Period averages conceal large, long-lasting swings in growth over time (Chart 4). Their revised measures suggest growth did not flat-line prior to 1750, even though it averaged zero. Rather, growth oscillated wildly. Second, given the scale and duration of these oscillations, they decompose their growth data into “expanding” and “contracting” periods. Chart 5 plots these for the UK over the past 700 years. A broadly similar pattern of expanding and contracting periods can be found in Spain, France, Italy, Portugal, and the Netherlands over roughly the same period. This decomposition changes the growth story radically. Even prior to the Industrial Revolution, economies experienced notable periods of strongly positive growth. Between 1300 and 1700, GDP expanded slightly more than half the time. Over these expanding periods, growth averaged 5.3% per year. The reason average growth was far-lower over this earlier period – indeed,  18 19 20  Solow (1956), Mincer (1984), Romer (1990), Iyer, Kitson and Toh (2005), North (1990). Haldane (2015a). Broadberry and Wallis (2017). 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  little more than zero – was because expanding periods were almost exactly offset by contracting periods. They accounted for slightly less than half the period, during which growth averaged minus 5.4% per year. So what has changed in the period since the Industrial Revolution? Growth during expansion periods is relatively little changed. Since 1750, it has averaged 3.2% per year. That is in fact a bit less than growth during expansion periods prior to the Industrial Revolution.
52 For example, Dauth, Findeisen, Südekum and Woßner (2017). 53 IMF (2017). 49  13  All speeches are available online at www.bankofengland.co.uk/speeches  13  technology than their positive longer-term effects on pay, productivity and the demand for new goods and jobs. It is the balance of these two effects, each large in gross terms, which will ultimately determine where unemployment will settle. 54  No one could say with confidence today the long-run net effect will be. What can be said with confidence is that the scale of gross displacement may be larger than ever-previously. This means that, if technological unemployment is to be avoided, positive effects on productivity, goods and jobs will also have to be commensurately larger. That has led some to argue that technological unemployment is more likely this time around. 55  Even if it is avoided, the societal costs of transition could well be larger, in terms of rising wage inequality, a falling labour share and damage to social cohesion. And if that recessionary impact of technological change on individuals and societies is sufficiently large, it could well call into question the merits of having pursued the creative course in the first place. Or that, at least, is the lesson of history. What experience since the Industrial Revolution has taught us is that this risk can be mitigated by an appropriate institutional response.