It will migrate to China and India.

It is no surprise that the bursting of the credit bubble led to a global crash in consumer spending on luxury goods. The traditional markets for luxury goods in the West and Japan—where 80 percent of the world’s $228 billion luxury sales take place—have hit a wall. In the United States, where aspirational brands became everyday items, the luxury business has gone into hibernation.

Maxed out, tapped out, and facing the need to pay off the decadeslong binge, Western buyers are saving instead of splurging on status-seeking. But instead of accepting this shabby fate, the more nimble luxury-goods firms are looking to the East, where the whole cycle of luxury development is beginning anew.

To really understand the relationship between luxury goods and the economy, it is worth going back to the ideas of Thorstein Veblen, the sociologist who created the concept of conspicuous consumption. A radical utilitarian, Veblen was offended by the waste involved in luxuries. Whether it was hand-crafting furniture or keeping servants for a single function like driving a car, Veblen railed against luxury as an affront to the efficiency of industrial production.

What Veblen missed was the foundation of the modern luxury goods business. Middle-class people, roughly defined as those with enough money to cover their immediate needs and secure their longer-term goals, understood the value of well-made objects. Handbags, clothing, and potential family heirlooms like silver and china didn’t have to be baroquely wasteful of a craftsman’s time and energy—as Veblen felt—to be more desirable. They just had to be more durable.

Your grandfather’s watch reminds you of your family’s status and reassures you that it can be maintained. Luxury goods, then, were a signifier of a larger sense of property. This was especially true of a number of the long-lasting fashion houses as well as the watch, jewelry, and leather goods businesses that make up the core of the modern luxury conglomerates.

But a funny thing happened to the luxury business as the West grew wealthy enough to support a vastly larger middle class. The best-known brands went from being artisanal manufacturers—literally making objects by hand—to become aspirational brands. The aspirational brand represents the triumph of signified over signifier; buying the product is an act of participating in the overall lifestyle image that the company has created.