The Price of Time (Part 1)

Note: I’m working on a science fiction serial inspired by Krugman’s The Theory of Interstellar Trade. This is the first installment, and I am quite nervous to post this. I expect to revise these posts substantially after initial publication. Your feedback is more than welcome. I am considering a bounty program for feedback that materially improves the work.

The foundational economic innovations of history all operate to enable and ease exchange, albeit on (ostensibly) distinct dimensions.

Money facilitates exchange over non-coincident desires. The Butcher wants a pint of beer, the Brewer wants a loaf of bread, and the Baker wants a new HoloViz. What hope is there for exchange in the face of these non-offsetting desires? Smith perennially reminds us that we need not count on the benevolence of any of these parties. Money enables exchange where there is no mutual coincidence of wants. Money rescues us from the proverbial—and ultimately apocryphal—land of barter.

Credit enables intertemporal exchange. The creditor swaps capital today for income tomorrow, and the debtor takes the opposite side of the trade. While money serves to match wants to their associated goods and services, credit matches remunerative opportunities to the requisite capital. A thorough investigation, beyond the scope of the present work, reveals the tenuous nature of the distinction between credit and money, especially in the early history of the two technologies.

Insurance allows for exchange across states of the world. Accordingly, one can conceive of insurance as an intrapersonal yet inter-potentiality trade. When an individual purchases an insurance policy, they set their potential selves to trade; the prosperous, numerous selves sacrifice a small share of their resources that they might protect their less fortunate, and less common, counterparts.

Lastly, long-distance transport facilitates, naturally, exchange at distance. While a less conceptual innovation than the proceeding three, long-distance transport is no less consequential. The resultant expansion in market size allows for further specialization and taps into the potency of Ricardian comparative advantage. Specialize and trade. Specialize, trade, and prosper. Nevertheless, while a specialize-and-trade approach almost always dominates autarky, excessive specialization can lead some polity or region overexposed to the vicissitudes of a certain commodity or industry; specialization has a checkered past, dotted with speculative bubbles and the “rust belt” towns that were victims of deindustrialization. Specialization can prove costly in a world with stochastic production and jagged and path-dependent innovation: not all specializations are created equally. Again, the purpose of this work is to outline the broad history of economic exchange and its companion ideas, so we will largely set aside such investigations.

The distinction between the four innovations above had always been blurry. This deception of distinction is most notable for money and credit, which have often been one in the same. The First Interstellar Period, however, shattered any stubborn residual notions of the separability of these four innovations.

Isaac Xu, A History of Trade, from Interstate to Interstellar

Depending on the day, or even the hour, Clara thought she was either on the cusp of a brilliant discovery or utterly misguided. As of late, she spent most of her time mired in the latter mood. Even worse, the ecstasy of discovery seemed to be waning at its peak, making these oscillations in spirit all the less tolerable. The dream of a tenure-track professorship was receding day-by-day. It was little consolation that she long suspected she would be miserable in a such a role. A long-pursued dream does not easily die. It is especially difficult to cede this dream since it was her prime motivation for the last seven, arduous years, and the dream long predated her formal studies.

Still, the joy of discovery owes in part to this tortuous uncertainty. Without the possibility of failure, there is no jeopardy, and thus no proper excitement, in the enterprise. Further, any given innovation might later be obviated by the next. There is always scope for new ideas, or old ideas revisited. It is this intoxicating pull of breakthrough that teased Clara in her periods of optimism. In these moments of respite from her gloom, she could look past the critics: her more technical peers outside of the discipline deriding her work as mere social science—or mere social “science”—and peers inside of the discipline who looked down upon trifling theory. Yet, despondency would soon reassert its claim on her spirits.

The call from Beacon, then, was an unforeseen validation of her work. She had expected one of the empirically focused members of her cohort would be the natural choice. Clara tried her best to delay her skepticism and shock. She happily signed the NDA they sent before the interview, if only for the temporary thrill of feeling like an insider. This job prospect was sure to fall apart on first contact.

Clara averted her eyes downwards, avoiding Peter’s inquisitive gaze. Her stare settled on the smooth, matte white desk. It looked cold to the touch and preternaturally clean, with just two neat stacks of paper. It looked like the type of desk at which one meandered through a long, interminable sequence of meetings, rather than do any proper work. Or, it was the desk of someone who spent their time on the road. It was worlds apart from the comfortable, worn clutter of her desk back at the university. She missed her broom-closet office at this very moment and was, despite her best efforts to avoid the question, puzzling over why she might be here. With her dissertation recently submitted and defense fast approaching, Clara knew she would have to leave the nest soon. However, she felt woefully unprepared to face her current predicament. She chanced a glance at Peter.

“You’re more than welcome to ask why you’re here. You really have no idea, do you?” asked Peter, letting slip a wry smile.

This brief display of humanity steeled Clara’s confidence. She mustered a response, “Well, I have a number of hypotheses, but they all strike me as rather speculative.” That was a professional, even erudite answer, Clara mused. And, the gap before her response was surely a sign of thoughtfulness and calm, rather than panic. Clara felt proud. She could manage this conversation without appearing woefully underqualified.

Peter’s smile widened, “Spoken with the caution of a scholar. We’ll be sure to knock that right out of you. Well, go on, speculate.”

Clara squirmed in her seat, her newfound confidence punctured before it could even find its feet. “Well, I thought someone with a bit more technical experience would have gotten this call. Beacon isn’t exactly known for hiring theorists, and my work is just a bit… niche.”

“You could say that, but consigning work to one particular niche is, as you say, ‘rather speculative.’ Innovation can come from unexpected places.” He delicately picked out one of the previously unperturbed stacks on his desk. “Here it is: Banking, Interest, and Time Preference in a Simple Heterotemporal—did I say that right—Environment. Something tells me we have a somewhat different understanding of simplicity.”

Clara froze. Peter didn’t even have one of her dissertation chapters, let alone her prized auction theory paper. How did he even find that throwaway project, a mere diversion from her serious research? Still, she stood by the results. And, a silly topic given sincere treatment could yield unanticipated insight. Clara recalled her excitement for the project and felt that the conversation might be shifting back towards a place of comfort. “‘Simple’ serves as a clandestine but fairly pervasive piece of jargon. My advisors seemed to think it was all a bit juvenile, so they insisted on the adjective: ‘Neither a serious analysis nor a serious topic,’ I recall one saying.”

“Well, I happen to disagree, but what do I know? Anyways, I don’t think you’ll need to worry about them anymore. Not all abstraction is useful, you know.”

Clara had taken a few other job interviews, but none proceeded with such candor or fluidity. She wondered if it were a job interview at all. “I’ve begun to suspect as much,” affirmed Clara. She was still unsure if she genuinely believed the point or held onto the idea as a defense mechanism against her self-suspected mediocrity.

Peter cut off this well worn line of thought before Clara spiraled into her doubts, “In that case, I’m relieved we found you before it was too late. Now, we seem to have gotten sidetracked. I think your work, past and future, is precisely what we need.”

“It’s just that I can’t see how the research would be useful here at Beacon, or any other business really. The topic isn’t necessarily practical, unless…”

“Unless?” Peter asked with a tilted head, implying, or at least hinting, that he might already know the answer.

“A whole lot of people traveling at alpha-c1 needed a savings account.”

Peter narrowed his eyes and leaned forward, “Precisely.”

“What? I thought Beacon worked in communications?”

“Well our partners over at Extraterra claim that they’re just about ready to go interstellar.” Peter slouched back to his position of confident repose, evidently proud to be privy to such a precious piece of knowledge.

Clara felt a laugh rising in her throat, both gleeful and nervous. Despite Peter’s playful candor, she did not think it was a moment for laughter. Yet, Peter was surely joking, albeit a rather pointless ruse.

“Take your time. It took me more than a few days to accept and believe the news. I still haven’t wrapped my head around it yet, and I would believe anyone who claimed they did.” Peter stood up, “I almost forgot to ask. Do you want the job?”

Clara, steadfastly glued to her seat, snapped back into the room. She leapt up and blurted, “yes!”

“Welcome to Beacon,” said Peter, extending his hand and flashing his, what Clara was now learning, characteristic smile.

Perhaps she should have asked some more questions. Or any questions at all. That was never a problem she had in seminars, much to the chagrin of her peers. And for her rather esoteric, throwaway paper that Peter got a copy of, the blatant unreality of the topic always aided a complete suspension of disbelief: interstellar travel was a pipe dream. Reasoning through the economic realities of such a world was a fun diversion from proper research, not that the tiresome constraints of reality were ever considered an essential element of economic scholarship. However, now that this blatant unreality asserted a claim to truth, Clara was lost and downright flummoxed. She had fantasized about this moment countless times while lost in science fiction novels. The work on her paper was the closest she would ever come to writing one of these books. Her imagined self invariably met the innovation with an intrepid excitement and opportunism. Now, the best Clara could muster was a rather pitiable sense of bewilderment. At worst, she was scared.

It is only at the cusp of reality, in the land of near imagination, that we begin to feel terror at a world that might come to pass. Here, a possible world becomes the overwhelming, and unavoidable, future. The onrushing change shatters the illusion of historical choice. Or careful, directed progress. Clara was stumbling into this future that had only ever been her fantasy. The whole world was stumbling into this future. Clara caught herself. The phrase “the whole world” would soon prove grossly inadequate to capture humanity’s extent. We were headed for the stars.

Clara knew that, as Peter said, innovation comes from unexpected places, and the impacts of consequential technologies are many orders of magnitude larger than those of the middling inventions. Power laws rule the world. And, when you take into account the pruning effects of survival and selection—through which comparatively fruitless innovations are cast aside—a precious few technologies steer the future.

Clara recalled the First Industrial Revolution. Who would have expected anything from Old Britain before a few tinkerers tamed the true potential of fire? Now, look at the position that small island nation occupied in the subsequent century, and the lasting influence of the period. Even the fusion of reactors of today merely heat water an convert that into work, an elaboration on an old theme. The scholars who take a more expansive view of technological epochs argue that we are still working out all of the advances unlocked by the titans of discovery from the eighteenth and nineteenth centuries.

Where innovation is unpredictable and only a handful of technologies truly fashion our world, it is near impossible to preemptively direct growth. We lurch headlong into the future and hope that necessity will guide us to shape these forces to our benefit. Clara swallowed her mounting discomfort and promised, perhaps vacuously, to return to the question another day. At least the pay was bound to be good—another question she should’ve asked.

You can read the next installment here.