Property Rights and Time Preference

This paper establishes a nexus between the established fields of constitutional political economy and macroeconomic capital theory. Constitutional political economy explores how legal and institutional structures emerge over time. The evolution of property rights has always been a central focus of this line of inquiry. Time preference is one of the most basic economic concepts. Theories of interest, term structure, and opportunity cost, are all dependent on time preference, which is also the basis for capital budgeting in modern finance. This paper establishes how and why the emergence of property rights supported a reduction of time preference, allowing for employment of capital in time-consuming means of production. This paper also argues that institutional imperatives inevitably lead to the systematic degradation of property rights, and a consequent increase in time preference.