Time will tell

time will tellLa Opinion – One of the most important contributions of the Austrian school to the economy is the time factor. It is the most scarce and essential resource that exists in the world, since we are not on a completely static equilibrium, the only thing that becomes limited is the time since 24 hours will continue to represent 24 hours now and within 100 years; while you can always find a gold mine, an oilfield or new resources not yet discovered.

As time is inherent and limited to all human action, then the individual must use it in the best possible way to achieve their goals. What was Robinson Crusoe’s main resource on the island? His time, Robinson could dedicate him to collect coconuts to eat in the day or he could collect more coconuts to eat them the next day and thus dedicate that day to building a network. Over time, Robinson could meet his most basic and primitive needs.

Time above all is a decision; Robinson decides what to do with it and then plan his actions. Action and time are strongly narrowed since there is no action without time. Robinson decides to act in the way he considers most useful to achieve his goals. He could well decide to sunbathe and do nothing in his time, but his life expectancy on the island would be minimal, but that would be a decision that only concerns him and is completely valid.

It is essential to emphasize that the decision on one’s time is only the responsibility of the one, no other individual has the right to impose on another what to do with his time. Of course, the consequences of these decisions, as long as they do not involve harm and damage to third parties, are also the property of the individual. That property that the individual has with his time is what transforms him into an active subject.

What is the condition that determines that an individual is active and not passive? Time, since as the individual is fully aware of the limitation of his existence, he is forced to make decisions and act; However, when another entity, in this case the State, has power over its time, the individual unconsciously becomes an automaton. When the individual realizes that he does not have any kind of power over the administration of his time, he decides to surrender to the emptiness of his existential finitude and undertakes to follow the orders of the State.

Likewise, the incorporation of time into the theory of the firm is fundamental to complete the entire microeconomic theory. The period of production is just the time, from the beginning of the action to produce a particular good, until it becomes a consumer good to meet different grade needs. From the above it follows that the individual:

  • prefers to be able to meet his needs in the shortest possible time (which is why it is more desirable for him that this production period is as short as possible), and
  • the duration of the pleasure that this satisfaction of needs implies is as long as possible.

In this way we can infer more about the behavior of the individual in consumer and producer theory in microeconomic decisions. In summary, the contribution made by the Austrian school to microeconomic theory is undeniable.

This article was originally published in LaOpinión.de (Argentina) on July 1, 2019.