worth the most and that evolved into machines and what they produced being worth the most, digital things that
have no apparent physical existence (data and information processing) are evolving to become worth the most.
That will create a fight over who obtains the data and how they use it to have wealth and power. (We will delve
into that in the chapter that deals with learning and improving to raise productivity.) The main point I’m trying to
get across is that the greatest power that produces these uptrends in living standards is humanity’s ability to adapt
and improve—so much so that movements around that uptrend caused by everything else don’t even show up
when one looks at what’s happening from the higher level in order to gain a bigger-picture perspective.
At the same time, like all such systems, capitalism has failed to do that job well enough to achieve the goals of
producing equal opportunity and maximum productivity through broad-based human capital development (for
more on that see “Why and How Capitalism Needs to Be Reformed”). But, to reiterate the main point: from the
top-down, big-picture level shown in the below chart, things pretty much keep getting better because people keep
getting smarter and keep conveying that smartness into more and better output.
Underneath this relatively smooth upward trajectory of learning and productivity are turbulent historical periods,
including booms, busts, revolutions, and wars. History shows us that almost all of these turbulent times are due to
money and credit collapses, big wealth gaps, fighting over wealth and power (i.e., revolutions and wars), and
severe acts of nature (like droughts, floods, and epidemics). It also shows that how bad these periods get depends
almost exclusively on how strong the countries are to endure them. For example, those with large savings, low
debts, and a strong reserve currency can withstand economic and credit collapses better than those that don’t have
much savings, have a lot of debt, and don’t have a strong reserve currency. Likewise those with strong and capable
leadership and civil populations can be managed better than those that don’t have these, and those that are more
inventive will adapt better than those that are less inventive. As you will read in the cases in Part 2, these factors
are measurable timeless and universal truths.
Because these turbulent times are small in relation to the evolutionary uptrend of humanity’s capacity to adapt and
invent, they barely show up in the previous chart, appearing only as relatively minor wiggles. Yet these wiggles
seem very big to us because we are so small and short-lived. Take the 1930-45 depression and war period, for
example. The levels of the US stock market and global economic activity are shown in the chart below. As you can
see, the economy fell by about 10%, and the stock market fell by about 85% and then began to recover.