Space: The Misguided Promise of Privatization


In the 1950s, the space race kicked off to a frantic start, with the Soviet Space program and NASA working to get their feet off the ground and out of the atmosphere. Each agency was fueled by establishing its political superiority as well as ensuring that it could not be threatened from the indefensible front of space through the Cold War. Space exploration has since been tied very closely to the governments of interested countries - even as the focus shifted from national defense to research and development, funding has consistently been sourced from ever-increasing budgets of 77 space agencies, led by NASA, the Russian Roscosmos, and the European Space Agency. 

Since then, huge progress has been made in terms of research and establishing space programs and travel, but there exists huge potential still in applications that have not yet been achieved. Recently, with the rise of technology and the increase in private sponsors with huge amounts of funds, these expeditions have been slowly turned private, and have become out of the hands of government agencies and leaning into the aspirations of private citizens and their corporations. It is important to note that public and private companies have different agendas; public companies are held accountable for general well-being and welfare, whereas private companies focus on achieving profitability and maximizing shareholder value, often resulting in significant advancements in the development of technologies. Throughout history, the privatisation of industry has often led to greater efficiency and rapid advancement, but conflicting priorities lead to definite and distinct challenges. As these private space companies make further advances into practical exploration and industrialization, their priorities, in the long run, do not align with the good of the public or scientific ethos, which will lead to an overall decline in benefit and advancement.

A Brief History of Privatization and Space

Privatization of an industry involves the transference for ownership from a public organization - like the government - to private parties. Historically, governments often chose to nationalize widespread activities, taking control of the governance and funding going toward public good services, primarily in areas of research, healthcare, transportation and education. The government's role, explicitly (with regards to privatization) was to create a foundation for emerging industries that the market would not be able to support on its own. Throughout the 1980s, issues were recognized in the management of widespread nationalist programs, specifically pertaining to the lack of efficiency created by a monopolist structure: when a stable budget is allocated and only one player is permitted to create goods and services, the incentive to make the structure of providing those services more efficient decreases. Hence, movement into the deregulation and liberalization of these industries become a popular method to reintroduce competition to stagnant markets.

Space exploration developed as a nationalized program for two main reasons. Rapid development spurred by the race with the Soviet Union, in the interest of national security and pride. Throughout the Cold War, the American government poured immense amounts of funding into keeping up with the Soviets: the annual federal spending on space expenditures increased by six billion dollars between 1957 and 1964, much of this being attributed to defense funding research and development. As a result, NASA prevailed in 1969, sending Neil Armstrong to the moon, allowing the United States to establish their political superiority. An added benefit was preventing the threat of missile attacks from space, thus achieving both national defense and pride. It is important to consider that the space industry at this time was not profitable and merely a basis for establishing dominance via technological advancements and marvels. As of present day, space exploration is focused primarily on research and the collection of knowledge, and the promise of profitability has slowly been becoming more apparent. Yet to do so, significant investments into R&D must be made to allow for the creation of the technology needed to achieve profitability in space. Thus, spending on exploration has continued to increase, with just under $31 billion in budgetary resources awarded to NASA for 2023 in the United States, with a global government spending of $103 billion for dedicated space programming. The private industry has also begun funding projects more aggressively, as annual investment towards space-economy projects has grown from $300 million to over $10 billion dollars between 2012 and 2021.

Different forms of private involvement have long collaborated with NASA in the form of outsourced labour: NASA continuously contracts external agencies who have the capacities and expertise to actually construct their equipment. A prime example of this outsourcing is the long-standing partnership with Boeing as the prime contractor for the International Space Station in 1993, after working with the company and contracting their manufacturing capabilities for the Lunar Orbiters, or the Saturn V rockets used in the Apollo moon missions. The inflow of NASA funding and research further allowed Boeing to develop their own air and marine craft lines as well as prompting their own line of space-specific manufacturing capabilities, such as a satellite launching platform in the Pacific Ocean, or the current Starliner ship. Given this successful long-standing relationship, it's important to recognize the differences in structure and impact as new-age private space companies make their marks in the space industry.

The Pitfalls of Privatization

Privatization is beneficial for a myriad of reasons - generally, contributing to higher efficiency and faster, more focused advancement in research and practical application than when in the hands of more bureaucratic agencies. Private companies may only remain in business for as long as they bring results, and in the scientific field, the applications of medical instruments, for example, have been motivated by the inherent need to turn development into a profitable business model. This is mirrored in the space industry, for as long as companies are pouring funds into research, they intend for that research to have practical, marketable applications that they can use to gain a hefty return. Already, SpaceX’s profit motivated system has allowed for huge cost reductions - from $10,000 to $1,200 per pound of payload -in launch capabilities with the development of liquid fuels and recoverable spacecraft, and is how the primarily American body that supports ISS transfer missions replaced the Russian actors used for the past decade. Even in the past, partnerships between massive federal agencies and specialist private contractors resulted in higher efficiency and mutually beneficial advancement, as seen with Boeing. However, the independent growth of new age space enterprises fundamentally differs from the partnerships of the past, and are motivated by much narrower aspirations. Privatization creates an environment of proprietary, private information, and an increase in commoditized knowledge. This attitude hinders potential progress and works against the nature of scientific discovery. In an industry that was founded for the good of the people, and depends so heavily on intensive research expeditions, commoditized knowledge translates into patents, intellectual property licenses and overall obstacles to the sharing and transfer of information. As progress is made by individual researchers working below independent enterprises, there exists no incentive to share information - anything that the company releases can be capitalized upon and used by its competitors, which works directly against the interest of the company. This prevents the brightest minds from working together to solve problems and contribute to discoveries, instead creating false competition in which progress is slowed. This collaboration is not limited to space-specific applications; already NASA is responsible for over 2,000 spin-off developments from heat protectant jackets to material simulations that are used in mining and materials work. Without the publicly available and accessible research coming from the obligations of a federal agency, the loss of related creation decreases the current economic and scientific benefit of working with theoretical research. Furthermore, as much of scientific space advancement is resource and time intensive, firms aiming to safekeep their findings from other researchers result in a waste of resources in repeating and rebuilding the tools needed for discovery instead of sharing the cost for the greatest chance of success. Especially in space, where first-movers have the ultimate advantage, the privatisation of the industry leads to firms trying to maintain their competitive edge at the explicit expense of progress.

Historically, not only was it scientists' aim to unlock the secrets of our universe, but also their responsibility to share these discoveries with the world (considering their funding came from their respective nation's resources). However, privatization results in the hoarding of discoveries and associated information, preventing knowledge from being shared with the public. Considering that one of the main areas of social progress is to increase the information available for free to the public, the Office of Science and Technology Policy announced the intention to make all federally funded research available to the public within a year of private publication just last year. Based on much of existing space research being sourced from NASA or other nationalized players, that information has been free for the public to use and has allowed further research. In a practical sense, barriers to the flow of information within the scientific world have definite drawbacks in advancement, but the same barriers pose threats to the ideological goals of ensuring that the knowledge we keep about the world around and above us belongs to humanity as a whole, and not just to those who have resources to wrangle it. Censorship is an example of these barriers, allowing only the most privileged people to have access to the most important or unique data. National space agencies are much more involved in public opinion than privately held enterprises are. NASA derives its budget from federally allocated funds, and consequently, it is accountable to the American government regarding its goals and allocations for those funds. It follows that the resulting missions, research, and discoveries are aligned with public interest. Private companies build their funding elsewhere, often from wealthy individuals or private equity and venture funds, so their interests sit squarely within how to build profit as rapidly as possible. Unfortunately, this motivator often leads to unsustainable practices on the social side of business. For example, in pursuit of making launch processes less expensive, SpaceX built their own launch site, called Starbase, in Texas. This base is used for both research, production and launch testing, allowing SpaceX to make huge progress in bringing down their launch and payload costs, which cannot be shared with other organizations as easily as if it were just a single agency. It has also led to concerns regarding air pollution, noise pollution, water contamination and wildlife protection, with the company being cited on 75 different environmental factors to be adjusted before continuing with their program.

This concern expands to more players as one considers the impact of more individual launch sites as well as the space junk being littered in low earth orbit- a challenge that currently has no solution. Profit-motivated enterprises often have these considerations on the back burner, leading to unrestricted and unregulated harm coming in tandem with technological progress. Especially in an industry as unregulated and unexplored as the space industry is currently, allowing private companies complete freedom over historically nationally managed resources which poses a threat to the protection of public interests.

Future Considerations 

As the adoption of privatization continues in the space industry, other concerns related to the nature of private operations arise for further discussion. Concerns include the development of complex industries such as commercial tourism, deep space research, manufacturing in space, asteroid mining, etc. Other concerns surround the nature of profitability such as cost-cutting and the impact on safety in high-risk environments. On that note, a large amount of regulation is yet to be established and thus concerns regarding jurisdiction, legislation, and emphasis of exploration arise. 


While it is indisputable that space holds huge potential for profitable opportunity in the development of the industry and infrastructure, as well as within the space-for-space and space-for-earth markets, the drawbacks of a privatized movement need to be recognized in order for the industry to grow most efficiently. It is in the interest of everyone - federal space agencies, private companies, as well as public benefit - for the space industry to advance effectively and efficiently, which may not be completely aligned with the natural goals of a completely privatized industry in such a new space. Unregulated privatization, while having explicit benefits to advancement, may not be what works best as of yet: the sharing of information and accountability of public institutions build the strongest foundations for what will eventually become a thriving stand-alone economy. Thus, while privatization may lead to the development of a flourishing space economy, their priorities in the long-run do not align with the interests of the public and hinder the expansion of our civilization here on Earth.