Economic systems for micronations in space

Question

What are possible economic systems for use within a space-based industrial settlement? The different approaches are to be weighed by the competitve advantages they offer to their respective communities.

Many science fiction stories are written about the space industrial settlement or colony as a “company town”, owned by an all-powerful corporation. Often workers are portrayed as oppressed wage slaves. My idea is to have a background that specifically prevents that, and instead encourages small independent companies.

This is a future where heavy industry has moved into space, with asteroid mining, settlements on various moons and other planets, in-space habitats, and shipping liners. An Autonomy Accord exists, preventing big companies from owning and being dictators over these various communities. Rather, each one must be owned and governed internally, by the people living and working there. So a big conglomerate might be a creditor, but cannot be your boss. What you have, in effect, is a federation of micro-nations.

Now any kind of industrial mining, shipping, or manufacuring concern will have a huge shared infrastructure. You can’t just have each person own his own tools and a little homestead. Not only that, but they must maintain a space-worthy habitat with life support systems.

So, in a pure capitalistic system you will need a labyrinth of contracts and stocks to provide for individual ownership of a logical piece of group property. But some communities noticed the whole “the workers own the factory” narrative as a parallel of the Communist movement that came out of the original industrial revolution, and decided to simply go with communism internal to the community.

Ocasionally writers will be more original: for example, the novel 2312 refers to a Mondragon worker cooperative system.

I'm asking about the internal economy of a “town” where workers can’t really go elsewhere after work; not about the political system of the “town” or the management of the company. Certain rights will be guaranteed by the federation, so we can’t have workers exploited by a resident ruling caste. Getting that sorted is not the scope of this question. I'm asking about how the community will distribute and share resources internally.

What is a possible (good) system, and how will adopting your suggested system provide the entire community (company) with an externally visible competitive advantage or disadvantage?

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More information

Each settlement is a member of the federation which exists to facilitate trade, provide for common defence against piracy, and establish international law for contracts, claims, and disputes. We assume it is aggressively capitalist, so the individual companies need to compete for business and value. There may be layers of politics, alliances, and preexisting deals in place, but long-term it’s safe to say it’s capitalism where the best deal gets the business.

As the off-Earth industry grows, buying and selling to each other becomes a larger part of the market.

Settlements have great variety in their self sufficiency. As more niches spring up, they can offload more non-core functions to other settlements. E.g. they can buy from a farming community if the logistics make it practical rather than shipping adding to the cost. In crowded Lunar L4, you will see a lot of narrow specialization. Prospectors will patronize outfitters before setting off to remote destinations, but need to keep onboard vats for basic food calories, fix their own equipment, etc.

Are the settlements designed to be self-sufficient? What is the variation in population of these settlements? Are there nation-state or larger groups out there, interacting with these settlements?

Note that the settlement “doing better” must translate into more bounty to the individuals. People who feel oppressed can just leave, and a large number of dissatisfied among the population can force a recall of the leaders — the trade federation backs up the principles of the autonomy accord whose main tennant is to prevent oppression.

Answer 1

Each employee is being paid in two currencies:

• galaxy wide credit (GWC)

• colony currency (CC)

GWC is to have some portable, long term savings. And to be able to buy the newest game console online.

CC is used to distribute scarce goods and services within the local economy. Because of a lack of portability or flexibility there is a general idea that they more or less should be used within some time frame and possibility of saving is limited. (Demurrage actually may be fine, depending on the conditions of the colony.)

CC and GWC are freely convertible, but the colony does not guarantee exchange rates.

Within the colony things like food, electricity, water, computer power (if someone wants to play Quake on the colony mainframe), rent for quarters, data transfer with the outside are being metered and priced in real life. A computer system tries to emulate the market equilibrium price that would clear the market. In the case of services provided only by single community members there would be some system of price controls, possibly with compensation for just being ready to provide some service.

Answer 2

The biggest problems with running a capitalist system in a confined space are waste and greed. Communism equally has its problems in such situations.

The best way to run it is like an oil platform or military operation. Everyone has their job, they do their job, the company hierarchy provides everything they need while on base. They do their tour, whether 2 weeks or 2 years with everything laid then go home. You could run a "2 weeks on 2 weeks off" system if transport is cheap or "6 months on 3 months off" if transport is more expensive, perhaps even just a 2 year tour, then apply for another position after an abused minimum rest period in full gravity if you want something more dystopian.

There's no reason whatsoever for the company town model to be a dystopia apart from the fact it makes a better story.

The model you've created here, while maintaining the autonomy of the individual, is going to actively prevent any economy of scale and place the risk and cost of the operation either on the individual or on the sponsor. While they may not be wage slaves, they are going to be debt slaves probably bound to sell their goods to one purchaser with no option to get a better price selling directly onto the open market. Not because the resource or person is controlled but because the transport is controlled. I can see a far worse situation arising from your model than from a well run company town.

The well run hierarchical company town in fact acts as an idealised, miniturised, meritocratic (with a hint of gerontocratic) commune. Where the members are directly rewarded for work done and punished from the outside for civil disobedience with no kickback to the other members of the commune.

The Spacing Guild ultimately controls them all unless you allow the corporations to become big enough to control their own transport.

Answer 3

If the number of people is pretty high then you need local currency to distribute goods (like all communist countries did). Even if the number of people is low and we have barter we can still talk in terms of currency. So who gets what amount of money?

The answer is that it all depends on the political system inside a micronation. In USSR the salaries were planned and the distribution was in hands of people who ruled the country (the leaders of the party). Everyone got almost the same salary, but some people had access to cheap cars and others did not. I believe that even with small amount of people the systems remains mainly the same, but the cheating significantly reduces (no cheap cars for special people). So everyone will receive almost the same salary. Highly qualified specialists will not like the system and will try to find jobs elsewhere.

Another variant are corporations according to German laws (Aktiengesellschaft, AG). They are partially controlled by workers (the CEO reports to people who invested the money and to people who work in the company). This way the specialists still get high enough salary, but the workers go on strikes and have higher salaries than in ordinary corporations.

Also it will be very hard for the international community to check if the workers are not exploited, because they are very far away.

Answer 4

I think a defining difference between living in modern day Earth and living in space will be isolation. The size of any colony or collection of colonies will define a lot about how people interact.

I would look at examples like east indian colonies in the 1800s, Pacific island military outposts in WWII, the American Wild West or the bases on Antartica. A key element of that life is waiting for the next shipment. In a fairly isolated colony there will be few surprises. The arrival date and manifest will be known to all - with the exception of contraband or other secret cargoes.

I think it would be rare that any colony could produce every good that it needs. Some external cargoes will be basic needs. A reasonably sane colony will distribute these based on need. Luxury items are different. Any colony will have businesses that are doing well vs others that are struggling. Distributing those items will be up to the community and your political process.

You can go a long way toward understanding this kind of economy by looking at travel times between colonies and defining the amount of trade. You can also look at how many colonies can produce different kinds of basic needs. Every colony will likely produce enough air, water & food. Few will produce higher quality goods like coffee, medicines or specialized hardware like the rubber seas on air locks or cryogenic hydrogen tanks.

So the average independent business operator will go about his day dealing with the limitations of the available materials. When there's a system failure, she will order parts that may take 6 months to arrive. Then negotiate with neighbors or neighboring colonies to get the parts early in exchange for something else.

Answer 5

IMHO you are trying to reconcile two things that are not reconcilable.

In order to have small "free" communities you have to make them self sufficient and that means they should own their own equipment, otherwise they will always be dependent on whoever (literally!) own the air they breath.

OTOH, once you stipulate spatial and temporal separation (long and somewhat dangerous travels) you will almost automatically get competing individuals/small communities. Dropping transport costs (goods, people and information) inevitably leads to "globalization" where larger companies will always have an edge on smaller ones.

Multiple competing "firms" can only exist in a fragmented world. No amount of legislative effort can prevent people from doing what is economically favorable for extended periods of time. In a system where travel/transport costs are low there is space for very few entities occupying the same niche.

I suggest You have a situation where colonies were started via unmanned, auto-replicating factories that replicated so well (before their owners would realize the danger) that certain basic commodities are essentially free so colonists could concentrate on developing higher return products which can be traded over long (and somewhat dangerous) routes.

Answer 6

Government, Hard Mode

What are the most important differences between this kind of colony and a country on Earth?

• Your colony must be extremely efficient to survive in space.
• Depending on the colony's position, transport costs and times may be very high.
• Law and order are extremely important, as individual destructive capabilities are high.

In other words, you took the job of running a nation and cranked the difficulty up to eleven. You need to do what governments do, but without the flukes and failures. Or else, your station dies off in one of various possible catastrophes. A hull breach, fire, or just a fluke in the supply chain could all lead to a cascade of failures that ends the station. Unlike on Earth, terrorists could be an extreme threat. If someone destroys anything that's required for station integrity or operation, and it can't be replaced in a timely manner, you're doomed.

This said, you already got the context right. You need to ensure security and prevent monopolies, but anything not limited by these constraints could be hardcore capitalist. The market makes sure that every little bit of resource usage is properly paid for.

Hardcore Is Correct

In today's rich countries, we're living in excess. We worry about topics like supporting people who aren't productive enough to life a decent and healthy life. Mind you, these people struggle with life down here, where oxygen is free and life can be supported with just soil and access to a river. And we struggle to stay on budget, even though we have much to spare.

The per-capita productivity required to survive in space is big, and the margin for destructive errors is tiny. Unless you have a lot of technology that is vastly superior to ours today, your station will kill off not just those who would be poor on Earth, but also everyone who isn't notably productive. You can't just feed people in prisons or pay an interplanetary ticket for them, nor do you want any crime problem. I wouldn't be surprised if a petty theft verdict becomes a death sentence under such circumstances.

Hardcore capitalism is very different from both anarchy and crony capitalism. When you're tight on resources, you really want people to keep their contracts. A "mere" delay in delivery might already cause big penalties, and any attempt to avoid fulfilling a contract would warrant police action. Unreliability, both from incompetence and fraud, reduce efficiency and must therefore be penalized. Neither being rich nor being disadvantaged should allow for any special powers; sympathies take a back seat and the contract rules supreme.

So, all in all, the system

• focuses on providing security and legal clarity.
• utilizes (and enforces!) laissez-faire capitalism as much as possible.
• tries to cut any costs that aren't vital to the above. (There are some corner cases of spending on a capitalistic system, see below.)

As another argument why this solution is correct, think about violating each of these rules. The first one has been handled before: without security, criminals can degrade or break the colony for personal profit, which usually isn't to the whole station's profit. The second is based on economic theory: people can sell their goods for the highest price they can negotiate. Any other solution would clearly be a competitive disadvantage. And violating the third, cutting costs, would be directly represented in taxes, which are directly taken from profit margins. Unless you have some reason to believe that government spending can offer a bigger competitive advantage than direct profitability, running costs don't improve the situation. The only exceptions are where the assumptions of capitalism don't hold, like education that improves individual decision-making, or the breaking of a monopoly that the market can't deal with in a timely fashion.

Seen From Inside

To an individual inside a colony, this means a lot of agency about their trades and actions. There would be tight competition on all sides, including job offers. I imagine a lot of market-like situations, with auctions, varying prices, and short-term offers. If a delivery runs late, some prices may spike. If the station is low on certain specialists, their job offers and associated salaries will explode until more arrive. Speculation, prediction, and storage would be much more important than on Earth, since the effects of a shortage are much more severe. Insurance would likely be a common tool to assess risk, as it ensures that those making false predictions have to pay for them. "Safety concerns? Did you see the insurance claim sizes? Joke's on them if they messed up."

In everyday life, it wouldn't be that different from local capitalism as we know it. People get paid depending on the value of the goods or services they sell, and everyone is looking for good deals. Just at high productivity and with a general consensus that any kind of fraud or deception is not okay.

An interesting aside is that these "spacers" would generally earn a lot compared to what we're used to. Since the baseline of their income can pay for around-the-clock life support in a space colony, those who have any disposable income would probably be considered quite rich in our terms. Anything that can be efficiently produced in the colony would be very cheap to them, and all but the poorest could support families on Earth with ease. And still, they might worry about food shortages or hull breach risks for themselves.