Time is a dimension often neglected by contemporary macroeconomics, even though it plays a central role in individual choices and in the structure and process of production. Neoclassical models generally treat time as a continuous, homogeneous and measurable phenomenon, reducing it to a mere objective variable at the service of mathematical modeling. The Austrian approach proposes a radically different conception, where time derives directly from the axiom of human action and constitutes a purely individual and subjective reality.

For Austrian economists, individuals have a natural preference for the present. Ludwig von Mises developed this crucial point by demonstrating that individuals have positive time preferences. In concrete terms, between the present or future enjoyment of the same good of identical value from the individual's subjective point of view, individuals will always prefer present enjoyment. This universal preference is explained by the fundamental uncertainty of the future. We don't know if we'll still be alive in five years' time, what circumstances will arise, what needs will emerge and what opportunities will arise. This irreducible uncertainty explains why, all other things being equal, a present good is always more valuable than an identical future good. This is the phenomenon of discounting, where one euro today is worth more than one euro tomorrow.

The uncertainty of time is compounded by its irreversible nature. Every action performed by an individual is unique and belongs to the past, with no possibility of going back and reproducing it identically. Human unpredictability prevents any exact reproduction of a past action, and therefore any certain future prediction based solely on historical examples. The context is constantly changing, people are learning and knowledge is constantly evolving.

Hans-Hermann Hoppe explains that, constrained by time preference, man will only exchange a present good for a future good if he hopes to increase his quantity of future goods. The level of time preference simultaneously determines the amount of the premium that current goods exert over future goods, as well as the level of savings and investment. This irreversibility means that economic agents can only verify a posteriori whether another action would have produced a better result. Past actions serve to guide present action, as they provide a basis for experimentation that informs our decision-making, but never completely. Economic learning thus represents an ongoing process of adjustment to changing circumstances.

The notion of time in economics involves two essential complementary concepts. Causality refers to an individual's ability to identify goods as means to an end. It implies that the individual knows how to interact with his environment, to adapt his actions to the actual constraints of his environment, or to transform goods into means to achieve his ends. This causality necessarily implies a sequential series of actions that take place over time. Ends are never reached instantaneously, but through temporal processes.

Ludwig von Mises expresses this idea clearly when he states that action is always directed towards the future, essentially and necessarily projected towards a better future. Its aim is always to make future circumstances more satisfactory than they would be without the intervention of action. Mises drew his inspiration from the French philosopher Henri Bergson, who distinguished between objective and spatial time, quantifiable and measurable, and time as experienced by human consciousness, subjectively and individually. We experience this on a daily basis, as an hour can seem interminable at the dentist's, while it flies by in an exciting conversation, while the objective measure remains the same.

Let's take the concrete example of buying a computer to illustrate these concepts. The computer represents the need, its acquisition constitutes the end, and the intermediate step lies in the individual's ability to save, money being the good transformed into the means. The value the individual places on his need and his time directly influences his actions, driving him to save more or less, to work more or less, with the aim of increasing his means to reach his end as quickly as possible.

Since time preferences are individual and subjective, two individuals will not approach the same good in the same way. One may save patiently to acquire the computer in the future, symbolizing a low time preference. The other may decide to borrow to obtain it immediately, demonstrating a high time preference and accepting to pay the price of time in the form of an interest rate. This premium paid over and above the principal sum of the good reveals how time preference structures the whole of Austrian analysis, explaining the very existence of interest, capital formation and business cycles.