Friedrich Hayek’s Invisible Hand Can’t Reach Space

Just a few days before the Paris Olympics ended, Americans finally remembered that their astronauts had been stuck on the space station for two months. On August 7th, Steve Stich, the head of NASA’s Commercial Crew Program, mentioned in a media conference call that if Boeing’s spacecraft couldn’t be repaired, they might have to consider bringing the astronauts back in February aboard Musk’s Dragon spacecraft.

This awkward situation has indeed shaken the faith of some who are staunch believers in America’s technological superiority. The issue with Boeing’s spacecraft isn’t primarily a technical one but rather an institutional problem. Boeing’s shortcomings and Musk’s success in the commercial space sector reflect two sides of the same coin in the current state of the U.S. space industry.

In other words, if you want to praise Musk, you have to acknowledge that other U.S. space suppliers, like Boeing, are becoming increasingly underwhelming. Conversely, if you want to downplay Boeing’s failures or hope they’ll bounce back, you also have to accept that Musk can’t solve all of America’s space problems, especially the unprofitable ones.

Boeing and NASA Bicker While Astronauts are Stuck in Space

Let’s start by outlining the issues with Boeing’s Starliner spacecraft. This spacecraft was part of the Commercial Crew Program initiated during the Obama administration. After the space shuttle system was retired, the U.S. had to rely on Russia’s Soyuz spacecrafts for trips to the space station. For reasons of national security and prestige, the U.S. launched a plan to develop a new manned spacecraft via private companies. Given the need for a backup system, two companies were chosen: SpaceX, whose Dragon spacecraft was developed relatively smoothly, and Boeing, whose Starliner faced numerous delays. This mission involved two astronauts testing Starliner’s performance.

So far, Starliner has faced two major issues during testing. First, there’s a helium leak in the propulsion system. This problem is relatively manageable, as the system is shut down when docked with the space station. Even if the spacecraft departs, the remaining helium should suffice for the return.

The second, and more critical issue, is the failure of the Reaction Control System (RCS), which has led to the astronauts being stranded. In simple terms, the RCS consists of small thrusters used for orbital adjustments. Precision maneuvers, like docking with the space station, rely on these thrusters.

Due to the Starliner’s design, if the astronauts were to force a return, the RCS would be jettisoned and destroyed in the atmosphere, making it impossible to reproduce the failure for further analysis. As a result, the money spent on this test would go to waste.

Repairing the spacecraft while it’s in space isn’t feasible either. Astronauts’ repair capabilities are largely limited to simple component replacements, making it difficult to thoroughly inspect or fix the system and identify the cause of the problem.

Thus, Boeing’s engineers have been working on the ground to recreate the issue. They’ve tentatively concluded that there may be a problem with the Teflon seals in the RCS. In the worst-case scenario, a forced return could leave Starliner unable to maintain its orientation during re-entry.

While NASA’s protocol allows for a forced return in emergencies, the Starliner hasn’t faced an emergency yet. As a result, Boeing and NASA are stuck in a stalemate. Boeing claims the problem is under control and that they’ve identified the true cause, pushing NASA to approve a return to save the cost of another launch. However, NASA remains unconvinced. Without fully understanding the root cause, a forced return carries too much risk, and NASA isn’t willing to gamble with lives or political fallout. Essentially, NASA doesn’t want to share in the blame or risk with Boeing. As for why the spacecraft can’t return unmanned, it’s allegedly due to some “software issues”.

Now Boeing continues its ground experiments, hoping to present a solution that NASA will accept. They are also trying to fix the software bugs to enable an automatic, unmanned return. However, it seems NASA’s confidence in Boeing is waning, and they’re preparing to use Dragon to retrieve the astronauts.

If Boeing can’t resolve this issue, they’ll need to repeat the test launch. Boeing has already sunk a significant amount of money into Starliner, with delays stretching over seven years. If they can’t complete most of the certifications this time, the Starliner project will drag on even longer, costing even more.

Friedrich Hayek’s Invisible Hand Can’t Reach Space

From any perspective, the development of the Starliner spacecraft has been a disaster, much like many other exorbitantly expensive failed projects in the U.S. in recent years—over budget, significantly delayed, and still unresolved. Boeing is also responsible for the key launch vehicle in America’s moon landing plans, the Space Launch System (SLS). Although it eventually launched, the SLS faced severe delays and budget overruns. Considering Boeing’s track record in other areas, such as civil aviation, military aircraft, and missiles, it’s clear the company has significant management and production issues.

When NASA chose Boeing as a supplier, it wasn’t an unreasonable decision at the time. Boeing’s space division was built from a series of acquisitions of other top aerospace companies after the Cold War, companies with extensive experience in manned spaceflight. No one could have predicted Boeing would turn into what it is today.

The core issue is that space exploration isn’t well-suited for extreme marketization and commercialization. Friedrich Hayek’s invisible hand doesn’t always work well on Earth, let alone in space.

Decades of market-driven economic development have led to a mindset in some circles that marketization and commercialization are the panacea for everything. Some believe that only commercialized spaceflight has value. In the same vein, some pundits argue that China’s space program should follow a similar commercial path, inspired by Musk’s success. However, those who believe that commercial spaceflight can solve all the challenges faced by space programs in either the U.S. or China fundamentally misunderstand market economics.

In reality, much of the current predicament in U.S. spaceflight stems from the market itself.

As mentioned earlier, Boeing’s space division was largely formed through mergers during and after the Cold War. Why did Boeing have the opportunity for such acquisitions? Could it be related to the reduced demand for space technology after the Cold War? The same forces that led to the scaling back of the military-industrial complex in the West, leaving them reluctant to ramp up production for Ukraine, also apply here.

This is undoubtedly a result of market forces.

Of course, some will point to SpaceX as a shining example of the benefits of commercialization. SpaceX is indeed a strong performer, but is it representative of the entire U.S. space industry?

After SpaceX’s cargo Dragon spacecraft succeeded, NASA sought to promote America’s space renaissance through commercialization across multiple sectors. Both the U.S. military and NASA’s lunar exploration efforts have followed this trend. However, aside from SpaceX’s relative success, other companies have had mixed results. For example, the Commercial Lunar Payload Services (CLPS) program, which involves private companies developing lunar landers, has faced setbacks. One lander failed its mission due to a fuel leak, another lander toppled over upon landing, and the most scientifically valuable project, VIPER, may be scrapped due to NASA budget cuts.

It seems that SpaceX’s success is more of an anomaly rather than proof of the success of commercial space models. However, commentators often conflate the two, treating other American space companies as if they were government entities. The reality is quite different.

At this point, it’s worth considering the views of Michael Griffin, who held senior positions at both DARPA and NASA. He once criticized many of the so-called government procurement of commercial space projects as merely changing suppliers, rather than truly commercial ventures. In his view, true commercial procurement should involve buying services that companies already offer, thus driving cost reductions and efficiencies.

Griffin’s point has merit. SpaceX is an excellent supplier, but many of its projects for the U.S. government aren’t exactly commercial in nature. For instance, the HLS lunar lander, designed to be used on Earth and Mars, is not ideal for lunar missions, yet NASA awarded it the contract anyway.

Moreover, Griffin’s idealism doesn’t fully account for the complexities of reality. Space exploration often involves needs that cannot be resolved purely through market economics. For instance, the U.S. National Reconnaissance Office’s (NRO) highly classified reconnaissance satellites, worth as much as an aircraft carrier, are developed in secret. This level of research and development can’t be achieved purely through commercial processes.

Similarly, while the U.S. military’s custom Starlink satellites may be beneficial, can private companies really offer tailored services for planetary exploration? Such projects are not profitable from a purely commercial perspective.

Believing that market solutions can cure all problems is a misunderstanding of history.

Boeing and SpaceX: Two Sides of America’s Market Economy

In an overly developed market economy, the excessive success of one company often means that other companies in the industry will suffer. For instance, while SpaceX has sparked increased investor interest in commercial space, smaller space companies are faring worse when faced with such a giant competitor.

Beyond monopolistic effects, the market has placed overly high expectations on these companies. After the dismal financial reports of smaller American space companies that went public in 2021, 2023 saw the lowest level of space funding in a decade. Although this is largely due to actions by the Federal Reserve, it also serves as a stark irony of the so-called commercialization of space.

Another example is that one of SpaceX’s major advantages is its low wages and long working hours. In contrast, Boeing and ULA, companies often labeled as rigid, still provide decent employee benefits. This situation is undoubtedly part of the market economy, but doesn’t it remind you of certain past events?

What’s even more ironic is this: if market commercialization were truly a panacea, how did deindustrialization in America come about? Deindustrialization is precisely the high-end stage of market commercialization. For example, rumors suggest that the current Boeing incident may have been caused by Indian engineers choosing faulty parts, echoing the time when problems at Boeing’s factories were blamed on Indian and Mexican workers. This type of thinking carries a tinge of racism, implying that if “real” (white) workers were in charge, there wouldn’t be any issues.

Not to mention white people do not inherently possess such superiority, in the context of the U.S. market, why would talented individuals, regardless of ethnicity, choose manufacturing over opportunities in Silicon Valley or on Wall Street? This is also a byproduct of the market economy.

When discussing the decline of American manufacturing, debates often arise about whether U.S. manufacturing has really declined or if it can be revived. But from a market economy perspective, what’s the issue? From a profit-seeking standpoint, manufacturing isn’t inherently necessary—even in a monopoly, profit margins remain limited.

In today’s market, hype is what matters most, easily leading to stock price surges by several times. The push for manufacturing’s return to the U.S. is driven more by the desire to win over Rust Belt voters and to compete with China. But this approach does not quite respect the rules of the market economy.

Now the U.S. plans to retire the International Space Station around 2030 and hand over space station missions to private enterprises. One reason is that the space station’s components are nearing the end of their designed lifespan, and another is the high cost of maintaining the station. These funds could be redirected toward lunar missions.

While many American politicians hope to extend the space station’s life for political reasons, the decision to retire it seems almost final. As for commercial space stations, aside from the technical difficulties, one wonders how they can generate sustained profit in today’s market logic. Will space tourism be enough? The scientific experiments conducted on space stations have little to do with direct profitability.

In truth, there is no such thing as the pure market economy envisioned by those market fundamentalists. Some argue that Boeing’s failure is due to it receiving excessive subsidies and preferential treatment, showing that it is not market-oriented enough. In contrast, SpaceX’s success, they claim, is due to complete marketization.

However, in the American market, government relations are inherently a crucial factor. Boeing, through historical accumulation, has gained advantages in government relations and has chosen to focus its efforts in this area. Within the rules of America’s market economy, this is perfectly fair.

Whether it’s SpaceX’s success or Boeing’s recent string of embarrassing failures, both are products of the market economy. They stem from the same source, and you cannot focus only on the positives while dismissing the negatives as a result of “not being market-oriented enough.” Self-deception won’t solve any problems, whether for Musk or anyone else. Under these rules of the game, no one can exceed the limits of the market economy.

Therefore, the idea of reviving American manufacturing through market means is highly misguided. But if the U.S. was going to revitalize its manufacturing sector with its policy toolkit, the problem is that the efficiency of U.S. policy-making is often much lower than that of the market, making the revival of American manufacturing quite difficult.

Thoughts on marketization also offer significant insights for the development of China’s commercial space sector. Commercial space ventures are not guaranteed to succeed, and in the realm of space exploration, many endeavors driven purely by profit may not yield the results we desire. There are certainly unprofitable areas that require the efforts of government space agencies. While commercial space presents a huge opportunity, it will undoubtedly also bring about numerous challenges. Unfortunately, people usually consciously or unconsciously ignore these realities.

The real world is complex. When we recognize that Boeing’s failures and SpaceX’s successes stem from the same source, we may better appreciate the weight and intricacy of reality. Elon Musk has no unique advantages, and Donald Trump cannot solve the issues facing U.S. manufacturing. Hopefully, we can learn some lessons from this weighty and complicated reality.