Krugman’s Theory of Interstellar Trade

Everyone needs a little light relief sometimes, including the Nobel winning economist and writer/blogger extraordinaire Paul Krugman.

A few months back he reminded the world of a short paper he’d written some years ago on the rather unexpected topic of interstellar finance. You can teleport a copy to your automated reading device by clicking here.

It’s a lot of fun, with a satirical slant lurking between the lines. But it’s also quite serious, because the specifics of sub-light-speed interstellar travel do pose some rather unfamiliar and intriguing conundrums: Krugman points out that transit times for goods are of course extremely large, and the passage of time itself is a function of inertial frames and the acceleration of frames. Relativity says that you can keep your roses fresh for Alpha Centauri, but your first customers may dead by the time you get there. Electromagnetic communication is naturally far faster than the transmission of material goods (although that’s a situation we already encounter here on Earth), which allows for trade to be set up. And having one-way transport, rather than round trips, of cargo vessels or merchants is okay for stable economic function on an interstellar scale.

He also shows that, in terms of capital, interstellar arbitrage and competition will tend to equalize interest rates between two locations (planets, ring-worlds, Dyson spheres, whatever) as long as they’re in the same inertial frame. This, as far as I can see, is astrophysically tenable. Typical relative motions of stars in our bit of the Milky Way are of the order of 10-40 kilometers a second. Although large by terrestrial standards, these velocities introduce a time dilation factor between systems of no more than 1.0000000089, or barely a millionth of a percent.

Despite the lore of so much science fiction, I don’t think anyone (erm… anything) is going to be hauling metal ore, minerals, water, beryllium spheres, dilithium crystals, helium-3, or for that matter any kind of raw material. The fact being that almost any cargo along these lines (made of the elements produced across the universe by stellar nucleosynthesis and supernovae) is going to be a) most likely available in any system already, b) definitely available for the taking from billions of unoccupied regions of space.

The better options are ‘native’ products.

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