As the global economy moves further into the 21st century, established economic ideas are being reappraised. The recent re-evaluation reflects the combined impact of technological change, widening inequality and growing concern for natural capital. For India and other BRICS economies, these shifts have immediate policy implications.
What 21st century economics means for India and others
French economist Thomas Piketty’s work has been central to this discussion. In Capital in the Twenty‑First Century he argued that capitalism tends to concentrate wealth, with inherited assets growing faster than incomes from labour. That framework helps explain rising inequality in many countries and strengthens calls for progressive wealth and inheritance taxes. Such measures are now part of mainstream debate in several emerging economies.
At the same time, behavioural economics — recognised by Nobel prizes awarded to Daniel Kahneman and Richard Thaler — has forced a rethink of the assumption that individuals always act rationally. Policymakers are using behavioural insights to design better social programmes and nudges that improve outcomes in health, finance and education.
Environmental and sustainable economics has also moved centre stage. Traditional metrics such as GDP understate losses when natural capital is degraded. Governments in BRICS countries are increasingly considering how to value ecosystem services, encourage green investment and integrate climate risks into economic planning. This shift is influencing public investment decisions and private capital allocation.
Technology has accelerated these debates. The rapid rise of artificial intelligence and automation means that job displacement is no longer confined to low‑skilled workers. Generative AI is disrupting roles that previously required higher education, creating immediate challenges for labour markets and social policy. For India, with its large skilled workforce and fast‑growing digital sector, the twin tasks are to support those displaced and to steer technology into productive, inclusive uses.
The 2008 global financial crisis and the COVID‑19 pandemic exposed limits in older macroeconomic models that assumed economies quickly revert to a single stable equilibrium. Economists such as Joseph Stiglitz and projects like Rethinking Macroeconomics now call for more plural, empirically grounded frameworks that account for shocks, multiple equilibria and distributional outcomes.
For BRICS members, practical responses are emerging. Governments can combine targeted progressive taxation with expanded social protections, including experiments in basic income or wage support where appropriate. Investment in reskilling programmes and lifelong learning will be essential to equip workers for new digital tasks. Public spending can be redirected to green infrastructure, renewable energy and technologies that create jobs while reducing environmental footprints.
These changes require political will and international cooperation. As global power shifts towards emerging markets, BRICS countries have an opportunity to shape global norms around data governance, digital taxation and sustainable finance. Collaboration on research, technology standards and financing for green transitions could yield collective benefits and strengthen economic resilience.
In short, 21st century economics calls for policies that balance growth with equity and sustainability. For India and its BRICS partners, the challenge is to translate modern economic thinking into actionable reforms that protect vulnerable groups, harness technological gains and preserve natural capital for future generations.
(The author is Professor of Statistics, Indian Statistical Institute, Kolkata.)
Key Takeaways:
- 21st century economics demands fresh tools to tackle inequality, climate risk and technological disruption.
- Thomas Piketty’s analysis and rising behavioural and environmental economics reshape policy choices for India and BRICS.
- Generative AI and automation are shifting job losses to college‑educated workers, highlighting the need for reskilling and new social contracts.
- Policy responses include progressive taxation, investment in green technology and stronger social safety nets to sustain inclusive growth.
