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NOTE 1.04. Further Implications: Time

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4. Further Implications, Time

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Time is omnipresent in human action as a means that must be economized. Every action is related to time as follows.

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Imagine a timeline divided into three segments. The first segment ends at the letter A. The second segment ends at the letter B.

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The first segment of the timeline thus depicts the period before the beginning of the action.

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A is the point in time at which the action begins.

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The second segment of the timeline, AB, is the period during which the action occurs.

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B is the point at which the action ends.

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And the final segment of the timeline depicts the period after the end of the action.

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AB is defined as the period of production, the period from the beginning of the action

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to the time when the consumer's good is available.

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This period may be divided into various stages, each itself taking a period of time.

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The time expended during the period of production consists of the time during which labor energy

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The theory is expended, or working time, and maturing time, that is, time required without

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the necessity of concurrent expenditure of labor.

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An obvious example is the case of agriculture.

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There might be six months between the time the soil is tilled and the time the harvest

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is reaped.

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The total time during which labor must be expended may be three weeks, while the remaining

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The aging time of over five months consists of the time during which the crop must mature and ripen by the processes of nature.

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Another example of a lengthy maturing time is the aging of wine to improve its quality.

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Clearly, each consumer's good has its own period of production.

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The differences between the time involved in the periods of production of the various goods may be and are innumerable.

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One important point that must be emphasized when considering action and the period of production is that acting man does not trace back past production processes to their original sources.

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In the previous section, we traced back consumers' goods and producers' goods to their original sources, demonstrating that all capital goods were originally produced solely by labor and nature.

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Acting man, however, is not interested in past processes, but only in using presently available means to achieve anticipated future ends.

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At any point in time, when he begins the action, say A, he has available to him labor, nature-given elements, and previously produced capital goods.

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The Theory of Money and Credit

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The Theory of Money and Credit

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is in the present and the future.

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This is the necessary result of the fact that action occurs in the present and is aimed

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at the future.

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Thus, acting man considers and values the factors of production available in the present

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in accordance with their anticipated services in the future production of consumers' goods,

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and never in accordance with what has happened to the factors in the past.

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A fundamental and constant truth about human action is that man prefers his end to be achieved

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in the shortest possible time.

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Given the specific satisfaction, the sooner it arrives, the better.

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This results from the fact that time is always scarce and a means to be economized.

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The sooner any end is attained, the better.

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Thus, with any given end to be attained, the shorter the period of action, that is, production,

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the more preferable for the actor.

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This is the universal fact of time preference.

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At any point of time, and for any action, the actor most prefers to have his end attained

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in the immediate present.

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Next best for him is the immediate future, and the further in the future the attainment

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of the End appears to be the less preferable it is.

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The less waiting time, the more preferable it is for him.

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Time preference may be called the preference for present satisfaction over future satisfaction,

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or present good over future good, provided it is remembered that it is the same satisfaction

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A common type of objection to the assertion of universal time preference is that in the wintertime a man will prefer the delivery of ice the next summer, future, to delivery of ice in the present.

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This however confuses the concept good with the material properties of a thing, whereas it actually refers to subjective satisfactions.

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The Theory of Money and Credit

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the consumer's good will satisfy the wants of the consumer.

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Some consumer's goods will satisfy his wants, that is, attain his ends, for a short period of time.

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Others, for a longer period. They can be consumed for shorter or longer periods.

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This may be included in the diagram of any action.

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This length of time, B.C., is the duration of serviceableness of the consumer's good.

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It is the length of the time the end, served by the consumer's good, continues to be attained.

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This duration of serviceableness differs for each consumer's good.

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It may be four hours for the ham sandwich, after which period of time the actor desires other food, or another sandwich.

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The builder of a house may expect to use it to serve his wants for ten years.

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Obviously, the expected durative power of the consumer's good to serve his end will enter into the actor's plans.

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It has become the custom to designate consumer goods with a longer duration of serviceableness as durable goods and those of shorter duration as non-durable goods.

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Obviously, however, there are innumerable degrees of durability, and such a separation can only be unscientific and arbitrary.

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Clearly, all other things being equal, the actor will prefer a consumer's good of greater durability to one of lesser, since the former will render more total service.

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On the other hand, if the actor values the total service rendered by two consumers goods

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equally, he will, because of time preference, choose the less durable good since he will

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acquire its total services sooner than the other.

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He will have to wait less for the total services of the less durable good.

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The concepts of period of production and duration of serviceableness are present in all human

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action.

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There is also a third time period that enters into action.

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Each person has a general time horizon stretching from the present into the future, for which

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he plans various types of action.

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Whereas period of production and duration of serviceableness refer to specific consumers'

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goods and differ with each consumer's good, the period of provision, the time horizon,

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is the length of future time for which each actor plans to satisfy his wants.

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The period of provision, therefore, includes planned action for a considerable variety

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of consumers' goods, each with its own period of production and duration.

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This period of provision differs from actor to actor in accordance with his choice.

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Some people live from day to day, taking no heed of later periods of time.

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Others plan not only for the duration of their own lives, but for their children as well.