When Atoms Trump Bits: Reflections on the Return of Physical Reality
For decades, the Western world has built its future on digits, software, and borderless flows of capital. But physical reality is now demanding its seat at the negotiating table. What does this mean for leaders navigating a new era of resource scarcity and geopolitical tension?
This article is a reflection from Kairos Future on a recent conversation between economist Nate Hagens and investor Craig Tindale, a discussion we found highly relevant for anyone working in strategic foresight and environmental scanning. Their exchange paints a sobering picture of a world where the neglected "atoms" of physical infrastructure and raw materials are reasserting their importance over the "bits" of our digital economy.
Why This Matters Now
For leaders tasked with understanding shifts in the external environment, this conversation offers a crucial signal. We have long operated under the assumption that the future is digital, weightless, and efficiently globalised. Under the banner of competition and cost efficiency, Western economies have outsourced production and raw material extraction, primarily to China. This has created a state of structural vulnerability that goes far beyond economics.
The challenge mirrors findings from Kairos Future's own research in our Citizens of Tomorrow studies: societies that have expanded individual rights for decades now suddenly need to prioritise. A hardening security situation, demographic shifts, and intensified global competition are forcing a painful renegotiation of expectations. The citizen who was once treated primarily as a customer in a global marketplace is now being asked to consider duty and resilience. The question is whether our institutions and infrastructure are prepared for this shift.
The Great Hollowing-Out
Tindale describes a process he calls "the hollowing out" of the West. By prioritising short-term financial returns, we have systematically surrendered control over the physical flows that enable our lifestyle. The numbers are stark: building a mine in the West costs 12 to 15 percent in capital interest, compared to roughly 2 percent in China. This is not merely a cost disadvantage; it represents a fundamental loss of capability. We have, in many cases, forgotten how to produce the most basic necessities.
This vulnerability extends into critical areas of security. China currently refines 60 percent of the world's copper and holds a near-total monopoly on rare earth metals and antimony, substances absolutely crucial for modern defence technology. Russia produces 4 million artillery shells per year, while Western nations struggle to reach a fraction of that volume. The conversation forces a direct question: in a world of escalating geopolitical tension, what does it mean to be dependent on potential adversaries for the materials of both economic and military power?
Three Key Insights
1. The Security-Liberty Trade-off is Real
When societies face external shocks and resource scarcity, the political centre of gravity shifts. Data suggests that when people are forced to choose, a majority prioritise security over liberty. We are already seeing signs that representative democracy no longer holds the self-evident status it once did, with growing acceptance for expert rule or strong leadership. This is not necessarily an embrace of authoritarianism, but a symptom of systems perceived as failing to deliver basic safety and resources.
2. AI is a Monster of Matter, Not Just Mind
Artificial intelligence is often presented as the ultimate solution to our problems, a tool to "think our way out" of any crisis. However, the conversation reveals AI's enormous and often overlooked physical footprint. A single 1-gigawatt data centre requires approximately 65 tonnes of copper. We are building digital cathedrals on a foundation of increasingly contested physical resources. For strategic planners, this means the AI revolution is inextricably linked to the geopolitics of raw materials.
3. History Offers a Warning and a Playbook
Research from the Seshat Global History Databank points to three factors that determine whether societies survive crises or collapse: external shocks, inequality, and elite competition. The third factor is perhaps the most counterintuitive. It is not just the suffering of ordinary people that drives societies to breaking point; the inability to provide status and opportunity for elites also destabilises systems. When the ability to guarantee prestige diminishes, so does the willingness of powerful groups to support collective solutions. History teaches that societies that survive are characterised by broad alignment, a willingness to think anew, and the courage to sacrifice old privileges for the common good.
Data Points to Watch
- Resource Concentration: China refines 60% of global copper and dominates rare earth supply chains.
- Demographic Pressure: With current birth rates, 100 Swedes will have roughly 50 grandchildren, intensifying pressure on welfare systems and the labour force.
Conclusions for Leaders
First, resilience requires a return to the physical. The conversation argues compellingly for a renewed focus on practical skills, local production, and infrastructure. We need more carpenters, electricians, and engineers who understand physical systems. This resonates with a broader, more "duty-affirming" trend visible across Northern Europe, where support for national service and crisis preparedness is growing.
Second, foresight must bridge bits and atoms. Strategic planning can no longer treat the digital and physical economies as separate domains. The supply chains for AI, green technology, and defence are deeply intertwined. Organisations that fail to map these dependencies are flying blind.
Third, the future is not predetermined. The sombre outlook of the conversation is not a prophecy. The value of strategic foresight lies in taking signals seriously and asking: "How do we make the future as good as it can be?" This requires inclusive institutions, courageous leaders, and shared visions that motivate action. We must move from being passive customers in a globalised world to being active citizens who value atoms as highly as bits.
Take the Next Step
Are you ready to navigate the era of resource scarcity and shifting social contracts? Kairos Future helps organisations understand and shape the future through data-driven foresight and strategic analysis. Contact us to learn how we can help you build a resilient strategy for the 2030s.