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The Market Liberalization of Space Odysseys

The Market Liberalization of Space Odysseys

Towards the end of 2019, a software issue during launch meant that Boeing’s Starliner spacecraft was unable to perform its first mission to supply the International Space Station as intended. It might by counted as merely one of the many problems often faced in cosmic exploration, yet this one was of particular interest because the spacecraft was created and operated by Boeing, a private business, as opposed to a public body such as National Aeronautics and Space Administration (NASA), such as we have been widely acquainted to. In fact, NASA abandoned the manned spacecraft program in 2011 (the space shuttle fleet), due to the high maintenance costs, as well as the significant and politically unpalatable dangers. Instead, what it has done since then has been to rent berths in Russian Soyuz spacecrafts or to encourage private businesses to come up with replacements. That is how SpaceX, Orbital Sciences Corporation and United Launch Alliance jumped onto the bandwagon of a game that, for the better part of the last century, was played by governments moved by Cold War logic.

Between the 1950s and the end of the 1980s, space exploration became the staging grounds for ideological competition between the United States of America and the Soviet Union. The Cold War was to be waged on all fronts, even if this meant leaving Earth and moving into outer space. Enormous amounts of dollars and rubles were pumped into a space battle that had to demonstrate the supremacy of one of the two economic systems at odds: capitalism or socialism. It was a combat of free markets versus planned economy. Washington and Moscow maintained a meticulous authority over space exploration, since even the slightest of failures could have meant a loss of supremacy and even face.

At some time during the 1970s, voices in America started to claim that the United States was investing too much money in the space programs, to the detriment of Great Society programs which were aiming to reduce poverty and the economic gap between races in the newly-egalitarian state. But, in love and war anything goes, so there was no time for second-guessing: the state of combat (even if only ideological) had to be maintained no matter what. Specialists suggested that it might be a better idea for the government to take a step back and allow entrepreneurs to join the space game with investment from their own private pockets. Around the world, the Soviet Union would continue its state-focused approach. The Soviet state was “all in” the Cold War, which meant that the United States could not accept the uncertainties of private development in areas that were too sensitive for the current state of the race. Private companies would put up communication satellites, transmit TV signals or act as contractors, but the march to the Moon and then (hopefully) Mars and the creation of the NavStar global navigation satellite system were to be conducted at breakneck speeds.

The emergence of true “space entrepreneurship” had to be delayed for yet more decades. History would eventually determine an end to the Cold War, and even then, the US needed around a decade and a half more, up until the mid-2000s, to let private businesses try their luck out in space. Elon Musk, Jeff Bezos or Richard Branson are the most prominent examples of entrepreneurs in the “New Space” sector and symbols of a shift in paradigm: opening up space to free market forces. The other superpowers engaged in high-level space exploration today are China, India, Russia and the European powers, mostly through an intergovernmental agency; hence, nations or unions of nations with the economy to support the large capital investment required in space. The rest are contenders only on the margins, with exceptions such as Luxembourg, which is trying to stake a claim in space finance operations.

But the pit might not be bottomless: sooner or later, a crisis may squeeze funding for space programs or reduce the appetite to take on risk for prestige projects. If it happened to the US, the doyen of space exploration, then it can happen to anybody. The Americans hope that private businesses such as SpaceX and Boeing may cooperate with NASA to bring costs down and grow the space economy into self-sustainability with government made, yet as free as possible markets. Even if the missions might fail every now and then, the most important lesson to be learned is the signal offered to the economy: market liberalization is always an option, even when it comes to outer space.


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The Market For Ideas Association

The Romanian-American Foundation for the Promotion of Education and Culture (RAFPEC)

Amfiteatru Economic