“It should be noted that, while the subject of this paper is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.”
It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer travelling with the goods than to a stationary observer.
An interesting science fiction book is Neptune's Brood by Charles Stross. A major structural core of the book is how different colonies trade and the finance models across interstellar distances.
How does a colony finance the initial voyage and investment. It raises the concept of slow money ( 1 slow dollar is the economic output of a professional people for 40 years irc) and fast money for day to day use.
Not based on speed of light travel, but I always enjoyed the old Andre Norton books that revolved around "tramp steamer" type traders. The Solar Queen series was great.
> Recent progress in the technology of space travel [...] raise the distinct possibility that we may eventually discover or construct a world to which orthodox economic theory applies.
Hah!
And
> among the authors who have not pointed this out are Ohlin (1993) and Samuelson (1947).
Willian Proxmire was a Senator from Wisconsin who was strongly opposed to government spending on basic research. He gave out "Golden Fleece" awards for studies that he thought were absurd. Unfortunately, it is very easy to make meaningful research sound ridiculous: bread mold as a cure for STDs? Pencil dust computers?
I saw the name and thought "that sounds familiar", only to realize it's the economist I've seen on social media a lot lately (e.g., he was recently interviewed by Hasan Minhaj [0]).
Krugman won the Noble Prize in economics and was an influential New York Time commentator for years. William Proxmire was a congressman famous for his laser focus on supposedly wasteful government spending who often dug up and denounced studies that sounded silly.
This is about interest charges which is faily boring, but the book Critical Mass has some interesting comments on economics of materials in translunar space. Compared to materials on Earth, the value of materials (e.g. for construction) is entirely dependent on their position (and orbit). 100 tons of packed lunar regolith is worthless on the lunar surface, but would be highly valuable in a medium earth orbit where it could be used to construct quite a large hull via chemical vapor deposition.
SpaceX and Rocket Lab are among the companies that can accelerate the addition of Interstellar Trade as a subfield of economics, perhaps even within the average life span of a Gen Millennial person.
It's interesting to see how the ideas of interstellar civilization have evolved over the last almost 50 years.
I'm glad it was rejected that returns should be calculated based on Earth or Trantor time rather than perceived time. I mean if a ship disappears for 2N years, you need to consider the return over 2N years regardless of perceived time because you're comparing investments that locally would take 2N years.
This paper assumes essentially perfect information. It has to because otherwise it has to deal with the issue of how would an interstellar currency work? Or rather, how would an interstellar financial system work? This is a surprisingly difficult problem. You can't support a centralized currency over such distances. And metals like gold may be otherwise worthless as a store of value. You also can't maintain a blockchain over light years.
One thing that isn't touched on here, which also dovetails into my assertion that gold would be worthless, is the energy budget for interstellar travel.
If we assume reaction mass-less, infinite energy travel where you can accelerate to a high fraction of c for essentially zero cost then this is all fine but that's likely not the case.
Gemini tells me that the energy cost to accelerate to 0.1c, travel to Alpha Centauri and decelerate at 1g is ~10^15J/kg. That's a travel time of approximately 42 years each way. Time dilation doesn't really kick in until a high fraction of c. The energy budget from this is orders of magnitude higher and the drag of the interstellar medium actually becomes a real problem.
So your spaceship looks a lot like a colony. That means it has to be big. The building block for a space-based civilization in a Dyson Swarm is considered by many to be the O'Neil Cylinder, which is wide enough to have spin gravity. Think a diameter of about 8km and a length of 10-40km. A colony ship looks a lot like this. Such a cylinder weights 10-100 billion tons.
10B tons is 10^13kg so at 10^15J/kg that means the energy budget is 10^28J. The Sun's solar output is ~10^25W, which is 10^25J/s. So we're talking 300 seconds of the entire Sun's output for such a journey. Currently we receive about a billionth of that so it's about 10,000 years of the Sun's output hitting Earth.
Our civilization is estimated to use 10^11W of energy so if we devoted our entire energy budget towards this project, that's 10^17 seconds of output or ~3 billion years.
Each way. And that also assumes perfect energy-to-acceleration so it's likely 1-2 orders of magnitude higher.
This is partly why I consider a Dyson Swarm inevitable because interstellar travel is basically impossible without getting access to that amount of energy.
So, back to gold being worthless. Well, 1kg of anything is about 10^17J of energy. Going the other way, 10^28J of energy is 10^11kg of whatever element you want. That's 100 million tons.
“It should be noted that, while the subject of this paper is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.”
Love this paper
This paper is hilarious
An interesting science fiction book is Neptune's Brood by Charles Stross. A major structural core of the book is how different colonies trade and the finance models across interstellar distances.
How does a colony finance the initial voyage and investment. It raises the concept of slow money ( 1 slow dollar is the economic output of a professional people for 40 years irc) and fast money for day to day use.
Not based on speed of light travel, but I always enjoyed the old Andre Norton books that revolved around "tramp steamer" type traders. The Solar Queen series was great.
Adding it to the pile of books to read! Thanks
> Recent progress in the technology of space travel [...] raise the distinct possibility that we may eventually discover or construct a world to which orthodox economic theory applies.
Hah!
And
> among the authors who have not pointed this out are Ohlin (1993) and Samuelson (1947).
Most chuckleworthy.
Paul Krugman* July 1978
*Assistant Professor, Yale University. This research was supported by a grant from the Committee to Re-Elect William Proxmire.
In case people are missing the joke...
Willian Proxmire was a Senator from Wisconsin who was strongly opposed to government spending on basic research. He gave out "Golden Fleece" awards for studies that he thought were absurd. Unfortunately, it is very easy to make meaningful research sound ridiculous: bread mold as a cure for STDs? Pencil dust computers?
I saw the name and thought "that sounds familiar", only to realize it's the economist I've seen on social media a lot lately (e.g., he was recently interviewed by Hasan Minhaj [0]).
[0] https://youtu.be/qGxFLOw7KW8
He's also on substack:
https://paulkrugman.substack.com/
And before that, he was a columnist for the New York Times for 24 years.
https://www.nytimes.com/column/paul-krugman
And winner of the 2008 Nobel Prize in economics.
And the subject of this 2009 early-YouTube "viral" song: https://youtu.be/XOYAuk809fY?si=sFuFdmrF0cizn5W5
(Somewhat embarrassed to admit this is how I learned of Paul Krugman)
Krugman won the Noble Prize in economics and was an influential New York Time commentator for years. William Proxmire was a congressman famous for his laser focus on supposedly wasteful government spending who often dug up and denounced studies that sounded silly.
This is about interest charges which is faily boring, but the book Critical Mass has some interesting comments on economics of materials in translunar space. Compared to materials on Earth, the value of materials (e.g. for construction) is entirely dependent on their position (and orbit). 100 tons of packed lunar regolith is worthless on the lunar surface, but would be highly valuable in a medium earth orbit where it could be used to construct quite a large hull via chemical vapor deposition.
I wonder what Milton would say about this...
SpaceX and Rocket Lab are among the companies that can accelerate the addition of Interstellar Trade as a subfield of economics, perhaps even within the average life span of a Gen Millennial person.
"I do not pretend to develop here a theory which is universally valid, but it may at least have some galactic relevance."
LMAO
"A solution is derived from economic theory, and two useless but true theorems are proved."
Based.
It's interesting to see how the ideas of interstellar civilization have evolved over the last almost 50 years.
I'm glad it was rejected that returns should be calculated based on Earth or Trantor time rather than perceived time. I mean if a ship disappears for 2N years, you need to consider the return over 2N years regardless of perceived time because you're comparing investments that locally would take 2N years.
This paper assumes essentially perfect information. It has to because otherwise it has to deal with the issue of how would an interstellar currency work? Or rather, how would an interstellar financial system work? This is a surprisingly difficult problem. You can't support a centralized currency over such distances. And metals like gold may be otherwise worthless as a store of value. You also can't maintain a blockchain over light years.
One thing that isn't touched on here, which also dovetails into my assertion that gold would be worthless, is the energy budget for interstellar travel.
If we assume reaction mass-less, infinite energy travel where you can accelerate to a high fraction of c for essentially zero cost then this is all fine but that's likely not the case.
Gemini tells me that the energy cost to accelerate to 0.1c, travel to Alpha Centauri and decelerate at 1g is ~10^15J/kg. That's a travel time of approximately 42 years each way. Time dilation doesn't really kick in until a high fraction of c. The energy budget from this is orders of magnitude higher and the drag of the interstellar medium actually becomes a real problem.
So your spaceship looks a lot like a colony. That means it has to be big. The building block for a space-based civilization in a Dyson Swarm is considered by many to be the O'Neil Cylinder, which is wide enough to have spin gravity. Think a diameter of about 8km and a length of 10-40km. A colony ship looks a lot like this. Such a cylinder weights 10-100 billion tons.
10B tons is 10^13kg so at 10^15J/kg that means the energy budget is 10^28J. The Sun's solar output is ~10^25W, which is 10^25J/s. So we're talking 300 seconds of the entire Sun's output for such a journey. Currently we receive about a billionth of that so it's about 10,000 years of the Sun's output hitting Earth.
Our civilization is estimated to use 10^11W of energy so if we devoted our entire energy budget towards this project, that's 10^17 seconds of output or ~3 billion years.
Each way. And that also assumes perfect energy-to-acceleration so it's likely 1-2 orders of magnitude higher.
This is partly why I consider a Dyson Swarm inevitable because interstellar travel is basically impossible without getting access to that amount of energy.
So, back to gold being worthless. Well, 1kg of anything is about 10^17J of energy. Going the other way, 10^28J of energy is 10^11kg of whatever element you want. That's 100 million tons.
So what exactly would you trade?