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The New Purpose of Companies

There’s a world beyond shareholder returns, and forward-thinking business leaders are figuring out how to navigate it.

Henri Campeã for Quartz
MISSION DRIVEN

How to build a space economy that avoids the mistakes of terrestrial capitalism

Tim Fernholz
By Tim Fernholz

Senior reporter

As the private sector sets its sights on doing business in orbit, space exploration is becoming space exploitation—how can humans use the environment around their planet to further their own prosperity?

With private spacecraft looking to ferry wealthy tourists to the International Space Station, and companies doing everything from aging wine to fabricating advanced fiberoptic cables there, there are concerns that the public will lose out as private companies take on a bigger role.

The good news is that we aren’t close to a world like the one depicted in the movie Elysium, where the ultra-wealthy repair to space and leave the rest of us behind. Our public and private interests will be far more intertwined, in part because governments have designed it that way. Most of the major space agencies are compelled by law in their home countries to support private economic activity, which means for example that NASA, by law, views the success of US companies in space as part of its mission, and not a distraction or a threat.

The reality is that public space agencies, particularly NASA in the United States, remain the largest spenders in space and control the conditions for private organizations acting in orbit. Their challenge—and opportunity—is to manage the transition to a new, multi-stakeholder world in orbit by successfully subsidizing new initiatives without letting the benefits escape the public at large.

Much of the work of establishing our space economy is prosaically earthly: Competition policy, labor rights, and corporate taxation. But with critiques of capitalism’s distributional failures at the center of public discourse, there are also sweeping challenges to address: Namely, can the orbital economy be structured better than its terrestrial analogue?

This kind of industrial policy is a fine line to walk for any agency. The key, according to economist Mariana Mazzucato, who has advised NASA on how to create an economy in low-earth orbit (pdf), is to take advantage of the agency’s historic scientific mission to lead the way into the new space economy. “Setting the direction is not about choosing a narrow set of sectors, but choosing the problems and the missions for a broad group of sectors to react to,” she and Douglas Robinson, a fellow at the Laboratoire Interdisciplinaire Sciences Innovations Sociétés in Paris, wrote in a NASA-commissioned analysis of the opportunity at hand.

Too often, Mazzucato warns, agencies conceive of their work as fixing markets, rather than creating them. But there are visible examples of early success in the latter—for example, the Commercial Orbital Transportation System, a program under which NASA funded the development of spacecraft at two private companies, SpaceX and Orbital Sciences (now part of Northrop Grumman). The space agency created a market for regular cargo service to the International Space Station, which in turn fostered broad competitive gains: NASA’s Ames Research Center estimates that commercial launch costs have fallen by a factor of 20 in the last decade.

This model of public-private partnership has allowed NASA to redirect more funding toward science. But that becomes more difficult as the level of risk rises: NASA now wants to build an ecosystem of activity in low-earth orbit (or LEO), where companies, nonprofits, and various countries share more of the cost of going into space. If not handled carefully, this transition could leave the world bereft of a research outpost in low-earth orbit or, at the other end of the spectrum, fail to capture a fair share of the gains generated by private companies using publicly developed infrastructure.

Mazzucato and Robinson, 2016
Changing roles in low-earth orbit.

As it stands, the private sector may not be ready to support this ecosystem alone, which will require the space agency to take a leading role in maintaining low-earth orbit, handling tricky questions about intellectual property and managing multiple stakeholders without losing its internal expertise. It will be key for NASA and other public agents to set the direction of space development even as private actors become increasingly independent. And the precedents they set could have long-lasting, far-reaching impact. Decisions about how to share the costs and benefits of a small 3D printer in low-earth orbit today, for example, could set the path for the economic governance for thousands of humans on moon bases or orbiting habitats in the future.

Arguments for a traditional approach to constructing the space economy must reckon with the reality that NASA-led rocket development in recent decades, from the canceled Constellation program to the current development of the Space Launch System and Orion spacecraft, have proven more successful at funneling money to large corporations and their workers in key congressional districts than in exploring the solar system.

Those troubles may not be passed along to the next generation of space agencies. Peter Crabtree leads New Zealand’s space agency, which was founded in 2016 largely to facilitate the work of Rocket Lab, a startup rocket-maker.

“Because we’ve started off with commercial space, we haven’t started off with government-led programs,” he previously told Quartz. “The skillset, the mindset has been very much around creating the right institutional environments.”

All this talk of contract structure, procurement strategy and innovation ecosystems may seem dry. But the expansive visions of space entrepreneurs—of sustainable human habitation, orbital manufacturing, mining water ice on the moon, harvesting resources from asteroids, or generating power from solar energy in space—will all be built on the rules and norms set in the first days of the space economy.

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