World Stock Market - What return should I expect?

I remember a textbook in College saying that a company that says that its going to grow indefinitely it will eventually become worth more than the whole planet. A simple statement but one that also could be applied to the stock market. If the value of shares in the stock market is expected to grow by 10% a year it won't take long before the stock market is worth more than all the assets in the world.

Long term company growth will have to eventually be the same as the growth of the economy unless we want the company to outgrow the planet. The S&P 500 companies are expanding overseas. The Chinese will probably eventually converge to the standard of living of the Europeans or Americans (if the planet can take it) and will need a lot of stuff to do it. But when these countries have converged and the markets become saturated then it becomes a zero sum game. You grow at the expense of your competitors and net growth will be zero unless the economy grows. Increases in productivity can make an economy grow but who wants to invest in something that just tracks the economic growth. An anemic 2 to 5 percent (after inflation).

So what will the long term world stock market return be?
The value of all world publicly traded stocks cannot grow faster than the value of the stuff these companies produce, since their profits are usually a fixed percentage of their sales, and all stock valuations are ultimately based on future profits. Hence the value of all stocks will trend guesses of future world production. The value of world stocks will rise faster than this rate only if they:

(a) Displace private competitors. For example, McDonalds driving mom and pop restaurants out of business and taking their customers. Production hasn't gone up, it has just been gobbled up by a company with public shares instead of a private "mom and pop" business. In this way, the value of McDonalds, and the price of the whole stock market will go up.
(b) Increase profit margins. For example, Boeing buys Airbus and with less competition can jack up the price of planes. This can increase stock prices without any real increase in the value produced.

The previous two examples is how the stock market can increase in value without an increase in world economic production. Most other scenarios, e.g. a country getting more productive or wealthier, are captured in the world production growth number.

So, here is my premise. World stocks should track predicted world production and have a net real price increase of about 2% to 5%. You can add this to a dividend rate of say 3% to give you a return of about 5% to 8% annually, ignoring taxes. So if you don't know any more than the next guy and you invest in world stocks, be happy to get share price growth of 4% and dividends of 3% and your investment should be relatively inflation protected.

So what about growth stocks where the dividend rate is 0% and the return is expected only from share price increases? Growth stocks are always confusing since its more art than science to determine when a growth company will reach maturity and start behaving like everyone else and pay dividends but the stock actually has no value without future dividends. Hence the argument will still hold, the share price will represent the value of the stocks future dividends albeit further into the future. Additionally, although the market isn't efficient, it is not completely innefficient either, so the long term return on growth stocks will trend the return on established stocks.

Eventually, even world production will have to stop growing since consumption can't increase forever without consuming the entire planet, but no one has told that to the captains of industry yet.