Joeri de Wilde: SpaceX is selling a future without planetary boundaries
This column was originally written in Dutch. This is an English translation.
By Joeri de Wilde, Senior Economist at Triodos Investment Management
Financial analyses show that SpaceX is grossly overvalued. Yet the prospect of being able to continue living in the same way remains an attractive prospect for many.
Since its IPO on 12 June, SpaceX has been ranked among the world’s ten largest companies. Based on market capitalisation, it even held fifth place for a while; despite the recent sharp fall in its share price, it still ranks seventh. Not bad for a company that reported a loss of USD 5 billion last year. By way of comparison: SpaceX’s market capitalisation is now roughly on a par with that of Taiwan Semiconductor Manufacturing Company (TSMC), which made USD 55 billion in profit last year.
To justify its current valuation, there must therefore be exceptional profit potential. According to SpaceX itself, this is certainly the case. The company claims to have identified the largest Total Addressable Market (the potential total market for a product or service) in human history: USD 28.5 trillion, more than a fifth of global gross domestic product. Of this, USD 26.5 trillion is expected to come from AI applications, primarily for businesses.
The appeal of a narrative
However, various analyses suggest that these estimates are extremely optimistic. Based on available market data, only 1% of the assumed potential market appears to be a more realistic estimate. And based on the current valuation, even the company’s only profitable division, Starlink, would have to eventually account for 80% of the global market for internet services.
Nevertheless, investors remain enthusiastic. This is probably not because of the figures, but because of the accompanying narrative told by founder Elon Musk. Through SpaceX, he paints a picture of a future in which artificial intelligence, space colonisation and technological innovation will enable us to transcend the limitations of Earth. AI data centres in space, millions of satellites orbiting the Earth and, ultimately, human settlements on Mars. Given the current geopolitical tensions, the increasingly palpable climate crisis and growing uncertainty, this is an attractive prospect for many.
The happy few
But whether space colonisation would actually relieve the pressure on Earth is highly questionable. Marjolein van Heemstra, author of the essay What is space worth, rightly argues that Musk’s ideas ‘are just as capitalist and destructive as those of our colonial history, and therefore rather old-fashioned’. It is indeed difficult to see why the appropriation of space by the richest man in the world would solve the fundamental problems on Earth. We would do well not to view space as a distant destination to flee to or a new territory to exploit, but as a domain ‘that is closely intertwined with the Earth’s ecosystem and reflects the social problems down here.’
But whether they succeed or not, Musk’s plans have made him an extraordinarily rich and powerful man. SpaceX’s flotation made him the world’s first trillionaire. Together with a number of like-minded individuals, he is gaining ever greater control over crucial infrastructure and over communication and information systems. SpaceX’s market value rests largely on expectations of a distant future. As long as investors continue to believe in it, that promise translates into ever-increasing financial and political clout for Musk.
Happy many
Coincidentally, just before SpaceX’s IPO, the Global Justice Report was published, authored by, amongst others, leading economist Thomas Piketty. This report also paints a picture of the future, albeit a fundamentally different one: by the year 2100, climate change and extreme inequality have been curbed. 90 per cent of the world’s population has seen their income double, works far fewer hours and benefits from a liveable planet. And virtually everyone is better off when not only income, but also leisure time and a habitable Earth are taken into account.
Unlike Musk’s vision of the future, Piketty’s plan does not rely on a technological leap forward that removes all barriers. The productivity growth on which the scenario is based is derived from historical trends. Yet Piketty’s thoroughly calculated plan for rapid decarbonisation, shorter working hours, reduced overconsumption and a fairer distribution of income, wealth and power is dismissed just as often as Musk’s as unrealistic or even dangerous.
This raises the question of whose interests are at stake here. For the world’s wealthiest, such as Musk, such reforms are indeed unattractive. Unlike the vast majority of the population, they would be relatively worse off as a result. It is therefore not surprising that it is precisely from this quarter that speculative visions of space colonisation and unlimited economic expansion are presented as realistic.
It is up to us to choose which narrative we place our trust in. A vision of the future that is primarily the dream of the richest man on earth? Or a vision of the future based on what is physically, socially and economically possible, and from which virtually everyone stands to benefit.
