Abstract
Modern economics deploys the concept of time-value as if it were a descriptive, empirically-verifiable objective property of the sort studied by natural science in its investigation of the natural world. In particular, economics frames efficiency as a core feature of time-value understood in a purportedly descriptive sense. Economic time-value is stripped of its normative quality, and held up for scientific investigation and brute factual description of the sort associated with criterial and natural-kind concepts. As such, economics deploys the conceptual devices such as the “time-value of money” in its quest to objectively ascertain in a purportedly morally-neutral fashion behaviors that are favorable to capital efficiency maximization. Yet, as the paper shows, economics thus removes the relation of efficiency to time-value from the realm of normative choice – that is, from the realm of contested interpretive concepts.
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Notes
- 1.
In this paper I am discussing the concept of time-value in a wider sense than its narrow use in finance and banking that refers to the market value of an option over and above its intrinsic value. See, e.g., Oxford Dictionary of Finance and Banking. Oxford University Press. The broader philosophical concept of time-value that I exposit in a larger research project is that time depends on value, and value depends on time. There can be no valuation (whether economic, aesthetic, or moral) without time. While one may have a sense of timelessness when contemplating a masterwork of sculpture, the contemplation takes place within a duration of time. Conversely, there is no time without valuation; what appears to be “descriptive” or “factual” valuation is ultimately “prescriptive” and “normative.” Our virtually unainimous adoption of clocks and calendars is ultimately a convention that expresses a preference for using discrete equal units of fixed duration for counting time. Strictly speaking, there is no “law” of nature that dictates this choice.
- 2.
“In reality the market lends more importance than is justified to the short-term future, ignoring the long-term damage this can inflict, particularly on relationships with workers, suppliers and customers” (Hutton and Jones, 2005 at 93).
- 3.
“Investment and careful building-up of market share are sacrificed to boost profitability in the immediate future. It is the share price now that matters, not the higher return that could be achieved in five years’ time. In fact, the very structure of the financial economy prioritises short-term gain” (Hutton and Jones, 2005 at 92).
- 4.
Cf. Aristotle, “Even God cannot change the past.” Nicomachean Ethics , Book VI, Sect. “Normative Dimension”, 1139b.
- 5.
By ‘economic objects’ I mean abstract entities. Such thought-objects, as they occur in economic theory, purport to depict activities and events like ‘equilibrium,’ ‘demand,’ ‘marginal propensity to consume’, and so on.
- 6.
As empirical research shows, if you offer someone the alternative of $100 now or $150 in 6 months, they will tend to prefer $100 now. People are inclined to prefer rewards in the present over rewards in the future. But notice that this is simply a conventional psychological tendency that does not settle the moral issue of how one ought to assign economic value across time orientations and time horizons. Presumably, in order to persuade people to place greater value on future rewards, the benefits associated with them need to be significantly greater than what is rationally expected.
- 7.
Accounting for the nature of time itself is a highly complicated and contentious undertaking, exemplified in the vast philosophical literature on the ontology and metaphysics of time.
- 8.
For an extended account of the idea of interpretation and interpretive concepts, see Dworkin, Justice for Hedgehogs (2011).
- 9.
Economic efficiency denotes an economic state wherein resources are optimally allocated so as to serve each party in the best possible way, while at the same time minimizing waste and inefficiencies (allocational efficiency). In an economy that is economically efficient, any changes taking place to benefit one party will harm another (Pareto efficiency). Concerning production, efficiency implies that goods are being produced at the lowest cost, as well as the variable inputs of production (production efficiency).
- 10.
The teletransporter puts one to sleep, then breaks one down into atoms, copying then relaying it to Mars at the speed of light. On Mars, another machine re-creates one’s body from local supplies of carbon, hydrogen, etc.) Every atom gets restored to precisely the same original arrangement. Parfit asks if teletransporter is a method of travel—if the person on Mars upon awaking is the same person as the individual entering the teletransporter back on Earth.
- 11.
High Frequency Trading (HFT) involves the execution of complicated, algorithmic-based trades by powerful computers. The aim of HFT is to take advantage of minute discrepancies in prices and trade on them quickly and in huge quantities (MacKenzie 2011).
- 12.
In economics, return on capital is a profitability ratio that measures the return that a given investment generates for capital contributors such as stockholders and bondholders. Return on capital is thus taken as a measure of how effective a company is at turning capital into profits.
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Jackson, K.T. (2018). Time-Value in Economics. In: Róna, P., Zsolnai, L. (eds) Economic Objects and the Objects of Economics. Virtues and Economics, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-94529-3_9
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