Von Boehm-Bawerk pointed it out for the first time and Frank Fetter, the American Austrian,
developed it, clarified it, the interest, long run profit, is a term that comes from
time preference.
This is something, by the way, the poor anti-usury people could never figure out, the Catholic
Church theologians, who tended to be in favor of the free market, but they couldn't figure
out what the justification for interest is, interest on a pure loan.
They can understand about risk. They understood about uncertainty and all that. They just didn't understand about why should people be able to charge 3% or 8% or whatever on a pure loan.
And the answer is that people prefer a good right now to waiting for it or the present expectation of a good coming in a year from now, 10 years from now or 100 years from now.
Everybody's got a time premium rate on present goods immediately available and a discount for the future. That determines the rate of interest.
Also, von Boehm-Bawerk pointed out in Menger II, the capital, which by the way modern economics still has not learned.
Capital takes time, production takes time, capital is a time structure.
Some goods are very close to consumers, like producing Wonder Bread, and the retailer of course is very close to the consumer.
On the other hand, the machinery that goes over, iron ore that goes into making the machinery that produces Wonder Bread is way up the structure.
It takes a lot of time to get to the earlier stage of production, so to speak.