Excuse me for sounding like all the nut-jobs who frequently waste a lot of time on these forums, and who believe that they’ve refuted fundamental economic principles, but I do believe that I’ve found, at the very least, some confusion and/or contradiction.
It is often said (by Austrian economists) that money is the medium of exchange, and time is the medium of production. But what’s the difference? Are they not intrinsically linked? Doesn’t production presuppose exchange, namely in the capital and labor markets?
Isn’t it more accurate to say that time is the source of all economic activity, and money is merely the intermediary of both exchange and production? In our modern advanced economy, money is required for both exchange, and for production. When you buy a ticket to a show, you’re not really buying the ticket, but rather the right to watch the show (a future good). The same is true for money; it’s not the case that you demand money as money, but rather you demand money as a commonly used commodity employed for exchange—to get what you truly want. Thus, the phenomenon of interest exists everywhere and always, even in money. If people had no time preference, there would never be exchange, and therefore money would never emerge. They would simply produce everything themselves and wait. Time has to be the essence of all economic activity. It seems as though money is the necessary link between all markets, for all goods, both future and present. The essential cause of all markets must stem from the phenomenon of interest, i.e., time. (Time is the cause, and money is the link).
It seems like the causal connection is Time => simple production and inefficient exchange => Money => Advanced production and efficient exchange.
If time is the cause and money the link, how did barter ever get started? No money…
The cause of economic activity is people want to be better off and feel if they do this or that they will be better off. This or that usually takes some time, varying degrees for varying options of this or that, and for different actors doing the same this or that. All money is, is a common denominator that comes into play for being the most salable commodity in any given area. It makes calculating whether you should do this or that, or someone else should while you do something entirely different, easier is all.
Because nothing in economics is instantaneous. Economics is a dynamic process of trial and error, where things emerge. Time is the cause of barter, and the double coincidence of wants lead to the emergence of money in order to satisfy needs, which ultimately stem from time preference (see Bohm-Bawerk for the causes of time-preference). I said all of this in my initial response–barter being inefficient exchange.
Yes, people want to be better off, but they could produce everything themselves (but they don’t). Time is what causes uneasiness, and ultimately accelerates human action, and leads to voluntary cooperation. When you have a lot of time, you act very differently. For example, when you have one month to write a paper, and you wait until the very last day before it’s due, that $500 online paper seems like a very good deal (assuming you value a high grade). This is just one very crude example.
But it can be pretty damned close to instantaneous. If you pick blackberries from wild brambles, the production of satisfaction of your wants, in terms of hunger, is basically instantaneous and no capital structure is involved, whatsoever. Any sort of foraging would fit this mold.
The problem with this sentence is that you could substitute almost any -ology for the word “economics”. It’s a true statement with the virtue of being basically meaningless.
That doesn’t make sense. I suppose your trying to say something like “barter occurs within the physical universe and the physical universe moves forward through time, so exchange presupposes time.” That is true but I don’t think it makes sense to say "time causes barter since time and causality are (at least for human beings) integrally linked. When we say event A caused event B, it is understood that event B is necessarily at some later physical time than event A. We do not think of space as causal, i.e. “the table is causing the cup to be at rest.”
Needs do not “stem from” time preference. Time preference describes the way in which we order our preferences through time, for example, preferring $5 in my hand now to $10 a year from now.
No, uneasiness is an intrinsic aspect of the human condition. You grow hungry and thirsty as a result of biochemical process within your body which evolved for the specific purpose of making you feel hungry and thirsty so that you will seek out food and water. Noting that time passes with these physical processes is a red herring. So what? Time passes with all physical processes without exception.
Time accelerates human action?? This sentence just doesn’t make sense. Human action occurs within time, that is, it occurs over time. How does time “accelerate” anything??
Time does not lead to voluntary cooperation - lots of things exist in time which cannot be described as voluntarily cooperating.
No, I’m saying that the realization of one’s own mortality, the fact that one has a limited amount of time, is the cause of uneasiness, and ultimately all economic activity. A person realizes that he doesn’t have enough time to produce the goods/services he desires, thus he engages in cooperative employments, and exchange, which ultimately leads to the emergence of money, prices, savings, and more advanced production methods. I’m saying that recognition of our mortality is the cause of all economic institutions and employments. It’s true that we may pick berries merely to satisfy our current hunger, but over time, humans begin to save, and engage in capital production. Surpluses will be exchanged in markets, and an economy will emerge. Essentially, separating money and time is, in my opinion, fundamentally illusory.
Animals act to satisfy their wants but don’t seem to have any rational capacity to self-reflect on their own mortality. In other words, the uneasiness is “built-in”, it’s not the end result of some cerebral process.
That’s just not true. It is scarcity that motivates people to engage in economic activity. Time is one among many scarce resources.
I think that’s because you don’t understand either one. Money is not time is not money. :-\
Animals don’t rationally act, they are forced into action, guided only by instinct (they don’t engage in economic activities). Uneasiness is not built-in; when I have 3 months to write I paper, I feel no uneasiness–only when time is scarce does the uneasiness become apparent, and I begin to panic (altering my actions).
You go to work because you feel it is the best way to satisfy your economic wants (because you don’t have what you want -scarcity) Time is a scarce resource as well so it behooves you to find the most efficient use of your time so as to satisfy as many wants as possible
The only thing is that time preference determines the natural rate of interest, which determines the length of the production process, the remuneration to laborers, obviously profit, and all subsequent prices. It seems to be elevated above the status of “just a scarce good.”