Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Time: A. Time is a dimension in which events are arranged. At first, no direction (before / after) is defined with this. A time direction can be obtained in the context of the Second Principle of Thermodynamics. However, a global framework must be assumed, within which there is an increase of entropy. The assumption of increasing entropy does not apply to the comparison of local events. B. In the case of the subjective time, the question of direction is less problematic. The perceived time direction is expressed by the learned use of the terms "before" and "after". See also time arrow, time travel, time reversal, symmetry, duration, space time, relativity theory, four-dimensionalism, world lines._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Murray N. Rothbard on Time - Dictionary of Arguments
Rothbard II 167 Price Theory/time/Rothbard: Here we must emphasize a crucial distinction between the proper status of the ‘short run’ and the ‘long run’ in economic theory. In price theory proper, the short run should take precedence, because it is the real-world market price, while the long run is the remote, ultimate tendency that never occurs, and could only take place if all the data were frozen for several years. In sum, we could only live in the improbable if not impossible world of long-run general equilibrium – where all profits and losses are zero – if all values, technologies and resources were frozen for years. But in monetary theory, the order of precedence should be different. For in monetary theory, the impact of partial ‘real’ factors on the price level, exchange rates, and on the balance of payments, are all ephemera determined by the general factors: the supply of and demand for money. These monetary influences are not ‘long-run’ in the sense of far off and remote, but are underlying and dominant every day in the real world. The monetary influence corresponding to the long run of general equilibrium would be a condition where all price levels and all real wage levels in a gold standard world would be identical, or strictly proportionate to the relative currency weights of gold. In a freely fluctuating, fiat money world, this would be the situation where all price levels would be strictly proportionate to the currency ratios at the international market exchange rates. But dominant influences of the supply and demand for money on price levels and exchange rates occur in the real world all the time, and always predominate over the ephemera of ‘real’ specific price and expenditure changes. Hence real-world analysis, which must always predominate, comprises short-run price analysis and slightly longer-run (but still far from final equilibrium) monetary reasoning. To put it another way: in the real world, all prices are determined by the interaction of supply and demand. For individual prices, this means consumer valuations and consumer demands for a given stock: supply and demand in the real world. This is ‘short-run’ micro-analysis. For overall prices or the ‘price level’, the relevant supply and demand is the supply of and demand for money: the result of individual utility valuations of the given stock of money at any time. And while equally real and dominant in the Rothbard II 168 ‘macro-sphere’, this is determinant in a slightly longer run than the superficial ‘real’ factors stressed by anti-bullionists in all ages. >Money, >Money supply, >Demand for money, >Bullionism, >Inflation, >Central Banks. - - - Rothbard III 277 Time/action/economy/Rothbard: It is convenient to distinguish the two vantage points by which an actor judges his action as ex ante and ex post. Ex ante: Ex ante is his position when he must decide on a course of action; it is the relevant and dominant consideration for human action. It is the actor considering his alternative courses and the consequences of each. Ex post: Ex post is his recorded observation of the results of his past action. It is the judging of his past actions and their results. Ex ante, then, he will always take the most advantageous course of action, and will always have a psychic profit, with revenue exceeding cost. Ex post, he may have profited or lost from a course of action. Revenue may or may not have exceeded cost, depending on how good an entrepreneur he has been in making his original action. It is clear that his ex post judgments are mainly useful to him in the weighing of his ex ante considerations for future action. Suppose that an ultimate consumer buys a product and then finds he was mistaken in this purchase and the good has little or no value to him. Thus, a man might buy a cake and find that he does not like it at all. Ex ante the (expected) utility of the cake was greater than the marginal utility of the money forgone in purchasing it; ex post he finds that he was in error and that if he had it to do over again, he would not have bought the cake. The purchase was the consumer’s responsibility, and he must bear the loss as well as the gain from his voluntary transaction. Of course, no one can relive the past, but he can use this knowledge, for example, to avoid purchasing such a cake again. It should be obvious that the cake, once purchased, may have little or no value even though the man originally paid several grains of gold for it. Cost: The cost of the cake was the forgone marginal utility of the three grains of gold paid for it. But this cost incurred in the past cannot confer any value on the cake now. This would seem obvious, and yet economics has always suffered from neglect of this truth, particularly during the nineteenth century, in the form of various “cost” theories of value. These cost theories asserted that the value of goods is conferred by the costs or sacrifices incurred in their acquisition in the past. On the contrary, it is clear that value can be conferred on a good only by individuals’ desires to use it directly in the present or in the present expectation of selling to such individuals in the future.(1) Rothbard III 378 Time/Rothbard: The pure capitalist (…) in performing a capital-advancing function in the productive system, plays a sort of intermediary role. He sells money (a present good) to factorowners in exchange for the services of their factors (prospective future goods). For „pure“ capitalist see >Evenly Rotating Economy/Rothbard; >Production/Rothbard, >Investment/Rothbard. He holds these goods and continues to hire work on them until they have been transformed into consumers’ goods (present goods), which are then sold to the public for money (a present good). The premium that he earns from the sale of present goods, compared to what he paid for future goods, is the rate of interest earned on the exchange. >Interest rate/Rothbard, >Capitalism/Rothbard, >Loans/Rothbard, >Credit/Rothbard. Production: The time market is therefore not restricted to the loan market. It permeates the entire production structure of the complex economy. All productive factors are future goods: they provide for their owner the expectation of being advanced toward the final goal of consumption, a goal which provides the raison d’être for the whole productive enterprise. It is a time market where the future goods sold do not constitute a credit transaction, as in the case of the loan market. The transaction is complete in itself and needs no further payment by either party. In this case, the buyer of the future goods - the capitalist - earns his income through transforming these goods into present goods, rather than through the presentation of an I.O.U. claim on the original seller of a future good. >Capitalism/Rothbard. Time market/Rothbard: The time market, the market where present goods exchange for future goods, is, then, an aggregate with several component parts. In one part of the market, capitalists exchange their money savings (present goods) for the services of numerous factors (future goods). This is one part, and the most important part, of the time market. Another is the consumers’ loan market, where savers lend their money in a credit transaction, in exchange for an I.O.U. of future money. Rothbard III 379 The savers are the suppliers of present money, the borrowers the suppliers of future money, in the form of I.O.U.’s. Rothbard III 388 The time-market schedules of all individuals are aggregated on the market to form market-supply and market-demand schedules for present goods in terms of future goods. The supply schedule will increase with an increase in the rate of interest, and the demand schedule will fall with the higher rates of interest. >Production structure/Rothbard, >Supply/Rothbard, >Demand/Rothbard. Rothbard III 404 Factors of production: The pure demanders of present goods on the time market are the various groups of laborers and landowners - the sellers of the services of original productive factors. Their price on the market (…) will be set equal to the marginal value product of their units, discounted by the prevailing rate of interest. The greater the rate of interest, the less will the price of their service be, or rather, the greater will be the discount from their marginal value product considered as the matured present good.(2) Rothbard III 420 The connection between the returns on investment and money loans to consumers is not an obvious one. But it is clear (…) that both are parts of one time market. 1. As Wicksteed states: “Efforts are regulated by anticipated values, but values are not controlled by antecedent efforts,” and The value of what you have got is not affected by the value of what you have relinquished or forgone in order to get it. But the measure of the advantages you are willing to forgo in order to get a thing is determined by the value that you expect it to have when you have got it. (Wicksteed, Common Sense of Political Economy, I, 93 and 89). 2. Cf. Böhm-Bawerk, Positive Theory of Capital, pp. 299–322, 329-38_____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
||
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
