Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Bank Credit Expansion and Its Effects on the Economic System 271or physiological concept, but necessarily follows from the logicalstructure of action present in the mind of all humanbeings. In short, human action is directed toward certain endsand the actor chooses the means to accomplish them. The goalis the actor’s purpose in performing any action, and in anyaction, time is what separates the actor from the goal. Thereforethe closer the actor is in time to his goal, the closer he isto achieving the objectives he values. The tendency describedabove and the time preference we have just explained are simplytwo different ways of expressing the same reality. Accordingto the former, actors undertake time-consuming actionsbecause they expect to thus achieve more valuable ends;according to the latter, other things being equal, actors alwaysprefer the goods closer to them in time. 8Hence it is impossible to imagine a human action to whichthe principle of time preference does not apply. A world withouttime preference is inconceivable and would be absurd: itwould mean people always preferred the future to the present,and objectives would be postponed, one after the other,8 The law of time preference may even date back to Saint ThomasAquinas, and it was expressly stated in 1285 by one of his most brilliantdisciples, Giles Lessines, who maintained thatres futurae per tempora non sunt tantae existimationis, sicuteadem collectae in instanti nec tantam utilitatem inferunt possidentibus,propter quod oportet quod sint minoris existimationissecundum iustitiam.In other words,future goods are not valued as highly as goods availableimmediately, nor are they as useful to their owners, and thereforejustice dictates they should be considered less valuable.Aegidius Lessines, De usuris in communi et de usurarum contractibus,opuscule 66, 1285, p. 426; quoted by Dempsey, Interest and Usury, note31 on p. 214. This idea was later presented by Saint Bernardine of Siena,Conrad Summenhart, and Martín Azpilcueta in 1431, 1499, and 1556respectively (see Rothbard, Economic Thought Before Adam Smith, pp. 85,92, 106–07 and 399–400). The implications this concept has for economictheory were later worked out by Turgot, Rae, Böhm-Bawerk, Jevons,Wicksell, Fisher, and especially Frank Albert Fetter and Ludwig vonMises.