The story of Macondo, shifting from a virginal town without rules or history to a town in utter destruction, is really a history of Latin America and how it became an outsider in the world. The town begins as a family in exile. Then, as it grows and thrives, the government and modern industry move to overtake Macondo's center of power.
The government wields power by establishing strange laws regarding the color that houses must be painted and imposes an unwanted conformity upon the townspeople. The banana company—run by strangers (culturally, linguistically, racially)—gains control by exploiting the banana crops and manipulating the local work force into unfair working conditions.
The good people of Macondo never derived their collective identity from industry. They lived a sustainable, agrarian life. They didn't recognize the signs of cultural overthrow that came with modernization, and were helpless to defend against it once it consumed their land. When the banana company failed, the people of Macondo were marginalized yet again, left with a flattened economy, a fragment of collective memory, and no real hope for a prosperous future.