MAR 98-083

Martian Law
Dr. Edward L. Hudgins, CATO Institute, Washington DC. ehudgins@cato.org

A country’s economic development and utilization of its resources depend foremost on the country’s economic, legal and political regimes. The fall of communism and state-directed systems in poorer countries seem to herald the victory of the free market. That regime gives maximum incentives for individuals to utilize the ultimate source of values, the human mind, to create wealth. But misunderstandings about markets have led to rough transitions.

The model for Mars is not the Antarctic Treaty nor the Law of the Sea Treaty. These versions of the statist regimes now rejected by most countries would ensure that Martian resources remain unexploited. In fact, flawed elements of the Outer Space Treaty and the Intelsat Agreement already have slowed the private sector space development.

Mars will need an economic/legal regime based on property rights and contacts. Initial planetary development will depend on consortia arrangements that serve immediate needs. But consortia must allow for a transition to a system with market prices, the only efficient way to allocate resources, and with incentives for entrepreneurial innovation.

Public health and safety functions, currently provided very poorly by governments on Earth, might be guaranteed more efficiently by incorporating their goals into initial consortia rules and contracts. The extensive research and insights market thinkers in past three decades can help Mars avoid the mistakes that all Earth governments now are trying to correct.

 

Attempts by merchants in the Age of Exploration 500 years ago profit though trade in a world without law gave rise to innovative market institutions like double-entry bookkeeping and insurance (a means to share risk). The development of Mars, if done right, will not only be yield advances in science and technology, but in free, civil institutions as well.