To Win the Moon, Divide the Labor

By Alexander William Salter

Thursday, July 16, 2026

 

This April, four astronauts sailed around the Moon aboard NASA’s Orion capsule — the first crew to make that voyage since 1972. Weeks later, on the Texas coast, SpaceX launched the maiden flight of Starship Version 3, a machine bankrolled not by Congress but by private capital, on which the company has now staked more than $15 billion of its own money. The commercial space revolution and the return to the Moon have arrived at the same moment. But can private enterprise coexist with public imperatives?

 

The answer is a resounding yes. We need both business and government to get the most out of space. In fact, some basic economic theory can help us understand the comparative advantage of each.

 

There are two major considerations. First, can space-related outputs be sold to a paying customer? Second, are public policy goals a question of technical possibility or financial feasibility? Answering these questions gets us far along the path to a strategy for American space supremacy.

 

Let’s start with space services that are difficult for markets to price. Some of the most valuable work in space yields benefits that are non-excludable. That’s an economic term meaning the benefits accrue to parties whether they pay for them or not. A space observatory that warns of solar storms — one recent tempest cost American farmers half a billion dollars due to scrambled GPS signals — helps everyone alike. Billing people separately for the service is prohibitively difficult. Economists would say the transaction costs are too high.

 

A related yet distinct category is the group of space assets too critical to fail. For example, in a planned lunar settlement, the core habitat and primary power system ought not depend on continued private funding. Otherwise, bankruptcy or other difficulties for-profit firms face would cost lives and invite geopolitical disaster. Better that the public sector foot the bill for this one.

 

And then there’s the highest-stakes issue of all: outer space’s basic governance framework. As humanity extends its reach into the stars, will America or its authoritarian rivals write the rules that govern the final frontier? Public international law makes this a basic consideration for states. The private sector can play a supporting role, but must be in the driver’s seat. Unless we are willing to abandon the foundational tenets of space law, nations, not corporations, provide the ultimate oversight.

 

This is an important list of governmental functions. But it’s also fairly short. There’s ample room for market forces on the Moon. In fact, ongoing developments in the commercial space sector show the power of property rights, prices, and profits in delivering both economic prosperity and national wellbeing.

 

Launch is the most obvious example. A little more than a decade ago, getting a payload to orbit required concerted and costly investments by sovereign actors. Today, it is much closer to a basic transportation service. SpaceX alone has cut the cost of orbital access by roughly a factor of seven, from an average of $18,500 per kilogram before reusable rockets to $2,700 per kilogram currently. Market forces and the profit motive did that. Government bureaucracies and the culture of cost-plus contracts could not have.

 

Denigrators of SpaceX frequently accuse it of being dependent on government funding, but a quick glance at its finances shows this is not true. Starlink satellite internet represents approximately 60 percent of SpaceX’s revenues. In contrast, only about a fifth comes from Uncle Sam (including NASA and the Department of Defense), and it is hard to argue that the U.S. does not get its money’s worth. There’s no getting around the fact that SpaceX is a genuine capitalist success story.

 

Contemplating increased human activity on the Moon, lunar resource extraction, manufacturing, and secondary power systems can all be supplied by for-profit entities. The rule is simple: once feasibility is settled and a paying customer appears, the job is best done by people risking their own fortunes, not the taxpayers’.

 

Between these poles lie some tricky and interesting cases: space projects that are potentially realizable but not yet proven, with goods and services that are sellable someday but not today. Even though private enterprise can supply many services, we must remember that governments will still be the primary customer for the foreseeable future. This is where public-private partnerships shine. They already have a long story of success in American space policy.

 

When NASA needed cargo, and then crew, carried to the space station in the era after the Space Shuttle, it did something revolutionary: It became an anchor customer, offering to buy the service while letting companies own the hardware and raise the capital. Commercial Crew put Americans in orbit for a fraction of government launch costs and ended our embarrassing dependence on Russian rockets. The same model now lands robots on the Moon and funds competition between SpaceX and Blue Origin to build landers to put Artemis crews on the Moon. There is a clear progression in the public sector’s role, from anchor customer to referee and overseer, nurturing nascent markets and then stepping aside as it matures.

 

Failing to allocate tasks properly between the private and public sectors can be incredibly costly. One error is to keep the government building what the market has already proved it can do better. This is the reflex that keeps NASA’s Space Launch System, a $4-billion-a-launch rocket, in operation — mainly because it employs the right people in the right congressional districts. The second is to hand private firms a contract that will never pay out, expecting companies to finance permanent lunar activities out of revenues that do not yet exist and may not for decades.

 

A permanent lunar settlement will be neither wholly public nor wholly private. Writing for the Center for Strategic and International Studies, space entrepreneur and policy veteran Charles Miller proposes a public-private “authorities” model — think Port Authority of New York, not abstract governmental power — for lunar development. It’s an intriguing option with a proven track record that takes the assignment of private and public responsibilities seriously. Authorities are publicly directed and overseen, but largely privately operated. That includes raising private capital by issuing bonds. These governance structures are used all over the world “for transportation projects, urban renewal projects, electric, water and gas projects, to create school districts and public hospitals, and for flood control.” Why not use them to develop the Moon, too?

 

The next ten to 20 years are the most important for American space policy since the Apollo era. With hostile powers, namely Russia and China, increasing their civil and military operations in space, we can’t afford to lose a step by getting the economics of space governance wrong.

 

Sort the tasks correctly, and Americans can return to the Moon to stay. The market forces that propelled us deeper into space than ever before will be an essential ingredient. But there is more to space supremacy than dollars and cents. Sort the tasks wrong by overlooking the government’s comparative advantage, and we will watch our rivals leap ahead of us.