redress the damage or they will go on using a subset of their reasoning power, the greed subset, and destroy the global economy.
Meanwhile the superset of reason has long acknowledged the fact that what benefits the working class benefits the capital class more than does their exploitation of the working class. It applies to main street as well as Wall Street.
Aynn Rand probably didn't think any of this through, her rudder having been stuck on reliance on the reasoning power of humans as to their own best self interest. She might ought to have spent some time thinking about just how capable people are of identifying their best self interest. Her CEO heroes, in real life, seem to be lacking in the attribute her philosophy most relied on them to have.