Economics... in space!
March 5, 2014 5:18 PM   Subscribe

I am looking for resources, online or in print, for how a society spanning many planets could function economically. I have read some novels that treat this matter seriously, but rarely in the level of detail that I am looking for.

Specifically, I am interested in things like knowing how valuable interstellar commodities would have to be to make interplanetary travel profitable. For example, let's say there's some heretofore unknown material on a planet in Alpha Centauri. Assuming humans have the capacity to travel to this planet, how valuable would the material have to be to be worth the expense of building and maintaining spacecraft to transport it? How would trade routes be established and controlled? (Entirely hypothetical, obviously, but that's just to give you an idea of what I'm looking for.)

My imagination is getting stuck trying to imagine how a space-faring civilization in the far future would profit, financially, from space exploration, beyond the usual noble causes like seeking out alien life etc. I'm pretty good at making up cultures and languages, but apparently not so great at making up economies! Are there resources you can recommend, or any novels that you know of that treat economics with the same attention to detail that is often given to language, culture, or technology? I'm holding out hope that some economics professor has written a non-fiction book or article about this topic at some point, but I'll also take any sf novels that handle their fictional economies especially well.

(Also note: While I'm not in love with hard sf, I would prefer that the material be based on real economic theories and scholarship instead of pure conjecture.)

(Yes, I am researching this for a novel.)
posted by deathpanels to Work & Money (9 answers total) 13 users marked this as a favorite
You should definitely check out cstross' Neptune's Brood.
posted by b1tr0t at 5:28 PM on March 5, 2014

If you haven't completely ruled out sci fi (not sure the diff between hard and soft) I'd go with Moving Mars.
posted by tilde at 5:31 PM on March 5, 2014

I definitely have not ruled out SciFi. I'm writing a SciFi novel. I'd just like this aspect of it to be based on something like fact (insofar as is possible with economics) instead of pure guessing, which is what I'm doing now.
posted by deathpanels at 5:39 PM on March 5, 2014

Have you seen Paul Krugman's 1978 (!) paper The Theory of Interstellar Trade (pdf)? It's focused on a fairly specific question regarding interest rates and near-light-speed travel but is kind of interesting to see how formal economic analysis can be applied to sci-fi situations. There is additional discussion in the wikipedia page.
posted by mhum at 5:49 PM on March 5, 2014 [9 favorites]

Another paper: The $11 billion bottle of wine. (In 1981 dollars!)
posted by Hatashran at 6:38 PM on March 5, 2014

Just outside the realm of novels, but on a parallel track, interstellar economics is addressed in just about every tabletop RPG dealing with interplanetary societies... and almost always poorly. Usually it is absurdly simple to break (you find and agricultural planet and an industrial planet close to each other and hop back and forth between them, becoming absurdly rich in short order). The only one to ever do it right, in my finding, was Far Trader for GURPS Traveller, the trade rules of which were written by a doctoral student in economics. It uses the gravity model of trade, which models quite successfully how international trade works. GURPS has a reputation even among non-players for impeccable research and background work, and Far Trader is a splendid example of that, as well as remarkably easy to understand.
posted by ricochet biscuit at 6:44 PM on March 5, 2014 [1 favorite]

Salt is on my reading list and it sounds like it might be of use (as well as just interesting to read). It was an incredibly valuable commodity and various trade routes were established around it.

Would some reading about the Dutch tulip trade give you some good information? The bulbs didn't have any intrinsic value (like food/clothing/shelter) but economics is all about supply and demand, right? People went crazy for them and huge sums of money were exchanged.

Something that people just want, especially since it's something completely new from a different planet, could be a very strong driving force to develop a trade route. And I wonder if the ups and downs of the trade of various commodities (for example, as I understand it, the tulip bubble only lasted about three years) would be the source of some plot devices.

Good luck with your book! Let us know when you publish and we can say we (sort of) knew you when.
posted by Beti at 7:29 PM on March 5, 2014 [1 favorite]

Entering Space by Robert Zubrin treats this very topic in a very practical and visionary way.
posted by General Tonic at 8:19 PM on March 5, 2014

It would really depend on the method of travel and the level of planet 'specialization'. By that I mean, a number of things, but most importantly method of propulsion. In the universe is interstellar travel driven by solar sails? Nuclear Propulsion? Warp Speed? Hyperspace? Wormholes? Gates?

Outside of that I'd say the masis for a baseline of profitability would be fuel costs + crew costs (food vs hibernation vs number of required active crew members) + general operating costs (wear and tear, spaceport fees, etc) + base cost for aquiring the good (mining? trading?) + a percentage (say 15-20% for profit?). Outside of that, if the price that would be fetched is lower than that equation there wouldn't be a market for trade to exist unless there was a subsidy either from a government or a corporation or whatever.

This is why it's so specific. For instance, the cost of solar sails in this model would be 0 on the fuel costs, but in universe it may mean that say the speed means crew costs are higher. Look at the real world model of using clipper ships up until even the end of the 19th century even with steam available. That's why it would take this base equation (and I may be missing things that I haven't thought of) and applying to the model you've set up for your universe and why there may not be a generalize approach that would be helpful. This is also of course depends on if you're speak about harder or softer sci-fi, There will be certain hard limits due to either the nature of our universe OR ur imperfect understanding of it if it's a fairly hard universe.

The good thing is that there may be certain reliable real-world models that would at least help start a plausible jumping off point for consideration. For instance, in a solar-sails model may be most conducive to considering individual planets like Hawaii, the Marshall Islands or the Caribbean. Based off of that you could establish a fairly 'realistic' econonomics model for the price of manufactured vs raw goods vs food stuffs on certain planets.

So that said the easiest approach would be to model your universe similarly to a known current or historical economics approach and just crib from there. Otherwise consider what I wrote above about that equation to determine potential supply and wholesale price of a particular good, along with potential demand. It won't be perfect, but it would certainly be a starting point.
posted by Carillon at 11:20 PM on March 5, 2014 [1 favorite]

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