Time is the one resource that no economic model can manufacture, and every serious theory of human action must eventually confront it. Yet mainstream economics has chosen, almost without exception, to treat time as an objective variable that is measurable, uniform, and expressible in equations. This is not merely a methodological shortcut but a foundational error, and the distinction that exposes it was drawn not by an economist but by a philosopher: Henri Bergson. It is the distinction between clock time, which is spatialized and measurable, and duration (durée), which is time as it is actually lived by the conscious individual. Ludwig von Mises recognized the full significance of this distinction and built it into the architecture of praxeology, permanently separating the Austrian School from its neoclassical rivals and from the illusion that human behavior can be captured in a mathematical model.
Einstein, Bergson, and the Relativity of Time
For Einstein, time remains an objective and relative quantity, but never subjective. In Newtonian mechanics, time is absolute: it passes in a purely predictable and linear way. Einstein introduced the notion of relative time, whose objective duration changes as a function of other deterministic and predictable physical factors, such as gravity and gravitational fields, which cause time to pass more slowly in certain conditions. Time, for Einstein, is relative but not subjective, and to approach time as a subjective reality one must turn to philosophy, and particularly to Henri Bergson.
According to Bergson, objective time, which is spatialized and measurable in hours and minutes, is necessarily the time perceived by the natural sciences, while duration corresponds to the time subjectively experienced by the individual. Duration is the time proper to human consciousness, and it is experienced differently by each person: it is not fixed, it is fluid, and it is qualitative rather than quantitative, heterogeneous rather than homogeneous. Simply put, two individuals can experience the same activity in radically different ways, where one may be deeply bored while the other may be having the best time of their life. In economics, which always deals with individuals, trying to quantify time as neoclassical economists do is a futile quest. As Bergson himself wrote, “What I call my present is my attitude towards the immediate future, it is my imminent action. My present is therefore essentially sensorimotor” (Matière et mémoire, p. 152).
These are two diametrically-opposed conceptions of time, and they still clash today between neoclassical economists, who study economics as a natural science with mathematical models, and Austrian economists, who defend a humanist and individualist approach to economic analysis. For the neoclassicals, time can be quantified, modeled, and expressed in equations, and they assign an objective time value in their econometric models as if every hour had a fixed and universal price. For the Austrians, this approach is an aberration because it denies the fundamental subjectivity of human experience.
Time: A Unique Resource
In every voluntary exchange, both parties gain more than they give up. This much is true. What is less often noted is that the buyer values the acquired goods far beyond what its monetary price alone suggests, since he also expends time and energy to obtain it. These non-monetary costs are real components of the exchange but they entirely escape external analysis, because only the individual himself knows the opportunity cost of the time and energy he is willing to invest, in addition to the monetary price, to acquire the goods. For one person, that investment may represent a welcome pause in a stressful day or simply an irresistible preference for a particular good, while for another it will represent an unacceptable waste. Who can judge this, if not the acting individual himself? No econometric model can capture this subjective reality.
Time is a unique resource in economics because it is inelastic, meaning that no one can produce more of it, and irreversible, meaning that each passing moment is definitively converted into an unrecoverable past. It is also non-transferable, since it cannot be ceded to someone else, and it is fundamentally uncertain, since no one knows how much of it remains. Despite every attempt to objectify it through hours, minutes, and fixed time values in econometric models, time remains a fundamentally subjective reality, and this is precisely what neoclassical models are structurally incapable of integrating.
The concept of the present moment raises an ancient philosophical problem, namely, whether it is a reality or a non-reality. It is either non-existent, immediately past or instantaneously future, or it is all-encompassing and totalizing, the only thing that truly exists, since the past no longer exists and the future does not yet exist. For Austrian economists, the axiom of human action provides a satisfactory definition of the real present. The acting person always uses the present moment and incorporates its reality to achieve their own goals, which are always oriented towards the future. The present encompasses action; it is defined by it and exists because of it. Therefore, the present is subjective.
Mises and the Temporality of Action
Ludwig von Mises, who was deeply influenced by Bergson on this question, places time at the very heart of praxeology, which is the science of human action:
Action is always directed toward the future; it is essentially and necessarily always a planning and acting for a better future. Its aim is always to render future conditions more satisfactory than they would be without the interference of action. The uneasiness that impels a man to act is caused by a dissatisfaction with expected future conditions as they would probably develop if nothing were done to alter them. In any case action can influence only the future, never the present that with every infinitesimal fraction of a second sinks down into the past. Man becomes conscious of time when he plans to convert a less satisfactory present state into a more satisfactory future state.
Unlike other schools of economic thought, the Austrian School incorporates the notion of time into its reasoning in a fundamental way, and praxeology places this question at the center of every economic decision. Action always aims to transform an unsatisfactory present state into a satisfactory future state, and it therefore always unfolds within a temporal sequence directed toward a future end. Without this dimension, human action would make no sense, and it is action that gives time its reality, not the other way around.
Consequences for Economic Analysis
The distinction between objective clock time and subjective duration has significant implications for economic analysis. For example, it explains why econometric models systematically fail to predict human behavior. These models attempt to quantify the unquantifiable and mathematicize a fundamentally subjective reality. This distinction also explains why central planning is doomed to fail because planners can never know the subjective value each individual attributes to their time. Therefore, they can never allocate resources, including human time, optimally, which is the scarcest resource of all. Finally, this distinction reminds us that economics is not a natural science like physics, but rather a science of human action. Human action is anchored in the subjective experience of lived duration and therefore escapes mathematical modeling by its very nature.
The next time someone declares a choice to be irrational, one need only respond that only the acting individual knows the value of their own time. Anything else is a neoclassical economist’s presumption.
