Money has no value in space. When seven astronauts are living together in a cramped atmosphere the psychology of small isolated groups kicks in. Whoever has squirreled away the most M&Ms, tortillas or coffee has the most bargaining power. Those are items that are most prized at the end of a mission if someone runs short in their own stash. Astronauts’ meals are color coded on shuttle missions — and reliable sources tell ABC News some astronauts aren’t above switching the colored dots on their dehydrated meals if they have run out of say, lasagna, on day six and have way too much creamed spinach left.
Here is more and the story is interesting throughout. Are they not allowed to bring money on the ship or does money temporarily lose its function as a general medium of exchange? Does the use of money, or the promise of money, break down spaceship norms? They’re allowed to bring iPods, so can songs become a medium of exchange? Or does preventing a general medium of exchange produce network externalities (increasing returns) to enhance the liquidity of all the other goods which need to be traded? You do in fact get the tortillas being squirreled away. Can this be a case where the emergence of a general money would be inefficient?
That reminds me of all those boarding school/boot camp stories where the same economy prevails. As to your question – if you have a small group that’s out of contact with the larger economy, money should logically become less important. They can’t spend it till they get home, and what they want is easier to come by through barter where they are. Also, wouldn’t they be using several different currencies? Are they going to follow the relative value of dollars, rubles, and euros?
I note a lot of things economic depend on whether you have a group of 4, 12, 150-200, or a few thousand and on up the scale.
Dehydrated creamed spinach … yum!
What makes something money is that the buyer would accept it back, not on the same trade but as having the same value.
But you can’t eat money, and time horizons are shortened in space. There’s nothing you can buy except what the other guy has, and vice versa, and that comes to an end when each of you have what you value most. So the last guy won’t take the money back. And like the prisoner’s dilemma, that queers all the preceding trades.
They could always trade electronically in space, using accounts on earth. Maybe that would extend the time horizon psychologically.
These comments, including Tyler’s, miss the point. The key questions are do they play poker in space? If not, why not? And if so, what are the stakes?
Answer those, and you will know what, if anything, is appropriate money in space.
“I believe there was a book about the economics of concentration camps – which seems to me to be a very similar situation (extreme rationing, limited goods, and no distribution of income to laborers).”
“If you’re in a prison camp, you don’t know when or if you’ll get out and you don’t know whether you’ll see the prisoners again. But when you’re up in space, you’re pretty sure you’ll be out soon and you’ll see your fellow “prisoners” again. So contracts are more enforceable.”
So in both cases it’s a liquidity crisis, like an extreme case of what we’re seeing now. In the case of the astronauts, they know the liquidity crisis will probably be over soon, and they should know the contracts they make on-board will be enforced (they would, right?), so as long as they all consider the problem rationally, there shouldn’t be an economic effect. But in the case of the prisoners… Well, most of them do know when or if they’re getting out to a large extent. So that’s not the problem. The problem is they don’t trust that contracts will be enforced, which is closer to our current liquidity and credit crisis.
Ooops; I wanted to add that even the spinach would eventually have a use value if, for example, their return had to be delayed.
It seems like a temporary shortage would just result in higher prices. But buying and selling at the right price looks bad, and avoiding such embarrassment through barter or an alternate currency avoids making direct comparisons.
For that matter, why did everybody suck up to Thurston Howell III on Gilligan’s Island?
Sigh. Why is this so hard? Whenever people trade different items, one of those items will be more tradable than others. When you see it, stop looking elsewhere for money. Once that item becomes tradable for everything, it has become money. So, if a money doesn’t appear, it’s because people aren’t trading enough, or enough different things. If there are only a small number of things to trade, barter becomes more efficient than money, because there’s only one transaction cost to get what you want.
Would not most or all of the stuff that can be traded be NASA stuff? Selling NASA property, even if it is stuff NASA has given you, for personal profit sounds a bit dubiuos, doesn’t it? Trading it for other NASA stuff doesn’t, IMO.
“What’s interesting is that the closer a prisoner is to being released, the more value cash has to him/her. Cash is pretty worthless to a prisoner serving life without parole. Basically, having cash in prison is like having a bond. The bond matures when the prisoner is released. The only catch it it’s illegal to possess the “bond” since cash is contraband.”
The fact that cash is contraband is the only reason the other parts hold. Otherwise, cash wouldn’t be worthless to a prisoner serving life without parole, because s/he could use that cash to buy something from a prisoner who is about to be released.
Comments on this entry are closed.