supporting growth of trade. 27 one measure of social capital used by sociologists is the incidence of violence or war in society. this is the limiting case of a lack of cooperation or trust within or across societies ; it is the sociological equivalent of financial crisis. 28 chart 9 plots the incidence of murder ( homicide ) in western european countries since 1300. it, too, tells a striking story. violent crime fell dramatically between the 15th and 18th centuries, by a factor of around five. by the time of the industrial revolution, it had levelled - off. rapid social capital accumulation provided a foundation for growth. sociology nurtured technology. with some interruptions, notably the two world wars of the 20th century, those trends towards lower levels of violence in society have continued to the present day. for example, war deaths have been falling secularly since the 1940s ( chart 10 ). this is consistent with a continuing accretion of social capital. 29 although hard to quantify, this too is likely to have provided a tailwind to growth in the modern era. infrastructural and institutional capital are widely believed to have supported the growth process. 30 england was the birth place of the industrial revolution. its parents, arguably, were english institutions well into adolescence at the dawn of the industrial revolution : a parliamentary system from the 11th and 12th centuries ; a legal and judicial system from the 12th and 13th centuries ; a central bank, the bank of england, from the end of 17th century. the government ’ s role, as an institution in society, also rose rapidly prior to the industrial revolution. chart 11 plots government spending as a fraction of national income in the uk since 1200. until around 1600, government accounted for only 1 – 2 % of national income. in the subsequent two centuries government came of age : its share of spending rose 10 or for example, fernald and jones ( 2014 ). hall and jones ( 1999 ). for example, pinker ( 2012 ). pinker ( 2012 ). for example, tabellini ( 2010 ). acemoglu and robinson ( 2013 ). bis central bankers ’ speeches 20 - fold. prior to the industrial revolution, institutions in general, and government in particular, became an increasingly important growth - enabler. institutional and infrastructural capital has continued to accumulate in the period since. since 1950, the number of countries operating with democratic institutions has risen from around 25 to almost 90. 31 legal systems globally have

portfolios in most of our severe recessions and the post crisis recession was no exception. on the face of it the uk cre market is simmering. transactions reached a record high of £81 billion in the 12 months to june this year. prices have risen by 10 % over the same period. as prices rise, average yields are deteriorating and are now around 2005 levels. the credit element of the story, however, which is most relevant from a macroprudential perspective, has been much less pronounced than in past episodes, cre activity has been financed more with equity than debt ; the share of equity financing of cre investment increased from about a third pre crisis to three quarters in the years following the crisis. and particularly in london, much has been financed by foreign flows which reached £40 billion last year. but leverage has started to creep back up in the past year or so as we have seen the return of more leveraged investors. that is not to say that there is no macroprudential interest in the uk cre market at the moment. a rapid fall in cre values could affect the uk economy through other channels. about 60 % of lending to smes and smaller corporates is secured on property collateral so a fall in values could well constrain investment. and there are important initiatives in train to develop a database of cre debt and to explore the use of “ through the cycle ” valuations1. in my view, the overall picture of the credit cycle in the uk suggests that it is entering into a more normal phase. credit terms remain easy for both households and corporates and credit is readily available. at an aggregate level, credit in the economy is growing below pre - crisis levels though to me that might well be a misleading metric. aggregate indebtedness is considerably below pre - crisis levels though it remains high. at a more granular level, credit is see brazier, a ( 2015 ) “ nurturing resilience to the financial cycle ”. bis central bankers ’ speeches growing fastest in the areas of unsecured lending to consumers and lending to buy to let housing investors. the stock of credit in each of these areas is reasonably material at around 10 % of gdp. but it is a relatively small component of the overall stock of credit. while we are seeing competition between lenders pushing down on rates, particularly in the mortgage market, we have not yet seen evidence of a general deterioration in underwriting standards. countercy