The capitalists—in supplying present goods for future goods—are constrained by the aggregated time-preference schedules just as sellers of any other present goods are constrained by the aggregated demand schedules of the consumers. The capitalists are not exploiters but intermediaries, bridging present and future demand with money—because, by definition, money is the best technology for this function.revisit
Put differently, capitalists do not necessarily influence people’s time-preference schedules; rather, they operate within them—coordinating present and future goods in response to existing preferences. In a free market, they serve as intermediaries, not influencers.
“In the aggregate, the interaction of the time preferences and hence the supply-demand schedules of individuals on the time market determine the pure rate of interest on the market.”
“The aggregate time-market schedules (determined by time preferences) determine the aggregate social proportions between (gross) savings and consumption. The time preferences of the individuals on the market determine simultaneously and by themselves both the market equilibrium interest rate and the proportions between consumption and savings (individual and aggregate).” (p. 400)
“The time market’s components are savings as supply of present goods for future goods, and producers’ demand (i.e., landowners and laborers) and consumers’ demand (i.e., borrowing consumers) for present goods.” (pp. 417-418)
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Related:
- 13-4d4 Value is subjective
- 13-4d5 Prices are derived from subjective values
- 13-4d6 The economist must take account of all the interrelations in the economy and recognize that money costs are determined by final prices reflecting consumer demands and valuations
- 13-5a The role of capital is to advance men in time toward their objective in producing consumers’ goods
- 13-7 Value scales consist of specific units, and associated subjective utilities
- 13-8c Utility alone determines the price and the quantity exchanged