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transportation technology improved , regions became more connected through trade agreements , and capital became more readily available through deregulation . Together these factors enabled companies to do more business abroad . As their home economies matured , they began to rely on far-flung markets for growth . Slowly at first , then with greater speed , multinational corporations ( MNCs ) introduced their wares around the world , led by consumer products and automobiles .
An unprecedented sharing of knowledge and talent across international boundaries spurred productivity and innovation , supported by the institutional framework that had been put in place after the war . This pattern of global economic growth is often taken for granted today , but at the time , it contributed to a general perception of progress and prosperity , with enough to go around . There was a sense that this progress , underpinned by healthy market economies trading with each other , was the natural order of things in the postwar world — at least for the citizens of those countries that globalization had reached . At the same time , policymakers grew accustomed to using GDP as the primary measure of national success . Drawn from agricultural and manufacturing statistics , it did not directly capture quality of life , but this did not matter so long as GDP and social progress rose together . A society full of promise was a natural outcome , it seemed , of the burgeoning financial world .
Business leaders , for their part , gradually returned to the concept that a company ’ s main objective should be to maximize shareholder value . This had been the prevailing point of view before the 1930s ( Henry Ford had famously lost a lawsuit in 1919 to shareholders who objected to his paying workers $ 5 per day ). But during the Great Depression and the War , American companies had adopted the view that they should work “ in the balanced best interests of all ,” a phrase used in the 1953 General Electric annual report . Starting around 1970 , economists such as Milton Friedman , Michael Jensen , and William Meckling argued that this multifaceted approach created inefficiency and waste . Management could make more intelligent decisions with the single financial goal of shareholder value ; in the view of these economists , this would automatically lead to better decisions for employees , customers , creditors , and the community as well . This mind-set was further reinforced by CEOs such as GE ’ s Jack Welch and International Telephone and Telegraph ’ s Harold Geneen , who delivered constant profit increases by aggressive restructuring of underperforming assets .
It is important to touch upon the nature and purpose of the economy — because the assumptions that underpin both are often subject to debate . The economy is considered here to be the engine by which human needs ( and desires ) can be met through opportunities . This means that the effectiveness of the engine itself largely determines the degree to which needs will be met and opportunities will be realized . During this period , the economic engine was delivering as intended , underpinned by the three drivers . It supported business and economic success , measured in financial terms , on an ever more global scale . This enabled many people to prosper , their communities to thrive , and society more broadly to advance .
Accelerated Success and Misalignment , 1989 – 2008
How reasonable it seemed by 1989 to think that this virtuous cycle represented the natural order of things . Humanity appeared to be moving to a world without borders , in which virtually every major nation relied upon market economies to make life better at a societal level , and now in an increasingly interconnected fashion . Or as political philosopher Francis Fukuyama wrote in 1989 , “ What we may be witnessing is not just the end of the Cold War , or the passing of a particular period of postwar history , but the end of history as such .” The new political thinking , he said , “ describes a world dominated by economic concerns , in which there are no ideological grounds for major conflict between nations , and in which , consequently , the use of military force becomes less legitimate .”
Later that year , on Nov . 9 , the fall of the Berlin Wall suggested that Fukuyama was right . This was one of four significant factors in this period that caused the drivers of change to converge , accelerate , and transform not only their nature but also their combined impact on a global scale :
1 . The fall of the Berlin Wall marked the start of a period in which every major country in the world adopted some form of market economy . The event also had a significant psychological impact . Market economies were plainly seen to have made better provision for their citizens than their major ideological competitors .
2 . Deng Xiaoping ’ s southern tour in the spring of 1992 ensured that China would retain market-based economic
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