How aggregated time accounting relates to economics
Microeconomics
Every transaction within any economy is an exchange between time and money. This means that economic transactions yield to time flows in the real economy that move in the exact opposite direction like cashflows do in the financial system. Hence companies have both cashflows and time flows. Companies create value for humans by continuously increasing labour efficiency. The free time flows and free cashflows this process releases are partly reinvested in the company for ongoing economic growth. The remaining money (excess cash) and time (redundant labour) is distributed back to respectively the shareholders (dividend payments) and the employees (dismissals). However, because employees and investors generally are different people, the employees that receive time dividend (dismissals) do not have the monetary income (dividend payments) to spend this time as leisure. Therefore, most employees have no option but to work equal hours in the future and virtually all productivity increase in capitalism-based economies always has been reinvested out of necessity into consumption growth instead of spending more leisure time.
Macroeconomics
The equivalent of aggregated production in time accounting and valuation (Y) is the Gross Domestic Product (GDP) in macroeconomics and the financial system. We should bear in mind though that there are some important differences which make them develop differently over time:
- In time accounting all human efforts should be included (like looking for a new job, housekeeping, raising children) whereas GDP only accounts for economic activity that is registered. For example, in time accounting unemployment can only be voluntary.
- In time valuation capital goods include human experience and skills, social networks, human knowledge and alike whereas in the financial system capital goods only include labour that was activated on companies’ balance sheets.
