Russia's Economic Collapse: The Hidden Role of Time Preference - Econ Lessons

[TexasTowelie]

My name is Mark Biernat, and I am an economist. Here, I explore the economic trajectory of Russia through the lens of Austrian economics, focusing particularly on Eugen von Böhm-Bawerk’s theory of time preference. According to Böhm-Bawerk’s foundational 1884 framework, individuals prefer present goods over future goods for three main reasons: (1) a more urgent satisfaction of wants, (2) uncertainty regarding the future, and (3) the greater productivity of roundabout (capital-intensive) production methods.

Today’s Russian economy exhibits an exceptionally high intertemporal subjective time preference among citizens and, more catastrophically, within state policy. As the Kremlin diverts national savings into immediate war expenditures, it sacrifices capital accumulation, future production, and long-term investment. This bifurcation of time preferences between the Russian people and the state has created a destructive feedback loop: forced savings and high nominal interest rates coexist with declining real capital deepening.

Drawing upon insights from Hayek, Rothbard, and Mises, this video argues that Russia’s economic system is undergoing terminal maladjustment. Metaphorically, it is consuming the seeds meant for future harvests — a clear sign of economic decivilization and eventual collapse. With expanding credit card debt and shrinking investment horizons, this disjointed time preference structure may lead to what Austrian theory calls a catastrophic disequilibrium.

This is not simply a downturn—it is a warning of economic extinction, comparable to evolutionary dead-ends like the prehistoric bear dog: an apex predator unable to adapt. I use metaphors to make a point about how economics affects real life.

[Warpy]

1. I don't see much of a buying binge in Russia

with the exception of food. With potatoes, butter, eggs, and poultry in short supply, and prices going up rapidly, it's understandable that there is a great deal of anxiety there. Russians are certainly not ubying apartments or cars, new construction and Russia's automotive industries have already pretty much collapsed already.

It remains to be seen shat Putin will do as banks and industries start to collapse. My best guess says he'll nationalize the whole kit and kaboodle, creating a Soviet-esque economy. It won't be any better than the first iteration and will probably fall faster.

The social indicators of an imminent collapse are even more obvious than the economic ones: a divorce rate in 2024 of 73%, a falling birthrate, funeral homes the one industry showing a healthy profit margin while they push "co friendly" cardboard coffins at their clients instead of the traditional wood, which they're running out of.

Even if Russia is able to create and sell a quasi Marxist economy again, the demographic bomb that's set to go off about 25 years from now will just about finish them---unless they pull off some sort of economic miracle and people actually want to live there.