Marshall proposed thinking in one of four blocks of time. The first would be a market period, where demand determines price because there is not sufficient time to alter supply. The short run, Marshall’s second period, introduced a new wrinkle: by responding to demand, firms could increase supply, but only by spending more money. So prices might go up, set by the cost of supply, working in tandem with demand.
The third period, the long run, during which firms had time to develop new efficiencies, introduced a further complication. Now rising demand might trigger falling prices as businesses benefited from economies of scale and better organization.
The fourth period, secular time, was Marshall’s nod to history it-self. Secular time was generational time, which might see huge shifts in demographics, knowledge, or political organization, completely refiguring the dynamics of supply and demand. Marshall had found a way to integrate the glacial movements of the ages, the lurches and accelerations of the present, and the universalizing clarity of economic abstraction.
Lifted from Jennifer Burn’s book Milton Friedman: The Last Conservative. She narrates Friedman’s encounter with Alfred Marshall’s book Principles of Economics.
Time in real estate is yet on another schedule.
Home Economics 