Newtonian time in economics
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Newtonian time describes an idea of time marked mainly by movements along a line (as either discrete or continuous units) in the same manner as space is made up of such units. This framing of time, while useful in physics, is also common in economics.
Neo-classical economics implicitly embraces the Newtonian framing of time. In doing so, orthodox economic theory downplays essential facets of a dynamic economic system. Austrian school theorists have criticized this conception and claim Newtonian time has little relevance for economics.[1]
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[edit] Specific examples
Specifically, O'Driscoll and Rizzo point to three elements of Newtonian time in standard economic theory:
- Homogeneity. All points in time are treated the same (except their temporal coordinate) and thus time can pass without a change in the environment. Endogenous change in economic agents is not given, including learning.
- Mathematical continuity. Just as each point in time is static, each point is disconnected from all other points. The mathematical nature of Newtonian time demands infinite divisibility, thus time does not "flow" from one period to the next; it leaps. "A Newtonian system is merely a stringing together of static states and cannot endogenously generate change." (p 55)
- Causal inertness. Because time is independent from its contents, all change in the system must be presumed from initial assumptions. Thus Newtonian models lack "genuine change" and "time literally adds nothing." (p 55, [emphasis in original)]
The authors contrast Newtonian time with real time. They maintain "a Newtonian system is merly a stringing together of static states and cannot endogenously generate change. Each period (or point) is thus isolated. Consequently, either we have the mere continuation of a period (no change) or we have change without the ability to show how it could be generated by the previous period" (O'Driscoll and Rizzo, 55).
[edit] See also
- real time (economics)
- Austrian School
- uncertainty
[edit] References
- ^ O'Driscoll, Gerald P.; Rizzo, Mario J. (1996). The Economics of Time and Ignorance. Routledge, 55. ISBN 415121205.
[edit] External links
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