Time Preference Is Only the Proximate Cause of Interest; the Ultimate Cause Was the Necessity of Consumption

Like Böhm-Bawerk, Mises believed that time preference was only the proximate cause of interest. But rather than seeing the ultimate cause in certain psychological dispositions of the human being, he followed Frank Fetter and Franz Cuhel in arguing that the ultimate cause was the necessity of consumption. The fact is that human beings cannot survive if they do not consume. Hence there must be some time preference in human action or the human race would perish. This does not mean that time preference is the only factor determining human actions. It means that in order to survive, human beings must at some point prefer shorter production processes to longer ones, even though the longer ones would be more physically productive.

Mises argued that one would always choose the longest production process if one could disregard the need for survival through time. It is the need to survive that prompts the acting person also to consider the passage of time and to prefer, at some point, sooner results to later ones.

—Jörg Guido Hülsmann, Mises: The Last Knight of Liberalism (Auburn, AL: Ludwig von Mises Institute, 2007), 778.