A gratuitous plug for my new book - Jam Tomorrow?
What if it's our perception of time, rather than utility or the profit motive, that really drives our economic decision making?
Just over a hundred years ago, Einstein’s theory of special relativity revolutionised our understanding of time. Up until that point, and following the lead from Newtonian mechanics, we treated time for the most part as a fixed unit of measurement - a sort of inter-galactic tape measure. Whether it was plotting the path of heavenly bodies or tracking the minutes and hours on our clocks, time was the same everywhere.
Then Einstein showed that the passage of time was dependent on what was being measured and where. Rather than being real or uniform, time was in fact proper to the body concerned.
Economics is littered with references to time - the time value of money, the duration of bonds, the terminal value of equity valuations and so on. Like Newton’s laws, for economics and financial markets, time is usually always a fixed system of measurement, sitting on the x-axis at the bottom of the graph.
What happens when you leave Newton’s natural laws behind and update economic and market thinking to accommodate the advances made by Einstein? Well - you get my book, Jam Tomorrow?
Unlike former British prime minister Tony Blair, who insisted on there being a third way, in economics, the most basic choice is a binary one - either to consume or to save.
As far as we know, humans are the only species aware of time, and who are thus able to undertake actions in the present in the knowledge they can affect the future, for good or ill. Dogs may bury bones and squirrels may store nuts, but they do so out of evolutionary habit. Unlike humans, who are motivated to save in the knowledge that compound interest will reward them for waiting, dogs and squirrels don’t ‘save’ to get bigger bones or more nuts.
Interest or capital growth is our reward for saving, and knowing that we can delay the gratification of consumption for the hope of more in the future is the incentive. This makes humans into the animal that chooses to save. Because the choice to spend or save is really a now-or-later one, it also makes this most basic economic decision into one about time.
If our most basic economic choice is really one about time, then it would suggest time is really quite valuable. When we say we are making up for lost time or living on borrowed time, we certainly acknowledge this. If our choices are seen in some way as balancing the needs and desires of the present with our hopes and aspirations for the future, then valuing time becomes a sort of shifting balance or time horizon between the present and the future.
The time horizons of the various economic agents (individuals, households, companies, institutions and so on) are different, and respond to each other and external events to varying degrees and at a differing pace. Some events affect everyone - in a deep recession, everyone’s time horizon shortens. In a boom, the hopes of those best placed to benefit extend further and higher than those whose means are more limited. Per Einstein, the value of time is not uniform, but proper to the economic agent involved.
Jam Tomorrow? presents an entirely new theory of value based on time, and re-appraises topics such as debt, money, inflation, government policy and the future of the environment through the lens of our ever-changing perception of time. Given the current concerns about climate change and the future of planet, recalibrating our approach to economics with a better understanding not of what the future holds but of what the future means seems to me at least a timely and rewarding exercise.
This is my first book, and I would be extremely grateful to those who decide to buy a copy (Amazon link for Jam Tomorrow?). Leaving positive reviews on Amazon is also a great help for a new author as it helps with the sales algos and all that.
Hopefully this brief synopsis piques some interest. The book offers much more..