The Future of Futures

The Future of Futures

The Time of Money in Financing and Society

Elena Esposito

This book reconstructs the dynamics of economics, beginning explicitly with the role and the relevance of time: money uses the future in order to generate present wealth. Financial markets sell and buy risk, thereby binding the future. Elena Esposito explains that complex risk management techniques of structured finance produce new and uncontrolled risks because they use a simplified idea of the future, failing to account for how the future reacts to attempts at controlling it. During the recent financial crisis, the future had already been used (through securitizations, derivatives and other tools) to the extent that we had many futures, but no open future available.

Chapter 1: Time in Economics

Elena Esposito

Subjects: economics and finance, economic psychology, financial economics and regulation, social policy and sociology, sociology and sociological theory


Is it possible that the problems of economics that we are faced with at present, which have recently been criticized as a result of the crisis of the financial markets, have to do with the ways with which time is dealt? In section 1, we discuss the charges that are frequently made against the approach of economics, which is regarded as static and overly oriented to equilibrium. In addition, we discuss possible alternative approaches that consider the role and relevance of time. Time, in the form of future uncertainty and indeterminacy, is seen here as a key resource for economic behaviour, one that fosters creativity and a spirit of initiative. Time can also explain how traders are mutually oriented to each other. Traditional economics, usually not taking the situations of circularity into account (section 2), has neglected the role of time. Traditional economics did not consider the cases where the behaviour of the operators changes the world to which they refer. These are the situations addressed by the latest trends, based on formulas such as imperfect information, asymmetric information and adverse selection. These are all cases where an uncertainty that is not eliminable arises, because the information that would allow for the uncertainty to be overcome is produced by the very behaviour of the operators who suffer from this same uncertainty. In order to valorize uncertainty and its role in the economy, one must make a complex concept of time the starting point. This complex concept of time is compatible...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information