Mars: What would the ‘perfect’ economy look like?

by Rajvir Kohli

“By seeking and blundering we learn.” ― Johann Wolfgang von Goethe

The buzz around the exploration of Mars has been exponentially growing thanks to the efforts of SpaceX and NASA. This certainly begs the question, however, of “how exactly we're going to emulate an economy on Mars.

A common school of thought is that humans are fundamentally flawed beings - we're designed to make mistakes since they generally help us to identify our shortcomings and therefore evolve as a species.

By the same token, we have a chance to start over on Mars by creating new systems and infrastructure to support a 'perfect economy': a reflection of our knowledge from previous economic blunders. This draws us to an expected dilemma: the intrinsic difference of opinion between economists. Free-Market vs. Planned Economy

Evidenced through previous economic failures such as the fall of communist systems in Eastern Europe (1989) as well as studies conducted by Bergson, Moroney, and others - planned economies tend to be relatively less efficient in utilizing scarce resources when compared to free-market economies.

However, most economies in the modern world fall somewhere along a continuum running from free-market to fully planned - with more developed nations often labeled as 'mixed' due to their blend of government intervention and the invisible hand.

Armed with these facts – would it be naïve to not assume a position advocating the implementation of a free-market economy on Mars?

Opponents of the free-market economy system are quick to tout the inherent inequality such a system breeds as well as its exaggerated focus on the ‘bottom-line’ rather than human and environmental well-being.

A felicitous example of such free-market failure can be observed in the United States where for years the oil industry lobbied laws requiring double-hull oil tankers to prevent spills, even after the single-hulled oil tanker Exxon Valdez spilled 11 million gallons into Prince William Sound in 1989.

A layman solution to such issues may actually be present in most modern economies: a ‘mixed economy’ of sorts where some aspects of the market require the government to influence the allocation of resources to promote environmental and social well-being.

World-Government or not?

Elon Musk predicts that a million humans will inhabit Mars by 2060.

If this turns out to be true, what central body should be assigned to govern such a large group of people?

Assuming that society on Mars would be independent of any pre-established government on Earth, we might gravitate to the idea of a central ‘world government’ of sorts: wading off the products of path-dependency present on Earth.

Using our own planet as a case-study, researchers estimate that the removal of all barriers to labor mobility would double the world GDP.

Additionally, empirical studies demonstrate a positive relationship between immigration and productivity gains – in support, Professor Bryan Caplan states that

“the single greatest loss in the world right now is the fact that most of the world’s talent is trapped in poor countries where they can only operate in a very small fraction of the productivity”.

This calls for a concept referred to as migration, a factor of human development.

A world government would, at least theoretically, have the ability to enact legislation promoting immigration and could invest heavily in the construction of transport infrastructure to ease the process of travel; thereby boosting societal productivity gains and perhaps increasing global standards of living.

However, some may argue that a single entity with such immense power is a catalyst for tyranny.

If we introduce such a system on Mars, we may well find dissenting countries starting civil wars of secession or even large variance in ideology leading to a global power struggle.

A more logical perspective may pose a simple question: what model of government would we follow if such an entity was to exist?

According to Professor Deaton, the 2015 Nobel Prize winner for Economics, the answer would be as simple as the question: none.

This idea is exemplified by E. Roy Weintraub who noted that

people have rational preferences between outcomes that can be identified and associated with values’.

To Professor Deaton, these rational preferences act as an impervious barrier to establishing a world government.

He states in one interview that he gets worried when people say, “Why can’t we be more like Sweden?” or “Why does Germany succeed whereas Japan doesn’t?” for in his perspective, differences in infrastructure and economic development exist due to varying tastes and preferences rather than a fundamental discrepancy in external factors like leadership.

Taking this into consideration, the feasibility of a world government may remain a product of fiction, for varying taste may trump the benefits of a central governing body.

Economics and Morality

Aside from economic considerations, the establishment of a new, successful economy may rely on a careful multi-stakeholder approach: combining the views of governments, consumers, businesses, and society as a whole.

One way to do this is to incorporate a moral framework into all our decisions. We must be critical of ourselves and ask, “Is this the right thing to do?” and “Is there any support for this?” This is key.

We don’t have a rigid blueprint for a new economy but asking such questions may certainly help us determine what economic institutions to carry forward when given the chance to do so on Mars.

Regardless, the question at hand may harrow future philosophers and economists alike. We must hope that we learn from our mistakes and give ourselves a chance to develop a sustainable and just economy on Mars.

After all, we wreak enough havoc on one planet alone.


  1. Office of Response and Restoration. "A Final Farewell to Oil Tankers With Single Hulls." Accessed March 30, 2020

  2. Michael A. Clemens, “Economics and Emigration: Trillion-dollar bills on the sidewalk?” Journal of Economic Perspectives 22, no. 3 (2011), Table 1.

  3. Stephen Dubner, "Think Like a Freak", July 7, 2015

  4. E. Roy Weintraub. (2007). "Neoclassical Economics". The Concise Encyclopedia Of Economics

Go to our new site