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Let's say humanity keeps advancing in its attempt to achieve permanent human presence on Mars, At the beginning it might be only temporary deployments (like to the ISS), but after some time let's say people will move there permanently.

At which point would the people living there start to use a currency for everyday transactions? How will it happen? Which things will be first? In which time frame will it realistically happen?

I would imagine it will start with some sort of a canteen where you can purchase basic and extra items (snacks, gadgets etc.) with your own currency reserve.

However at a certain point private entities (people and companies) will start purchasing private real estate, at which point you will start to see differences in life quality. Small differences at first but then larger.

In essence, my question is what would a government exploration mission transitioning into an economy look like?

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    $\begingroup$ "Aat a certain point private entities will start purchasing private real estate": purchase from whom? This is the essential element. They will pay for the real estate in the currency accepted by the seller. (And as things stand now, Mars is terra nullius. Whoever gets there first becomes the owner of all the land he can reasonably claim.) $\endgroup$
    – AlexP
    Jun 16 '20 at 10:49
  • $\begingroup$ @AlexP, I meant they will privately fund missions for mars, Or lease/purchase decommissioned ones from NASA? $\endgroup$
    – moshevi
    Jun 16 '20 at 10:51
  • $\begingroup$ NASA? Are you truly convnced that NASA will get to Mars before SpaceX? It may well be the case that when NASA gets the funds for an expedition to Mars they will find a thriving Muskian colony there. $\endgroup$
    – AlexP
    Jun 16 '20 at 10:52
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    $\begingroup$ @J... My comment was about the bootstrap period. You might be satisfied to run a colony "at a loss" for decades. I know others who won't be satisfied by that. $\endgroup$
    – user535733
    Jun 16 '20 at 21:06
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    $\begingroup$ @user535733 Ok, but you can't have a Martian market economy until that happens, and OP's question is what Mars' market economy would look like once it emerged. By the time Mars is mature enough to have a market economy, it will probably also be very well along the way to being self-sufficient. I think the latter is more important metric (becoming self-sufficient will be the major turning point rather than also requiring the development of planetary exports). $\endgroup$
    – J...
    Jun 16 '20 at 21:10
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There are a few requirements which I think have to be fullfilled before private transactions can occur:

Choice
As long as transfer of goods to the mars station is just given by the same institution which governs the station and deployment there is rather short, there will not be much transaction. possible some extra gadgeds or snacks in the cantina as you suggested, payed via reduction of your monthly wages, and thats it. Just when I get the chance to choose between at least two competing providers, there can be trade. Not both providers have to be placed at the station itself, there is just need for the ability to recieve the goods ordered, for example it is allowed to send material with the owners ships or ships of other providers are allowed to land at the station. But as long as the stationowner doesn't allow any of that, there will be no (legal) transaction.

Time
There is no need to buy more then some of those gadgeds mentioned before if I stay at this station for a rather short time. My deployment there has not to be permanent, but the time there as to be long enough that investments in other things than the 'usual standard' pay off (at least emotionaly ^^).

Space
Sounds silly, but there has to be enough space at the station for my personal goodies. As long as this station is a cramped place (similar to a submarine for example) neither me nor my comrades have interests in goods which can not be placed and used properly. This fact highly reduces interest in transactions.

Privacy and ownership
Not needed right at the beginning of the process, it highly increases the interest in personal goods if I have a place which I can call my own (at least for a time, much more if it is for Lifetime). Some cabin I am given I will not pay that much interest in, but my own personal home I want to improve. Make it more livable. The posibility of getting ownership of a place greatly improves the 'trade' on that station.

Addendum: I think nowadays this will not happen by itself, our society is that much money-centralised that I think the governing organisation of the station will focus trade by itself as soon as it can be profitable.

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Top of the Pyramid - Hunting & Gathering

Collecting data on Mars is why we have invested so much, so far. Gatherers collecting samples, prospecting for natural resources, and observing the unusual are collecting the kinds of wealth that people on Earth will pay for.

These eager Earthers will pay to ship high-price analysis equipment to Mars. Earth will invest the kind of money that the fledgling Mars colony could not afford to build extraction sites (mines) for interesting finds, and Earth will invest to build top-tier research facilities. That high-price equipment, and those facilities will get handed down and be the trickle down part of the economy.

There's going to be a natural tendency by the investors to keep their investment out of the secondary market. Hopefully, this tendency will be resisted by wise investors, who see value in spreading the wealth.

Near the Top - Teaching

Teaching has always been an early service industry. This could include conducting Earth tourist visitors to the top of Olympus Mons (virtually or physically). It could include attempts to BASE jump or wingsuit in the thin atmosphere. Or videos about Phobos - a moon that is only 9,000 kilometers away. There will be a tremendous amount of educational service product Mars can create for export to the rest of the solar system.

Also Near the Top - Medicine, Law, Management

A perpetual lower-upper tier service, because of how valuable it is to people. These are medical services, legal services, and people who capably can recruit/organize/finish projects.

Mid Tier - Engineering and Mechanics

A Mars colony might (unless a moon colony is built first) the place where all of the learning is done for long-term best-practices about near-space construction. There's a wider availability of workspaces and materials, but similar exposure to radiation and low pressure.

There will also be Mars-specific engineering and mechanical know-how that will have to develop. Most of this won't be exported, but will be used by others.

Lower Mid Tier - Construction

A perpetual mid-tier industry is constructions, which might occasionally rise up during booms, is construction. Homes, commercial buildings, space ports, research centers - they all use the same tools and methodologies. This will be mostly for domestic use.

Lower Tier - Essential Services (Agriculture, Materials, Data, and Energy)

These industries are always the bottom tier, because every other industry requires a cheap and reliable supply of food, industrial materials, data, and energy.

Emerging

To get past a novelty economy, Mars will need to generate a diverse set of industries that provides something great that is uniquely Martian. A great product is an essential ingredient: every tourist trap sells crafts that are uniquely local. It's hard to guess what Martian products might turn out to be phenomenal - maybe a Martian cheese made from milk in recycled atmospheres will turn out to taste fantastic, maybe Martian radiation treatments will train up a uniquely Martian expertise in radiation medicine. Anything is possible.

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The economy start immediately, form gradually, and without you even knowing it.

We carry our value systems with us, and also our innate desire to trade, with or without currency. In fact, one could argue that all human interaction is an exchange of some sort.

It will start first with human and labor capital - as there wouldn't be any physical resources to trade yet. It could be as simple as "Can you watch this monitor while I go get a nap, and I'll do the same for you tomorrow." It is immaterial if it is SpaceX or NASA, public or private.

This will slowly evolve into a demand for currency. Not overtly, but rather exchange of goods mediated by currency. However, we are smart. We have been here before - so I suspect our Colonists would simply start their own internal currency, call it the Martian Dollar. This is because tying a currency to Earth is too inconvenient, the delay is too long for transactions, the economy will be separate anyway, and U.S. dollars don't make sense in a Martian cafeteria when all you want is an extra ration.

Resources would be constantly sent to Mars, essentially funded by Earth. I don't think anyone would seriously entertain a repayment of these resources - and at any rate residents of Mars would want to be independent as soon as possible in case they stop.

The economy would then grow to the point where, perhaps in a few years or decades, the Martian Dollar would be able to interface directly with U.S. dollars. because Mars will now have items to export. These would be Tertiary industries, not primary or secondary or any resources, due to costs of transport, and would include:

  • Intellectual Property and Research
  • Tourism
  • Art
  • Professional Services
  • Sports
  • Entertainment

These can all be transmitted at light speed - and paid for by Earth (and someone on Earth will want it). This is where then currency will need to be exchanged, so we will need the first virtual interplanetary Exchange Market to convert between Martian Dollars and earth currencies.

From there, the rest of the Solar System, and the galaxy, is anyone's guess...

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People would be using currency from day 1, as they will still be downloading movies, music etc from the same providers as ever. People will still be earning salaries, paying taxes and living much as before. Going to Mars is not fundamentally different to going to Antarctica in this respect.

As for buying land - I don't think so! Ownership of extra-terrestrial territory and mineral resources is going to be a thorny international legal issue and it will not be a matter of people moving in and buying it. Governments may control sections and assign blocs to corporations, but it's still the same earth governments, earth corporations and earth money as ever.

Things would only really change if Mars declares independence and has its own government and currency. Good luck with that.

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It will happen when Alibaba starts shipping to the Martian colony.

First, the assumption seems to be that it will be American centric projects that get to Mars first. I sincerely doubt this. It is going to take a sustained concentrated focused effort on the part of some efficiently centralized agency to accomplish the task, and currently the only country that fits the bill is China. They are the only economy that has the available disposable money under the control of a centralized command structure. The economy on Mars, therefore, would be a reflection of the economy of China, not of the West. It would be the Chinese economic, social, and cultural model that would be propagated and would prevail on Mars.

So to answer your question realistically, demands that we look at the type of economy China has, and to consider how that would transfer to Mars.

China has a history of some 8,000 years of continuous Confucian socialism, so it is unlikely that anything will change any time in the future. In China, the cultural focus has been on the benefit of society over the individual. The entire economic system, over thousands of years, has been centered on win-win non-adversarial negotiating. The first thing to realize, is that there are no 'sides' in this form of negotiation. (In China, the definition of 'fraud' is, basically, making money at the detriment of others). It is not zero-sum win-lose 'what I gain is taken from your loss' negotiating. All parties are striving for the most optimal solution for society, not the individual. Whatever is gained, is gained by and strengthens society as a whole. It is the philosophy of 'I can have this, only if everyone else can have something else'. In the end, 'profit' is a measure of how society itself profits from or gains from the transaction, the benefit of the transaction to society as a whole, not on some monetary gain or 'excess income over expenditure' of one side, or an individual.

Translated to Mars, this settlement would have as its main economic engine, the benefit and advancement of the colony as a whole, not of any particular individual or faction in it. Anything that was done, would be for the advancement of the society, of the entire colony.

So why is this important? In such a society, 'money' is no longer seen as an indication of 'wealth', nor of wealth accumulation. It would have no status within the society. It would probably be transient. That is, it would have an expiration date. If not used by such-and-such, it is null and void. It would be a mechanism of exchange only, a mechanism for immediate barter. It would also be a local economy only. Someone with a particular talent would produce something, that someone else would be attracted to. Perhaps a type of food, or an article of clothing, or an artistic creation. It's only value would be in its desirableness to someone else. So, a trade would be made, perhaps even with an intermediary exchange mechanism, a system of 'IOU's'. But what value would 'money' itself have in such an economy? Every person would work for the colony, not for themselves, as a collective. They would do what was necessary to keep the colony going, and would do jobs required of and for the colony, as part of their duty, not their employment. In return the colony would provide their necessities. Local goods would be made primarily for the use of the colony. There would not be sufficient demand for mass production, so things would be made on demand, as required, preordered. There would be no speculative manufacturing, as materials would be too scarce to allow for something to be made and then placed on a store shelf, waiting for demand. The economy would be immediate, not future speculative.

Such a colony would depend at first from supplies sent from earth. It would be very expensive to ship anything to Mars, and again nothing would be shipped speculatively. You don't send something all that distance 'just in case' someone might want it. There would be no 'Walmart' on Mars for a very long time. So that brings me to the first point - things would be shipped to Mars preordered and prepaid by the end user. It would be on-line shopping only. So this begs the question be asked, 'what would be the currency?' And the answer would be trivial - in the currency of the on-line shipper, using earth-based banks, bank accounts, and banking transaction methods. It would be conducted as part of the overall earth-based marketing of the retailer, part of their every day transactions. The volume of the Martian business in and of itself would not be sufficient to sustain a business enterprise. The Martian residents would need an earth-based bank account, and some mechanism for depositing earth-generated revenue into it, in earth-denominated funds. A Martian artist, for instance, who sold the artwork to earth-based entities. Or maybe even transient tourists from earth, who bought an all-expense-paid vacation from an earth-based business, using earth-based currency, paid to an earth-based corporation. But earth-based money would only have value on earth, not on Mars, and it would only have value based on what you could buy and ship from earth. The colony itself would be decidedly socialist and community-based in nature and design.

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