I think one must clearly separate two things:
1) The growth of fundamental value
2) How that value is discounted to present, resulting in equity returns over time
These two might have other elements affecting both (like population growth, savings, amount of money, interest rates, inflation, etc.), but they are separate.
As the economy grows, companies invest and grow their total earning power. So the "world economy" gets more valuable over time, assuming no change in profit margins (or return on capital). Only the part of the economy that is stock exchange listed shows in total market value, but let's assume this stays constant as well.
During the last century U.S. stock market returns have been very close to real earnings growth + equity-holder yield (+ inflation).
Surely, if one could have 20:20 vision of the future, it would make sense for the long-term investors to discount this future value to present with a rate somehow resembling the available alternatives, like the gov. bond rate. But human vision is not 20:20. Few have eternal investment horizons. Human nature with fear and greed has always made the stock market rather volatile.
It seems that in order to assume this risk, people have traditionally required a return very much resembling the one stated above. In the short term market prices (and returns) gyrate wildly up and down, but investors end up getting the long-term fundamental return over many, many years (only) as we go along.