Starry- eyed economics: Navigating the final frontiers of space.
Gargee Dixit
FY B.Sc. 2023-27
Reading time: 5 Minutes
Stephan Hawking famously said,” We are running out of space, and the only places to go to are other worlds.”
In today’s world, we hear a lot about “how the world is burning” and the solution of some people (Billionaires) is to pack their bags and shift to Mars. Very dystopian-ish narrative. Although it may sound humorous to some of you, searching for habitable places for humans aside from Earth has been the goal of many organisations in the past. Elon Musk, Bezos, and many billionaires are trying to make life possible on Mars. Virgin Galactic and SpaceX are proof of that. Musk even had the ambitious goal of sending humans to Mars before 2030.
But when we talk often about space colonisation or even making space habitats habitable essentially, we fail to account for the economic aspects. The question now isn’t whether it is technologically possible to send humans to space, the question is whether we can economically, and whether we are willing to take this gamble when resources here on Earth are scarce as well. This is where interplanetary economics comes into play. Now bear with me, this is a purely theoretical idea right now and I doubt there is more than a handful of research on this topic, but it does raise important questions that we future economists should be able to ask.
I came across an interesting read titled “The Theory of Interstellar Trade” by Paul Krugman. If you are even remotely interested in this topic, I urge you to read this. The author has extended traditional international trade theory to form some tangible (albeit useless) theorems. It sheds light on what interplanetary economics could look like in the future. One important point he raised was about the concept of time and how that relates to the concept of transport and arbitrage. As you know, time is relative. How will you set up a modern financial system that is based on the concept of the time value of money, interest rates, and opportunity cost, when time itself that holds all of these together is relative. The main question the paper deals with is how you charge interest on goods in transit when the time for the observer is different from the time for someone travelling with the goods.
Interplanetary trade or even space colonisation has raised some important questions on the fundamentals of economics. If we ever migrate to Mars or the moon, aside from biological and technological problems, we still haven’t thought about whether it’s economically viable. The resources we have on earth are already scarce. That’s why we have economics, what happens when we migrate to space where even our value-in-use commodities like water, sunlight, and air are also value-in-exchange commodities. A single litre of water costs $10,000 on the international space station! How are we supposed to colonise space when the things that keep us alive are so expensive or so cumbersome to produce.
We have to also consider the fact that how do you establish an economy which hasn’t been organically developed throughout history. The modern economy has had hundreds of years to evolve from barter system to feudalism to mercantilism to capitalism. How do we organically grow economies out of thin air? What will be the pricing strategies? Even we as a world cannot decide on one singular economic structure to allocate our resources. Do we communally share all our resources or do we set up a competitive market? Do we have a central plan and allocate based on our needs or do we set up a pricing strategy and have laissez-faire capitalism?
If our end goal is to leave Earth and go on a cosmic adventure, is our economy in space self-sufficient to support humanity or does it have to be connected to our economy back home on Earth? What if the Earth dies out? Who will support us then?
The answer to scarce resources for some scientists is simply looking up yet again. Asteroid mining projects are going on and every day we are finding new planets where resources here are scarce but there they are in abundance. There are even certain scientists suggesting the use of a Dyson sphere, a sphere around the sun harnessing its power to give us energy but again they are all theories with no tangible technology to back it up yet. And even if we find gold-filled planets and diamond-rain moons, an abundance of these rare earth elements will ensure their use but their market value will take a stark dip, ensuring the profit-seeking companies would have no incentive to set up extraction plants.
What I have said seems very dystopian, seems too futuristic for us to be thinking about right now but even this exercise of theorising space economics, reveals how complex and interconnected our current world economy is. It was constructed organically through its material conditions for thousands of years and if we have a chance to replicate it somewhere else, we need to first understand it to the fullest.
In the story of humanity, science, and economics have always been the yin and the yang. Science is the dreamer, the explorer, the aspirant while economics reels her in and asks the question of whether it is possible and scalable. Many people are asking the question of whether we should divert our resources devoted to space travel back to earth, where we could improve our earth instead of looking up. Late-stage capitalism insists that our world is doomed, and we can do nothing about it and space colonisation seems a way to “escape” this reality. But should we divert our resources and focus on new avenues or keep trying to save the world? We are at a crossroad, and we need to choose a path before it is too late. So, what is it going to be dear reader, a scary cosmic escapade or an earthian overhaul?