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The credit card: spending tomorrow today : Comments
By Isaiah Black, published 23/12/2009The credit card, perhaps more than any other commodity, is most synonymous with human desire.
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However it is a universal tendency of mankind to prefer the satisfaction of a given want sooner rather than later, otherwise we’d never eat. It is this time preference that gives rise to the phenomena of capital and interest. It is an unalterable fact that man’s time on earth is limited. This has certain economic consequences. This time preference is reflected in all human action.
Capital is valuable because it brings us closer *in time* to the satisfaction of our wants than if we didn’t have the capital. To make capital goods someone has to forego the “instant grat” of consuming now everything that is produced; and setting aside some of what he produces to make a production good, rather than a consumption good. So instead of catching fish with his bare hands, the primitive capitalist took time out from consuming everything he produced in that way, to sharpen a spear or make a trap – the produced means of production – capital. The significance of capital is that it increases the amount that can be produced with a given unit of input, and so increases the wants that can be satisfied later – for those who are prepared to wait.
Thus, notwithstanding the prejudice of the ancient authors against debt, how could it be otherwise? If one did not expect a greater satisfaction in the future to compensate for delaying one’s gratification, how or why would anyone delay their gratification for long enough to produce the goods which the debtor consumes now for instant gratification– at the cost of paying for the waiting time, which is interest? The lender does no kind of injustice whatsoever to the debtor by lending him money. There is no injustice in debt nor the requirement to pay interest. The parties’ consent answers all questions of ethics involved.