This has crossed my mind a lot of times and I think the comment is right - market capitalization of index cannot increase to infinity. There is a finite number of companies that the Index is comprised of and there has got to be a theoretical upper limit to that.
Moreover, the investment psychology also comes into play here. The growth rate of index may slow down as it becomes large because investors always compare today's index with the previous values and are likely to conclude that the index is "over-valued" if it keeps rising.
I'll be curious to find evidence of deceleration as the index value rises.
Actually population growth all over the wold is slowing down. China is already at almost neutral and growth is even slowing in India and Africa.
And a static or shrinking population would have an adverse affect on total market cap, however it would also mean a great job market, because even as the economy shrinks the labor pool would shrink faster.
So your investments would not do well, but you'd always be able to get a high paying job.
Moreover, the investment psychology also comes into play here. The growth rate of index may slow down as it becomes large because investors always compare today's index with the previous values and are likely to conclude that the index is "over-valued" if it keeps rising.
I'll be curious to find evidence of deceleration as the index value rises.