Up until recently, we thought history had come to an end. Trade had replaced power politics, dependencies were mistaken for security and economies stopped growing as they once had. Now, however, we finally seem to be emerging from what one writer called the Great Stagnation. It’s about time, too.

During the 1990s and especially the 2000s, there was little doubt that Western economies entered a prolonged period of stagnation. Despite the endless wars in the Middle East, a naive faith in free trade, and increasing dependency on China and Russia for wealth and energy, it was a comfortable time in the West. With trade replacing confrontation in the brave new world of globalisation, many began to believe that the rules of the game were set for good.

But for a long time during the Great Stagnation, the West was like the proverbial frog in a pot. The temperature rose so slowly that we had time to get used to it. Then came Russia’s full-scale invasion of Ukraine in 2022. It showed once and for all that the post-Cold War world had reached the end of the road. Hamas’s attack on Israel on 7 October 2023 served as a similar wake-up call in the Middle East and showed how badly the threat from Iran had been underestimated.

The awakening has certainly been abrupt and has also exposed deep divisions within the West. But there are signs the West is adjusting. Europe is spending more on its own defence capabilities. Russia is facing greater resistance. Iran has been weakened after two wars. And the US is once again turning its attention to its own backyard in Latin America.

The economic shift has been just as pronounced as the geopolitical shift. It was the economist Tyler Cowen who, in 2011, coined the term ‘the Great Stagnation’ to describe the economic phenomenon of the late 20th and early 21st centuries. He argued that Western economies, and the US in particular, began to slow once the great productivity gains of the 20th century had already been made. Growth had long been driven by mass education, electricity, antibiotics and access to cheap land. The low-hanging fruit had simply been picked. Innovation continued, particularly in digital technology, but it did not produce the same transformative effects on the economy as earlier technological revolutions.

When Cowen’s argument is applied to energy and infrastructure, the problem becomes clear. Bureaucracy, regulation and various forms of veto held back the investments and innovations required for the next great leap in growth.

The problem of energy is perhaps the most significant of the challenges facing Europe. Energy is the foundation of a surprisingly large share of what we do in the economy. Cheap energy can mean cheaper transportation, cheaper food and, with enough energy, even fresh water produced from the sea. In short, it can make geographical constraints irrelevant.

But this critical fact was ignored for too long. As software became steadily cheaper and better, the physical world became increasingly expensive and neglected. We began living as if energy no longer mattered very much.

The geopolitical shift following Russia’s invasion of Ukraine acted like a defibrillator. War, energy dependencies and great-power rivalry forced us to recognise something we had forgotten. The physical world is still the real world.

Today, energy has once again risen high on the Western agenda. Right-wing parties in particular have taken the lead because energy is the fundamental resource of the economy. It underpins growth and prosperity. It is essential for national security, transportation, food production and housing.

We are also now reckoning with our inability to get anything built. It’s now clear we need to become better at creating things in the real world. For decades, the digital domain has developed at breakneck speed, while the physical economy has become trapped in regulations, permit processes and local veto powers. Housing, power grids, nuclear plants, factories and other infrastructure take years to build. The problem is therefore not simply that technology must continue to advance, but that society must become better at translating technological progress into the physical world.

There is a cross-partisan political opportunity here. Trump is wrong if he believes that tariffs alone can recreate the golden age of American manufacturing. But that does not mean industry should be left to fend for itself. It is possible to imagine a liberal industrial policy that does not rely on the state handing out subsidies and picking winners, but on removing the obstacles faced by those who are actually going to build.

Cheaper and more reliable energy, better infrastructure, greater competition and fewer regulations would give entrepreneurs and businesses better opportunities to invest and produce. This is not about the state dictating what should be built, but how it can make it easier for others to build more.

The Western world once assumed that the future would primarily be about information, services and digitalisation. These things matter and will remain part of our new reality. But history has nevertheless brought us back to the material world. The problem is that the service economy can never be detached from physical reality. Energy, steel, factories, power grids, transportation and defence are not remnants of an old world. They are the very foundation of the new one.

If the West is to restore growth, ensure its security and preserve its independence, it needs something quite simple – to start building again.

Andreas Birro is a writer.