But unlike its predecessors, and almost by definition, it would be near-impossible for the human brain to imagine where the machine brain would take innovation, and hence growth, next. The world would be one of blissful ignorance. The excitement of the optimists would be fully warranted. Let me now take the other side of the argument. What secular forces could retard growth? Technology, by itself, was arguably insufficient to explain growth in the past. It may also be insufficient to secure growth in the future. The sociological roots of growth also matter. Some of those sociological roots are less well planted than in the past. Indeed, in some cases technology may have contributed to an uprooting. Take social capital. While violent crime and war are hopefully in secular decline, other measures of social capital are depreciating. One diagnostic is rising levels of social inequality. 52 The income share of the top 1% of earners has doubled in the UK and US since 1980. Patterns of wealth inequality are, if anything, even more striking. 53 Recent evidence suggests such a depreciation of social capital, through rising inequality, slows growth. Cross-country studies by the IMF and OECD have found a significant and sustained drag from inequality on growth. 54 The IMF study estimates that a one percentage point rise in a country’s Gini coefficient – a measure income distribution – lowers growth by around 0.1 percentage point. Let’s apply that to some real data. The Gini coefficient in the US has risen by eight percentage points since 1980.

Wars, depressions and financial crises have pock-marked history, causing growth to stall or fall. And phases of innovation have lifted economic fortunes, caused living standards to leap. But whereas the growth lapses have been temporary, the leaps have been permanent. Over the past two and a half centuries, secular innovation has dwarfed secular stagnation. In explaining rising living standards since 1750, economists have typically identified three distinct innovation phases. Each was associated with a great leap forward in society’s production possibility frontier. 9 The first is the Industrial Revolution commencing in the middle of the 18th century; the second, the era of mass industrialisation, starting in the second half of the 19th century; and the third is the IT revolution, which began life in the second half of the 20th century. What distinguished these three innovation phases is that they gave birth to a sequence of socalled General Purchase Technologies (GPTs). 10 These technologies had applicability well beyond the sector for which they were originally designed, thereby transforming the efficiency of business practices generally. During the first industrial revolution, these GPTs included the steam engine, cotton spinning and railways; during the second, electricity, the internal combustion engine and internal water supply and sanitation; and in the third, the personal computer and the internet. Interest in innovation-led growth has re-intensified over recent years as growth prospects have dimmed. One strand of the secular stagnation debate asks – wither innovation? Among some there is a concern the well of innovation may be running dry.