A shadow hangs over the possibilities for commercializing outer space: What are the property rights? Say that a company launched a rocket to the asteroid belt and managed to bring back tons of rare minerals to earth. Would the company \”own\” those minerals? Every explanation of the basic principles of economics includes a riff on the importance of property rights. After all, if people can\’t hold property, then the incentives to work or save or invest are vitiated. In \”Celestial Anarchy: A Threat to Outer Space Commerce?\” Alexander W. Salter and Peter T. Leeson explore the issue of property rights in space. Here\’s how they set up the argument (citations omitted):
Economists have long highlighted the necessity of private property rights for thriving commercial activity. … Celestial anarchy thus appears to pose a serious obstacle to flourishing outer space commerce. But what if private parties sidestepped the problem posed by sovereigns’ inability to support celestial property rights by enforcing such rights privately—that is., without reliance on any government? ….[I]t is widely believed that a purely private celestial property rights regime is not possible. This article argues that conventional wisdom is wrong. Celestial anarchy is genuine, but the ostensible problem it poses for the development of outer space commerce is not. Private property rights can and do survive without the endorsement or involvement of any sovereign entity. This suggests that private parties can, if given the chance, enforce property rights in outer space. … Economic theory demonstrates how private individuals can enforce property rights without reliance on government. And economic reality demonstrates how they in fact do so. There’s nothing special about this theory or its manifestations in practice that would limit it to terrestrial property rights.
How might a system of property rights work? Salter and Leeson offer some examples from international trade. First, an example from history:
In the ninth and tenth centuries a professional class of merchants emerged across Europe. These merchants confronted the central obstacle of international anarchy pointed to above: the absence of a supranational sovereign that could protect international traders’ property rights, enabling the growth of international commerce. … In response to such obstacles to international commerce, medieval merchants resolved international commercial disputes privately on the basis of merchant-developed law in private, merchant-developed courts. This system of self-enforcing property rights is called the
medieval lex mercatoria (law merchant).
They argue that this system of law functioned because of the “discipline of continuous dealings,” which basically means that it\’s not worth defying the private law in any given case, because by doing so, you would lose the ability to be protected by the private law in all future cases. They write: \”Since the gain from defecting is a onetime gain but the gains lost from defecting even once are forever, if parties don’t discount the future excessively, they earn more by always cooperating than by ever defecting. Property rights are self-enforcing.\”
Trade disputes in modern times are also often handled by private arbitrators. Salter and Leeson explain (again, citations omitted):
Given the difficulties, and for many years the impossibility, of using national sovereigns to enforce international commercial disputes, contemporary international traders rely on private international arbitration associations instead. Indeed, at least 90 percent of modern international commercial contracts contain clauses stipulating the resolution of contractual disputes via private arbitration. The sums of money at stake in these private courts are enormous. For example, in 2001 roughly 1,500 parties from 115 countries used the arbitration services of the International Chamber of Commerce (ICC), the largest of such organizations, in property conflicts that ranged in value from $50 to $1 billion. Over 60 percent of these disputes were for amounts between $1 million and $1 billion.
Over time, international treaties now mean that national governments have agreed to enforce the decisions of these private panels: \”In 1958 the first multinational treaty aimed at facilitating the enforcement of private international arbitral decisions in the national courts of sovereigns emerged: the United Nations New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Since then, many, though not all, countries have signed the New York Convention (NYC).\”
Their bottom line is that it is not necessary to have a government that rules outer space in order to have a recognized legal system for dispute resolution in outer space. They write:
Perhaps commercial space pioneers would use already-existing arbitration associations, such as the ICC, in order to enforce celestial property rights. Or perhaps a body of private outer space law—informed at its core by familiar precedents relating to nuisance, damages, liability, and so on—might progress to the point that space-specific arbitration agencies, employing their own experts in space law, would serve as the primary dispute resolution mechanism and process by which precedent is set. Alternatively, the first space pioneers might have a voluntary convention in which their representatives form a kind of outer space “social contract,” thereby setting the rules for original appropriation of unowned resources, property rights enforcement, and the proper bounds of behavior between parties when one party’s behavior imposes uncompensated burdens on others.
The Salter and Leeson argument is usefully mind-expanding about the potential for private property rights. But as they point out at the end of the article, their argument is essentially one of economics, not of politics. I can easily imagine the kind of regime that they describe as useful for thinking about issues that arise between those who are operating in outer space, applying to the times when they are operating in outer space.
But the first time resources or other resources from outer space are brought to Earth in sufficient quantities to be worth a lot of money, or to move prices of minerals in Earth-markets, I suspect that any agreements reached by those who were travelling in outer space will come under Earthly political challenge. Denmark recently announced that it was challenging Russia and Canada for control over the territory that includes the North Pole, and the United States and Greenland also have ongoing claims in Arctic waters. I suspect that nations will try to assert jurisdiction over outer space, too.