Jesús Huerta de Soto is one of the great masters of Austrian economics and a master teacher as well. Videos of his enormously popular lectures in Austrian economics at the Rey Juan Carlos University in Madrid have been viewed by hundreds of thousands; and English speakers are fortunate that an edited transcript of some of these lectures is now available in the book. It is my pleasant task to review. The lectures vividly convey Huerta de Soto’s great interest in etymology and also his delightful sense of humor, though I anticipate that some of his jokes will offend “DEI” people and that is all to the better, but in this week’s column I’d like to concentrate on his illuminating philosophical views and their relevance for economics.

The dominant theme in the lectures is the creativity of the entrepreneur, understanding entrepreneurship to hold of all actions, as well as the activity engaged in by people with new ideas for making money in business. In all our actions, we speculate about an uncertain future.

The future that is relevant for action, de Soto believes, is made and not found, Time as understood in physics is not real time but rather a series of events that never change their order. He writes,

In economics, the concept of time is a subjective concept. What does this mean? It means that time, as we are referring to it, is time as the subject feels and experiences it in the context of each action. . . .We will call this the subjectivist view of time (Kairos in ancient Greek) in the sense that the subject feels the passage of time precisely because he or she acts and completes stages.

This is to be contrasted with objective time, which is simply movement along a line:

In the world of physics, time is a dimension, the fourth dimension, which is simply an analogy for movement. Imagine we are at the North Pole beginning at the time of the spring equinox. Well, at the North Pole you can see the sun, and the sun moves . . . after one hour . . . another hour. . .as if were marking the hours on an enormous clock face. The sun returns to where it was before. The fourth dimension of time, the one Einstein studied.

Though these are heady waters indeed that I enter with reluctance, I fear that de Soto has assumed a premise that need not be accepted. It does not follow from the fact that the events of chronological time, the “fourth dimension,” occur in a fixed order that these events continually recur in the same order, so that one cannot genuinely speak of “before” and “after.” It is not a consequence of Einstein’s General Theory of Relativity that physical events recur in this way, though there is in fact a model of the theory devised by Kurt Gödel that Einstein rejected, though he was much intrigued by it, in which this is true. But this is by the way. …

De Soto sweeps away the notion of empirical testing in economics. Economic laws are true ceteris paribus (other things being equal,) but it is impossible to test ceteris paribus laws empirically. “In the real world, no scientist has ever been able to observe anything ceteris paribus, other things being equal, nor can any scientist do so now, nor will any ever be able to do so in the future.” To assume otherwise requires specializing time as if the world were static and not dynamic.

De Soto deserves our gratitude for showing in such a striking and dynamic way the relevance of philosophy for economics.