The name of the game when it comes to investing in the markets is that you must not only be ahead of inflation but you must also beat the averages, exceeding the normal rate of return. If you don’t do both then you are neither protecting nor accumulating capital, i.e., in the limit you will lose your wealth. This principle also applies to nations.
Ignoring our need to rely on different economic measures (pdf) other than the Gross Domestic Product (GDP) of a nation to indicate progress, wealth and well-being, if a countries GDP growth rate is below the global average, then over time that country will lose influence and be subject to an unstable economy. In essence, how a countries economy performs is relative to how other countries perform – there is a “growth imperative in capitalist economies” (pdf).
“But why do capitalist economies need to grow? Because competition and the quest for profit compel each business to grow or be wiped out by its competitors.”
The economic theory that best encompasses this principle is Differential Accumulation. It “emphasizes the powerful drive by dominant capital groups to beat the average and exceed the normal rate of return.” The video linked below and the following excerpts from an article entitled “Differential Accumulation” by Shimshon Bichler and Jonathan Nitzan provide further information on this train of thought (emphasis added).
continued at chycho