Looking at these multiple sources of capital, in turn, provides an account of the Industrial Revolution whose genesis differs significantly from the Neo-Classical one. 25 Take human capital accumulation. One measure of that is literacy and numeracy in the population at large. Chart 7 plots the level of adult literacy in a selection of Western Europe countries from the late 15th century. At that time, less than 10% of the population were literate. Measured levels of human capital were miserably low, consistent with subsistence living standards. But in the following three  22  Douglas Allchin describes preternatural phenomena as being “suspended between the mundane and the miraculous”. 23  For example, Romer (1986), Aghion and Howitt (1998) and Acemoglu (2009). 24  Sachs (2014). Sachs also discusses environmental capital. Also see Solow (1956), Becker (1965), Rebelo (1991), Putnam (2000), Romer (1986). 25  For example, Acemoglu and Robinson (2013), Clark (2009). BIS central bankers’ speeches  5  centuries, a transformation took place. Literacy rates in the adult population shot up to around 50% in Western Europe, in some countries higher. In other words, human capital accumulated at real pace prior to the Industrial Revolution. This skills-deepening provided one foundation on which other sources of growth-enriching capital were built – for example intellectual capital, the generation of ideas and innovation. On this interpretation, sociological transformation supported, perhaps preceded, technological transformation. Innovation was an earthly creation, not manna from heaven. Since the Industrial Revolution, levels of educational attainment have continued to rise.

63  Carr (2008). 64  See http://www.economist.com/node/15557443  65  Simon (1971). 66  See http://footballperspectives.org/end-season-football-manager-statistics-2013–14. 12  Assessment  (PISA)  2012  results  BIS central bankers’ speeches  The rising incidence of attention deficit disorders, and the rising prominence of Twitter, may be further evidence of shortening attention spans. If so, that would tend to make for shorter-term decision-making. Using Daniel Kahneman’s classification, it may cause the fast-thinking, reflexive, impatient part of the brain to expand its influence. If so, that would tend to raise societal levels of impatience and slow the accumulation of all types of capital. This could harm medium-term growth. Fast thought could make for slow growth. Psychological studies have shown that impatience in children can significantly impair educational attainment and thus future income prospects. 67 Impatience has also been found to reduce creativity among individuals, thereby putting a brake on intellectual capital accumulation. 68 Innovation and research are potential casualties from short-termism. There is evidence suggesting just that. Investment by public companies is often found to be deferred or ignored to meet the short-term needs of shareholders. 69 Research and development spending by UK companies has been falling for a decade. They are towards the bottom of the international research and development league table (Chart 16). If shorttermism is on the rise, this puts at risk skills-building, innovation and future growth. 70 A final ingredient is infrastructure capital. Here again, investment trends are not encouraging.