Kondratiev Waves: The Blueprint for Economic Innovation and Market Mastery

The Kondratiev waves are not just cyclical patterns of economic expansion and contraction—they’re a blueprint for the future of innovation. They reveal something investors often miss: the long-term dynamics that fundamentally reshape industries and entire societies. The real game is not in chasing short-term profits but in positioning yourself to anticipate the technological revolutions that are inevitable.

The Engine of Growth: Technological Revolutions

Each Kondratiev wave marks the rise of a new technological era. These are not incremental improvements; they are paradigm shifts that completely disrupt the status quo. The steam engine, electricity, and the internet didn’t just fulfill existing demand—they created it, generating entire ecosystems of value. This is how revolutions unfold: they don’t just meet needs, they create new possibilities.

Yet, the waves follow a cyclical trajectory that’s predictable. Here’s the typical arc:

1. Frenzy: A new technology creates speculative mania. A bubble forms and eventually bursts.
2. Crash: After the collapse, only the real innovators survive, the ones who understand the technology’s true potential.
3. Deployment: This is the phase where lasting value is created, and the new technology permanently changes industries and power structures.

Key Commodities in Each Kondratiev Cycle

• First Cycle (1780-1830): Technology: Steam Engine Commodity: Coal. This was the Industrial Revolution’s lifeblood, powering factories and railroads, creating the first modern global economy.
• Second Cycle (1830-1880): Technology: Railways & Steel Commodities: Coal & Steel. Infrastructure exploded globally, connecting distant markets and industries, a precursor to modern globalization.
• Third Cycle (1880-1930): Technology: Electrification & Chemicals Commodities: Coal & Copper. The electrification of industries and cities was a massive leap, with copper wiring becoming the backbone of new industrial power grids.
• Fourth Cycle (1930-1970): Technology: Automobiles & Petrochemicals Commodity: Oil. Post-WWII growth was fueled by cheap energy. Oil became the global currency of growth, defining geopolitics and economics for decades.
• Fifth Cycle (1970-2020): Technology: IT & Communications Commodities: Oil & Semiconductors. Silicon chips reshaped the world. The digital revolution built on the foundation of computing, creating a tectonic shift toward tech dominance.
• Current Cycle (2020-2040): Technology: AI & Biotech Commodities: Electricity (Gas, Hydro, Uranium, Copper) & Semiconductors. We are now in the frenzy phase of AI and biotech. Massive speculation is fueling rapid advances, but the full integration of these technologies into society is still a decade away.

Geopolitical Instability and Commodity Shifts

Technology creates new industries, and with them comes a new demand for critical resources. This is where the geopolitical game heats up. Each Kondratiev wave has been defined by a shift in global power, with nations fighting for control of the commodities that drive technological revolutions.

• In the 1800s, it was coal.
• In the 1900s, oil fueled both global conflict and growth.

Today, we are transitioning from oil to electricity. This shift will create new geopolitical instabilities as nations vie for control over gas, uranium, copper, and renewable energy. Power will shift to those who dominate the new energy resources and, likely, a new monetary standard will emerge.

At the same time, data has become the most valuable resource of the 21st century, setting the stage for conflicts over intellectual property, cybersecurity, and the future of information ecosystems. As AI and biotech continue to evolve, the next battleground will center around who controls these breakthrough innovations. Blockchain and Web 3.0 are set to decentralize power structures, creating entirely new paradigms for economic control.

Where Are We Now?

We are deep in the frenzy phase of a revolution driven by artificial intelligence and biotechnology. The pandemic of the 2020s, coupled with massive fiscal and monetary stimulus, accelerated the rise of AI and biotech. Startups are popping up everywhere, and speculation is rampant. However, like all speculative bubbles, this one will burst. History tells us this is inevitable, but it also tells us that crises don’t kill innovation—they intensify it.

What’s Next?

By 2030, the current speculative mania will likely have purged itself. But the true deployment phase of AI and biotech will unfold between 2040 and 2060, when these technologies will fully integrate into society and industries, transforming them in ways that are hard to fully grasp today.

This matters because AI and biotech aren’t just new tools—they’re changing the very definition of what it means to be human. We’re no longer merely optimizing processes; we are actively rewriting the core code of life and intelligence. In this new era, we will see entirely novel forms of value creation—from personalized medicine to AI-driven economies.

Kondratiev waves are not just economic phenomena; they are signals of transformation. The critical question is not whether the next technological revolution will happen—it’s about who will shape it. Will you recognize these waves as the markers of transformation, or will you simply react to them?

The real opportunity lies not in following the trend but in leveraging these nonlinear dynamics to shape the next cycle before it fully arrives.

Thanks for reading,?

Guillermo Valencia A

Cofounder of Macrowise

September 29th , 2024