there remains considerable unease among some segments about the way markets distribute that wealth and about the effects of raw competition on the civility of society. thus, should recent positive trends in economic growth falter, it is quite imaginable that support for market - oriented resource allocation will wane and the latent forces of protectionism and state intervention will begin to reassert themselves in many countries, including the united states. for now, the process of globalization is being aided by strengthening economic growth, which is clearly being driven by an accelerating application of new insights. technological innovation, however, arguably comes in bunches as new discoveries feed on one another to push forward innovation until the effects of the initial impetus finally peter out. the vast electrification of our societies and, before that, the spread of the railroads helped elevate economic growth for a considerable period of time. but the pace of growth eventually slowed when full, or near - full, exploitation of the newer technologies was achieved. the most recent wave of technology has engendered a pronounced rise in american rates of return on high - tech investments, which has led to a stepped - up pace of capital deepening and increased productivity growth. indeed, it is still difficult to find credible evidence in the united states that the rate of structural productivity growth has stopped increasing. that is, even after stripping out the significant impact on productivity acceleration of the recent shape of the business cycle, the second derivative of output per hour still appears to be positive. if we knew at what stage of the current technological wave we were in, we could, i assume, confidently project when these elevated rates of change in long - term earnings expectations, productivity growth, and, hence, wealth creation would return to a more historically average pace. for it seems evident that once such a wave begins to crest, much of the self - reinforcing virtuous cycle presumably fades, as it has in the past. in such a scenario, full development of available technological synergies and their competitive deployment would damp the historically high prospective rates of return on capital investment and slow the pace of capital deepening. the level of structural productivity does not recede, of course, since once gained new technological insights are never lost, but its rate of increase would slow, and projections of long - term profits growth presumably regress back to earlier magnitudes. from any perspective, of course, a tapering - off in productivity acceleration is inevitable at some point in the future. in the past

these technologies are available to all, the intensity of their application and the accompanying elevation in the growth of productivity are more clearly evident in the united states and other countries with fewer impediments to implementation. parenthetically and counterintuitively, the increased ease of layoffs in the united states, by reducing the risks of hiring by american employers, has contributed to a higher rate of employment in the united states compared with the vast majority of our major trading partners. a particular irony in all this is that europeans have been finding investments in the united states increasingly attractive and have accounted for an increasing share of the expanding total of foreign investment in u. s. direct and portfolio assets. in an effort to raise returns on domestic assets, many governments, european and others, are being led away from former dirigiste regimes to place greater reliance on markets. these governments see such a direction as necessary in order to enable their firms and workers to achieve the efficiencies required to meet the rigors of international competition. recent plans for tax reforms, significant initiatives to create more flexible labor markets, and ongoing steps toward greater privatization in europe and elsewhere underscore the extent to which views have changed in recent years. but it is clearly pragmatism, not ideology, that is the main driving force in these evolving views. the structural policy adjustments in western europe and japan, not to mention the efforts in china and russia to move toward market capitalism, are being motivated, for the most part, by the evident ability of market competition to elevate living standards. thus, despite the meaningfully different views initially held of the way the world does, and should, work, powerful global competitive forces appear for now to be driving the economic and legal paradigms of many nations into closer alignment around a more competitive market capitalism. it is by no means self - evident, however, that these trends will eventually lead to world convergence of economic regimes and to agreement about the conceptual framework that such a convergence would likely require. certainly, the demonstrated ability of relatively unfettered markets to raise living standards over time creates considerable incentive for movement in that direction. but the speed of that movement - indeed, its very persistence over time - is far less clear. even among liberal democracies, one can still find deep - seated antipathy toward free - market competition and its partner, creative destruction, to use joseph schumpeter ’ s now famous insight. while recognizing the efficacy of capitalism to produce wealth,