Is the Industrial Revolution a good precedent for explosive growth today?
This article challenges the assumption that the Industrial Revolution serves as a valid precedent for predicting explosive economic growth driven by AI. The author argues that historical growth accelerations were more modest than current projections suggest.
Why it matters
Understanding the limits of historical economic analogies is crucial for policymakers and investors evaluating the potential long-term impact of AI on global GDP.
One line of evidence that AI might lead to explosive economic growth is the precedent set by the Industrial Revolution. For hundreds of years — 1252 to 1652, to be precise — the compound annual growth rate of per capita real GDP in the UK was around 0.07%. It then began to accelerate, settling into a new compound rate of around 1.02% per year by 1850, which it held until 1913. In other words, growth accelerated by roughly 15 times before; the argument goes that this should make us humble about predicting it can’t happen again, and perhaps we should be open to accelerations of 10 times or more today.
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