Time, Uncertainty, and Institutions

Today we are going to introduce another key element of economics, and that is the concept of time. Dear students, all human action takes place in time. All human action takes time. If there is one important aspect of the view of economics I am presenting to you, it is that it is a subjectivist view of economics. As I have said, ends are subjective and are not given; the subject determines them. The same is true of the means. The concept of scarcity is also subjective. Well, in economics, the concept of time is also a subjective concept. What does this mean? It means that time, as we are referring to it, is time as the subject feels and experiences it in the context of each action. In other words, we are not referring to objective time, but to the feeling we have that time is passing as we are imagining and completing the different stages of each action process. We will call this the subjectivist view of time (Kairos in ancient Greek), in the sense that the subject feels the passage of time precisely because he or she acts and completes stages. So, we discover and create ends and seek out means to accomplish them, and we combine everything into a cocktail of stages, and as we complete these stages, we sense the passage of time. In the subjectivist view of time, it is action itself that gives us the sense that time flows. Thus, sometimes the paradox arises that in a period that is objectively, chronologically very short, we pack in a lot of life; we experience the culmination of many stages. Napoleon lived a relatively short life. He died at the age of fifty-one, and yet he declared, “What a saga my life has been!” So many experiences, battles, etc. In contrast, imagine a different person, maybe an older person who has lived ninety years, an entire life, in the country, doing the same things over and over again. In the subjectivist view of time, that person has lived less, even though he or she is older. What I am saying is that the more we act, the more responsibilities we have, the more complications we are involved in, the faster we feel time is passing. Furthermore, this is a constant in human life. Let us remember our childhood. Did it not seem as if time stood still? Our first memories, maybe from when we were three, four, or five years old, or going to school, are from a period when time seemed to stand still, and yet those were very few years. As we mature and acquire responsibilities, start a family, engage in entrepreneurial projects, time speeds up. Older people tell us that time passes faster and faster for them. That is a rough way of explaining this truth I am talking about. In subjective terms, the passage of subjective time is perceived as we act. The more actions we are involved in, the more time we feel is passing.