Exploring the Space Economy
The present and future of capitalism beyond our planet
New space race between the US and China already started, and Governments should embrace private enterprise.
Private companies, such as Elon Musk’s SpaceX, now account for 82% of space industry revenues, with government and military sectors making up the remainder.
Regulatory and bureaucratic obstacles remain the biggest threat to further expansion.
A more liberalised policy framework is paramount to competing with China.
A new review of literature on the space economy, published by the Institute of Economic Affairs (IEA), highlights the rapid expansion of private enterprise in space exploration and its potential to outpace traditional government-led initiatives.
"Exploring the Space Economy", by Dr. Rainer Zitelmann, outlines how market-driven innovation is lowering costs, accelerating technological breakthroughs, and making space more accessible than ever before. With estimates suggesting that the space industry could be worth $1.8 trillion by 2035, the report argues that regulatory barriers must be minimised to allow competition and entrepreneurship to flourish.
The second space race, between China and the United States, has already begun, but there are two key differences to the last space race. It now encompasses tangible economic and military interests. And above all, this time the private sector will determine the outcome.
To unlock the $1.8 trillion potential of the space economy and compete with China, we must dismantle existing regulatory barriers. When SpaceX submitted its launch application, the FAA received 18,000 public comments on the environmental impact. As argued by Dr Zitlemann, “opponents of progress understand they can ‘paper’ a project to death in America, but regulatory delays and public concerns will not delay China’s Starship clone.”
Private investment has already revolutionised satellite technology and launch services, with companies like SpaceX slashing costs by over 80%. The next frontier, asteroid mining, commercial space stations, and a lunar economy depends on a pro-market approach free from excessive government interference.
The paper also examines the geopolitical implications of the new space race. While China and the U.S. compete for dominance, the real drivers of progress are private firms seeking commercial opportunities beyond Earth.
Zitelmann notes that the space economy stands as perhaps the only sector where the private sector has bucked recent international trends, stepping into a crucial role previously dominated by governments and military bodies.
Privately driven space exploration is not just a recent phenomenon. The paper points out how private businesses and individuals drove and funded observatories in the early twentieth century, so recent developments in space are as much a reversion to the original approach.
Companies in the space economy have consistently delivered extraordinary scientific advancements and pioneering innovations. By fostering an environment of market-driven innovation, these companies have not only reduced costs but have also accelerated the pace of technological progress, making space more accessible than ever before.
Rainer Zitelmann, report author and historian, said:
"Private enterprise has transformed space exploration, driving innovation and slashing costs where governments once dominated. To unlock the $1.8 trillion potential of the space economy by 2035, we must dismantle regulatory barriers and let competition soar.
“Manned space flight has stagnated for decades since the end of the Apollo program because politicians interfere too much. Projects such as the Space Shuttle and the ISS saw costs explode, and these were out of all proportion to the benefits. So-called ‘cost plus’ programs created completely wrong economic incentives. With Government space programs, we haven't made it to Mars in the last 50 years and wouldn't get there in the next 50 years either. The only hope lies in private space travel."
Capitalism has led to Governments struggling to raise sufficient tax revenue to pay their way. That has led to the rise of the mega rich individuals and countries like China, Saudi Arabia and the like. Who those governments now go to when they need their money back! But in selling Bonds and gaining contract it comes with a cost. A cost that makes those governments poorer each time resulting in higher and higher government debt because that debt is going back to the lenders plus interest each time. So you are correct. For the last 50 years nothing has happened in space! Except now we have the likes of Musk and Bezos spending their wealth on the same thing to see who can do it best! The rich get richer as the rest get poorer paying for their wealth. And it won’t be too long now when we could see the crash that is predictable. Too much money is being held by too few for too long. The recipe for the disaster of the many by the few holding too much wealth. The space race we see is just an example of what a waste of money looks like! What is missed is the fact that those two rely on a normal terrestrial business to make them that wealth. Amazon and Tesla. Relying on normal people on Earth, not Mars, to work and spend on cars and goods! But, for them to continue to lay the golden egg they need the return of that money to do it all over again! Yes, predictably their wealth is as only as good as their ability to keep selling to people with less and less money. Whilst their costs go up and up! A recipe for disaster me thinx!… capitalism is a belief you can keep taking money off others who have to loose that money. It works! But not for everyone! Just the few. The majority have to suffer that loss. Money is finite when held onto. Our Governments pretend not to see that the tax system is based on spending. And convince us the workforce that workers only pay tax! But let’s put that right. Income tax is paid by the employer! As you is NI. It’s not paid by the employee. It’s just calculated on the wages paid. But it pretends those who are unemployed or on benefits or those who are elderly, infirm, disabled or just poor or unemployable pay no tax because they don’t work!? Well they do! They pay Vat, fuel duty, alcohol duty, tobacco duty, death duties, council tax, stamp duty, insurance tax etc just like all workers! The main difference is that the poor and now most the middle class workers spend all their income each month to survive! So they all pay as much in tax as is possible. So ‘We the taxpayer’ is not just workers as they like us to believe, it’s everyone! All pay taxes. It’s just they hide it in the price. So they pretend workers pay tax, but in fact it’s employers who pay the tax. And we all pay more than the total income tax take on all the other hidden taxes. Not just those smoke and mirrors, to add insult to injury the only people who don’t have to spend all their income are those who get more than they need! In the main the rich, wealthy and mega rich people, companies and countries. No tax is charged on money unspent and unused! Tax us only paid by money bring or having to be spent. Unused money unspent for days, weeks, months, years, decades and centuries triggers no tax! None! So they get away with not paying tax while withholding it from the economic pot that supplied the tax revenues to the exchequer. It’s s double whammy. Not only is no tax paid but, no money is spent back for the buying cycle through earnings from work to begin again. So what we see rolling out across the economic world is exactly that. The rich wasting money because they can! They should not be bigger than a country. The government must look again at the tax system to make a spending policy of all money to glow do the cycle can at last be perpetual and autonomous. Earn as much as you can but you have to spend it! Base tax on Vat alone. Start making tax revenues sufficient for our needs without borrowing. Pay higher wages, benefits and state pensions! All because we all need money to spread around. Not be given to those who just waste it on frivolous escapades that do no good for the man in the street. We don’t need Mars! We need an answer to our home grown problems first. No more mega rich. No more poor! Just everyone doing well and everyone happy. At present we don’t have either. Capitalism gives us a space race alright. But delivers a modern version of an outdated tax system and widespread struggles and an inept government who can’t see the answers.