Last modified: 2016-04-09
Abstract
A fundamental dimension, in economics, time is rarely portrayed as a prominent theme, because of the sharp contrasts that have historically divided economists using alternative conceptions of time, but also of the conundrums brought about by its incorporation into economic models. Should we care about the nature of time, in doing economics? To put it differently, can we content ourselves with the “rather ordinary, workaday conception of the ultimate nature of time” usually implicit in social analysis, as Winston (1988: 31) writes? Or should we be anxious about the potentially dangerous effects of neglecting problems related to the metaphysics of time? Or, alternatively, should we concern ourselves with the both theoretical and practical issues raised by the measurement of a somehow elusive magnitude?
An easy answer to this question comes from the history of economics as discipline: the dominant neoclassical approach has opted for “the poverty of simplicity” (Louça 1997). Not only was any reflection on the metaphysics of time ruled out from the beginning, since Walras’s general equilibrium theory, but the positivist-in-character reductionism of this latter fostered a static approach to economic systems, amounting to consider time as meaningless or at best irrelevant (ibid.). With the result that economics ended up with leaving aside the issue of time irreversibility. Zamagni and Agliardi’s (2004) collection of articles about time in economic theory demonstrates, according to Boland (2005: 122), that economists are interested in the problem of how to incorporate time in their models, but much less so in the difficulty to build models “where time matters because it is irreversible”.
Yet a history-of-economic-thought perspective can easily show that despite substantial general neglect in the mainstream of the discipline for such philosophical considerations, some leading figures of yesterday’s economics have addressed the issue of time in a non-trivial manner, and rather brought time into the forefront of economic theory. Unsurprisingly, given both the methodological concerns time straightforwardly raises and the criticality of expectations in his economics, John Maynard Keynes devoted considerable attention to the concept of time. This paper wants to shed light on two usually neglected aspects of Keynes’s reflections on time. Section 1 explores Keynes’s very early (1903) but usually ignored characterization of time as relative rather than absolute, intimately connected with the notion of change, and using, in practice, conventional measurement. Sections 2 to 4 examine Keynes’s methodological reflections on time. We thus illustrate Keynes’s logical approach to economic theory in Section 2, and discuss the criticality of time in the General Theory in Section 3. We then insist, in Section 4, on Keynes’s treatment of time as one of those complex, manifold magnitudes which – perplexing the choice of units for macroeconomics – requires economists to carefully avoid unsafe logical reasoning about its characteristics and, more in general, the non-homogeneity of the economic material over time. Section 5 concludes by showing the limits of the now traditional history vs. equilibrium approach and the possibilities allowed by Keynes’s alternative way of conceiving economics in time.