For almost 250 years, the world has experienced a remarkable period of socioeconomic progress. Now the world in which two generational investment programs are competing for many of the same scarce resources. And there is a real risk of global economic and political disruption.

For 250 years the path has never been smooth. Wars, depressions, financial crises, political upheaval and technological disruptions have repeatedly interrupted the journey. Yet the broad direction has been extraordinary: longer lives, better health, rising incomes, expanding education, greater productive capacity and levels of wealth that would have been unimaginable to earlier generations.

Much of that progress has been driven by science and the ability of societies to turn scientific discoveries into productive technologies, infrastructure and institutions.

The question facing us now is not whether another technological revolution is occurring. It is. Artificial intelligence is likely to transform production, services, infrastructure and the organization of economic activity. The scale of the investment required to build the computing, electricity, telecommunications and physical infrastructure supporting AI could make this a generational investment program.

But AI is not the only generational investment program emerging.

The international political order that supported much of the postwar expansion is also changing. The United States is reconsidering the scale and cost of its global commitments. If the United States moves from attempting to provide the principal security and economic architecture for much of the world toward a more regionally focused role, the adjustment will not simply be diplomatic. It will have enormous economic consequences.

For decades, the United States and its allies built an international system in which security, trade, finance, transportation, energy and communications infrastructure were increasingly interconnected. A different distribution of geopolitical responsibility requires investment in new defence capabilities, supply chains, energy systems, transportation networks, strategic industries and national infrastructure.

In other words, the world may be entering a period in which two generational investment programs are competing for many of the same scarce resources.

One is private-sector led: the construction of the AI economy.

The other is sovereign and geopolitical: the rebuilding and restructuring of the infrastructure required to operate in a less integrated and more strategically competitive world.

Both programs can be economically productive. Both can be justified by powerful long-term arguments. And neither can simply be switched off because the financial system becomes uncomfortable.

That is what makes the issue different from a conventional investment boom.

The potential problem is not necessarily a shortage of money. Modern financial systems can create enormous quantities of credit. The constraint is the availability of the real resources that credit claims: skilled workers, engineers, electricity, water, land, construction capacity, transportation infrastructure, critical minerals, semiconductor capacity and ultimately the productive capacity to generate the income required to service the resulting debt.

Financial markets allocate claims on those resources.

If two enormous investment programs accelerate simultaneously, they can therefore collide in the capital markets long before the physical economy reaches its limits.

The warning signs may initially appear in familiar places: sovereign bond yields, corporate borrowing costs, credit spreads, infrastructure costs and the competition for institutional investment capital. But the deeper question will be whether expected future productivity and government revenues are sufficient to justify the extraordinary claims being placed on future economic output.

This also changes how we should think about the current AI boom.

The question is not simply whether artificial intelligence will transform the economy. It probably will.

The question is whether the financial system can correctly price the timing, scale and distribution of those future gains while governments simultaneously undertake another enormous investment cycle to rebuild strategic economic and security capacity.

History offers plenty of examples of technological revolutions producing enormous long-term gains while the financing of those revolutions generated periods of financial excess, collapse and reconstruction.

The danger, therefore, is not that either transformation is necessarily wrong.

It is that both may be right at the same time.

And when two historically large investment programs compete for the same capital, infrastructure and productive resources, the resulting adjustment could determine whether the next phase of socioeconomic progress is another extraordinary expansion – or whether the world first has to go through another painful period of financial and economic reconstruction.

That is the question behind these posts.