A little over a decade ago, in my book “Argentina 4.0: The Citizens’ Revolution” (2013), I introduced the term “Newconomics” to present the idea, drawn from my readings and studies, that a New Economy was possibly emerging on the horizon.
I did so while analyzing technological changes that influenced the policies of my country and the political decisions that any nation would face in the future, arguing that these changes do not occur overnight. Much like observing a city skyline evolve over time, the transition from the old to the new economy unfolds gradually.
Twelve years later, I ask myself: Are we already living in a New Economy? Has “Newconomics” arrived?
Throughout history, experts have proposed from time to time that a “new economy” could be emerging.
Early in the 20th century, the rise of Keynesian economic theories reshaped economic thought and policymaking, arguing that the effects of economic downturns could be mitigated through government intervention using a proper set of fiscal and monetary policies. While not explicitly branded as a “new economy”, Keynesianism modernized the discipline.
Later in the century, another approach challenged traditional economics: the “green economy”. Based on the idea that natural capital—the finite resources we borrow from the planet to produce goods and services—should be integrated into economic models, this perspective both informed and questioned standard economic theory.
Beginning in the late 1990s and continuing into the early 21st century, the pervasive effects of information and communication technologies, the internet, and e-commerce on production processes and consumption patterns led to the widespread belief that a New Economy was emerging. Its main drivers were knowledge, networks, and digital business.
Among the many analysts exploring this shift, my book stood out by providing a practical example of how new technologies were affecting traditional economic theories. Specifically, I examined how data-mining techniques applied by social media platforms to their users expanded and reshaped the Theory of Revealed Preferences. Yuval Harari further explores this issue in “Homo Deus” (2016), while Shoshana Zuboff provides a broader perspective in “The Age of Surveillance Capitalism” (2019).
More recently, the rapid expansion of digital platforms, social media, and the emergence of Artificial Intelligence have further transformed productive systems, strengthening the idea that a new economic landscape is taking shape.
Network economics and platform markets (already identified in “Argentina 4.0” in 2013) are becoming central due to the rise of companies like Amazon and Google.
A whole new wave of studies on the digital economy and behavioral economics was triggered by pioneering work done by many, including Daniel Kahneman and Richard Thaler, who challenged rational decision-making assumptions and incorporated cognitive biases and irrational behavior into economic models.
To determine the extent to which we can define this new landscape as “Newconomics”, we need to assess whether the impact of technology on productive systems and consumption patterns is driving a comprehensive theoretical shift away from standard economics.
Let’s examine how these technological shifts are reshaping standard economic theory in various domains.
It is easy to verify that tech firms face near-zero marginal costs (contrary to what standard microeconomics would predict), as well as network effects and returns to scale (unlike traditional industries). In standard Production and Cost Theory, this phenomenon is triggering a theoretical shift from diminishing returns to increasing returns, and from labor-based to knowledge- and capital-based production.
In Labor Economics, we are witnessing a shift from classical labor-capital substitution to AI-driven job polarization, contrary to standard labor models rooted in a balance between labor and capital. This includes the rise of the so-called gig economy and freelance work.
Market Structure and Competition Theory also sees a shift from classical competition models to platform economy monopolies. Market power is shifting from price-based competition to data-driven dominance, rendering traditional antitrust regulations less effective in ensuring competition.
In Monetary Theory and Finance, the emergence of cryptocurrencies challenges state-controlled currencies, promoting a theoretical shift from centralized monetary systems to decentralized finance, and from rational market behavior to AI-driven market fluctuations.
Trade Theory is also under pressure to adapt, shifting from traditional physical trade models to digital economic frameworks. Additionally, supply chains are transitioning toward blockchain-driven transparency mechanisms.
Public Economics and Policy must therefore focus on a shift from traditional taxation to digital taxation and from physical market regulations to digital market governance, as suggested in Argentina 4.0.
In Growth Theory and Innovation, we are witnessing a shift from physical capital-driven growth to knowledge-based growth. Furthermore, the emergence of AI introduces a new productivity paradox—while technological progress accelerates, overall productivity gains remain uncertain.
This summary highlights how the definition of economics has been evolving—from a study of wealth and production (standard theory) to a broader analysis of decision-making, networks, and technological disruptions.
Indeed, each technological revolution—from the steam engine to AI—has forced economists to redefine economic principles and develop new models to understand human behavior, markets, and policymaking.
“Newconomics”, however, goes beyond any given technology. It is characterized by the emergence of new economic actors (or a different level of empowerment of existing ones) operating under new rules while demanding new institutions, and compelling consumers, governments, and companies to rethink their objectives.
Nowadays, the digital economy could be seen as the New Economy. According to the World Economic Forum, the digital economy has been growing 2.5 times faster than the physical economy.
However, unlike digital economics, which focuses on the impact of specific technologies on economic activities, Newconomics explores how the rise of AI, automation, and decentralization is fundamentally altering the structures of economic power, institutions, and decision-making frameworks.
Precisely for that reason, it is important to draw a clear line between the changes triggered in economic patterns by a given technology and the broader changes in economic theory and institutional organization—what we define here as Newconomics.
The next evolution of economics may center around AI-driven economies, post-scarcity models, and sustainability-driven growth.
This is why, in Argentina 4.0: The Citizens’ Revolution (2013), I was determined and excited to discuss the concept of Newconomics. As automation, digitalization, and decentralized finance continue to reshape economic structures, it becomes increasingly clear that traditional economic frameworks must be reimagined to better capture the complexities of a world in dynamic disruption.
If Newconomics hasn’t fully arrived, it is undoubtedly shaping the future. As automation, AI, and decentralization continue to accelerate, the question is no longer if Newconomics will replace traditional economic models, but how and to what extent.
