ABSTRACT
The Newtonian conception of time is spatialized; that is, its passage is represented or symbolized by “movements” along a line. Real time, genuine uncertainty, and equilibrium all have important functions to perform in the analysis of an economic system. The most important implications of real time are for the modeling of adjustment processes and the characterization of uncertainty. The chapter examines both the endogeneity of uncertainty in real time and its incompatibility with standard notions of equilibrium. It analyzes the anticipation of future events from the perspective of their typical and unique features. Finally, we explore the interrelation between equilibrium and optimality. Keynes' illustration emphasizes that aspect of genuine uncertainty that differentiates it from Newtonian or neoclassical uncertainty. The two features of Keynes' example that we shall explore in detail are its endogeneity and its inconsistency with static equilibrium. Genuine uncertainty is characterized by both relatively time-independent and time-dependent features in the flow of events.
