Imagine you start an asteroid mining company. It's tough at first. You know that profits are uncertain and, if they do ever materialize, it will be in five years at the earliest, maybe even ten. It takes a long time to find investors willing to trust you because several similar ventures with almost identical business models have already gone bust and the investment horizon is far too long for many. Nevertheless, you persevere, and you manage to convince a few investors.

You hire astronomers to identify asteroids with valuable metals such as platinum. You send unmanned probes to several near-Earth asteroids to collect samples. The first few turn out to be of little value. The costs are too high and outweigh any potential profits.

Then comes the breakthrough: You find a suitable asteroid, and you succeed in bringing platinum group metals all the way back to Earth. But then a group of countries files a lawsuit against you. They are all signatories to the so-called Moon Agreement of 1979, formally known as the "Agreement Governing the Activities of States in the Moon and other Celestial Bodies," which came into effect in 1984. The treaty applies not only to the moon, but to all celestial bodies, including asteroids.

Some of these countries are now demanding that you hand over a significant share of your profits to people who have never had anything to do with asteroid mining—many of whom couldn't even say exactly what an asteroid is, let alone launch rockets into orbit. They invoke Article IV, Paragraph 1, and Article XI, Paragraphs 1 and 3, of the Moon Agreement, which state: "The exploration and use of the Moon shall be the province of all mankind and shall be carried out for the benefit and in the interest of all countries, irrespective of their degree of economic and scientific development. Due regard shall be paid to the interests of present and future generations as well as to the need to promote higher standards of living and conditions of economic and social progress and development in accordance with the Charter of the United Nations." So much for Article IV. 

Article XI states: "The Moon and its natural resources are the common heritage of mankind. Neither the surface nor the subsurface of the Moon, nor any part thereof or natural resources in place, shall become property of any State, international intergovernmental or non-governmental organization, national organization or non-governmental entity or of any natural person."

The Moon Agreement, since signed by 22 countries and ratified by 18, was developed to work in the same way as seabed law, and a delegate from Sri Lanka explained in simple terms what the intention was: "If you touch the nodules [valuable mineral deposits on the seabed] at the bottom of the sea, you touch my property. If you take them away, you take away my property." 

The plaintiffs now demand their "rightful share" of your profits, arguing that the platinum belongs not to you, but to all of humanity—and especially to developing countries, many of which are not yet engaged in space exploration. Should the plaintiffs win, neither you nor any other company would ever be able to attract investors again. Asteroid mining would be dead and buried after this very first attempt.

Mars Without Property Rights

Suffice it to say: Investors can remain confident, as a lawsuit based on a treaty signed by only a small number of countries is unlikely to succeed. But consider a second thought experiment: 

It is the year 2075. The first settlements on Mars have been successfully established, housing several thousand people and many more robots. The settlers are busy building underground houses and domed communities, a hospital, and other facilities. But there is a problem: Unlike on Earth, there is no private property ownership on Mars. The settlers have repeatedly attempted to establish private property rights and even create a digital land registry, but legal experts keep putting a stop to their efforts. This time, the problem is not the 1984 Moon Agreement, but the 1967 Outer Space Treaty (OST), Article II of which states: "Outer space, including the Moon and other celestial bodies is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means."

And Article I of the treaty states that the use of outer space "shall be carried out for the benefit and in the interest of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind."

In this case, the argument that the Moon Agreement has limited signatories cannot be made, as 117 countries are parties to the Outer Space Treaty—including all major spacefaring nations, such as the United States, China, and Russia—and another 22 are signatories. 

The plaintiffs assert that Article II of the Treaty prohibits not only the national appropriation of celestial bodies, but also any form of private property ownership. They further contend that Article I should be interpreted as mandating the equitable sharing of proceeds from resource extraction among all nations—an interpretation that has sometimes been put forward in the real world.

For now, let us assume their interpretation is correct. There are no property rights: Nations cannot own land (which they could potentially lease), nor can private entities, since any form of appropriation by states or private individuals is prohibited. Could such a society exist, let alone be economically successful? Of course not. 

Most successful countries permit the private ownership of land. Where this right does not exist, it is at least possible to buy usage rights from the state for 50–99 years, which can also be resold—as in Vietnam and China, for example, or (regarding the 99 years) in Singapore. North Korea is the only country where even that is not possible. Property ownership on Mars would therefore be most comparable to that in North Korea, a country plagued by widespread poverty where people go hungry after every poor harvest. Do you believe a settlement on Mars could be successful if its economic model mirrored that of North Korea?

The Legal Debate Over Private Ownership in Space

The decisive factor in determining whether private property rights apply is Article II of the OST. Legal scholars have put forward differing viewpoints over its interpretation. The primary area of contention revolves around the "prohibition of appropriation" and whether this applies only to the states expressly mentioned in the treaty or also to private individuals and companies not mentioned in Article II.

In Outer Space: Problems of Law and Policy, Glenn H. Reynolds and Robert P. Merges contend that: "Being prevented from claiming sovereignty and exclusive property rights located in the space environment for themselves, it will be argued that States are also prohibited from granting quasi-sovereign and exclusive property rights over such areas and resources to those natural and juridical persons which are subject to national jurisdiction and which are created through international agreements."

Those who argue that appropriation by private individuals is prohibited, also assert that private ownership would infringe upon the freedoms of access, exploration, and use guaranteed to all states in Article I. If private property rights existed, argues space law expert Marcus Schladebach, this would impinge upon the freedoms granted to all states, and the legal status of outer space as a "global commons" beyond territorial sovereignty would be jeopardized. If national appropriation is prohibited, Schladebach maintains, then private appropriation must be prohibited all the more. 

In contrast, other legal scholars argue the exact opposite: National sovereignty stops where outer space begins, which means that national appropriation of the moon, other planets, and asteroids is forbidden—but not the private ownership of celestial bodies. This interpretation rests on the legal doctrine expressio unius est exclusio alterius: the explicit mention of one thing implies the exclusion of others. If, for example, a statute or treaty expressly mentions one or more things of a class, it is only reasonable to conclude that others of the same class remain unrestricted by that statute or treaty. This principle serves to interpret legal norms and supports the assumption that things not mentioned were excluded by deliberate choice, not inadvertence.

Other legal scholars, however, argue that while it is not forbidden for private individuals or companies to claim property, it is a crime for a nation to recognize such a claim publicly. This interpretation, however, confuses the terms "recognize" and "confer," as the legal scholars Alan Wasser and Douglas Jobes explain: "'To recognize' means to 'acknowledge the existence, validity, or legality of' or 'accepts, acquiesces to, decides not to contest.' In contrast, 'to confer' means to 'grant (a title, degree, benefit, or right).'"

They go on: "If a nation claims the right to confer, give, or grant title to lunar land, it could be violating the ban on national appropriation. But if a settlement is established and the settlers claim private ownership of land around their settlement, and a dozen of Earth's nations recognize the settlers' claim, it is not reasonable to say that all dozen nations are trying to appropriate the land and thus are violating the Outer Space Treaty."

Still others argue based on various provisions of the Outer Space Treaty, which, for example, hold states liable if a rocket launched by a private company from their territory crashes in another country. Furthermore, they claim, states are obligated to authorize and supervise the activities of private companies located within their territories. From this, they conclude that, even if not explicitly stated, the Outer Space Treaty prohibits private appropriation. 

Wasser and Jobes rightly object to this: "But the treaty clearly does not contain any language explicitly saying that states may not authorize their citizens to do anything that they themselves cannot do, contrary to what some authors appear to assume. The treaty does not say that what is prohibited to states is therefore prohibited to private entities, nor that what is prohibited to the regulator is therefore always prohibited to the regulated. A baseball coach gives 'authorization and continuing supervision' to his players. Does the fact that the coach is not allowed to run onto the field to catch a fly ball mean the players he supervises cannot either?"

The wording of Article I of the Outer Space Treaty states that outer space is "the province of all mankind" and that celestial bodies should be "free for exploration and use by all States without discrimination of any kind on basis of equality" and "there shall be free access to all areas of celestial bodies." Critics argue that this turns space into a public good whose owner is everybody and nobody. 

The only relatively undisputed point is that the OST is ambiguous in several areas, particularly concerning private property ownership and the role of private companies. This ambiguity stems from the priorities of the United States and the Soviet Union at the time of the OST's drafting. Their primary focus was on preventing an arms race in space and the deployment of weapons of mass destruction there. The concept of private space companies, including business models that would allow private companies to engage in asteroid mining, was a distant prospect in 1967. Consequently, the issue of private ownership was secondary for both nations. However, the Soviet Union would have preferred to prohibit private companies in space during the treaty negotiations, a proposal the United States rejected. So, they did what national governments sometimes do in joint international declarations or treaties: The language was kept vague and omitted contentious issues, which is what leads to the difficulties interpreting it today.

How Nations Are Writing Their Own Rules

Many years later, some countries felt the need to clarify the issues that had remained ambiguous at the time. We have seen that—unlike Article II of the Outer Space Treaty—Article 11, paragraph 3 of the Moon Agreement explicitly prohibits private ownership in outer space. 

The Moon Agreement, which not only explicitly prohibits private property but, according to some interpretations, even demands an egalitarian distribution of the profits generated by private users, breathes the spirit of socialism. "At its heart," says space analyst and consultant Rand Simberg, "the Moon Treaty was redistributionist in nature, taking from those who were willing to take risk and invest capital in developing new resources and giving to those who did not."

Most countries refused to sign it, albeit for different reasons. This raises the question: If the Moon Agreement merely precisely regulated exactly what the Outer Space Treaty intended—that is, if the Moon Agreement simply served as a concretization of the Outer Space Treaty—then why did 121 of the 139 states that signed the Outer Space Treaty refuse to sign the Moon Agreement? Oddly enough, this question is rarely asked.

What can be done when a treaty, in this case the OST, is open to so many different interpretations? First, it could be renegotiated. For example, in 1999, Ezra Reinstein argued: "What is needed is an amendment to the Outer Space Treaty, one that both clarifies and expands property rights in space." First, Reinstein insists, it must be clarified in the amendment that the formulation, "'for the benefit…of all countries' is a moral exhortation and not a loophole through which the United Nations can dispossess a private party of his site." The fact that Reinstein considered these clarifications important enough to include in an amendment once again underscores the vagueness and legal uncertainty of the Outer Space Treaty. 

However, this is just one potential avenue and probably not a likely one. In recent years, the U.S. has adopted a different strategy, one that is certainly a step in the right direction: If a treaty is subject to varied interpretations by different countries, it increasingly becomes the responsibility of national legislators to interpret the treaty. And this is what has happened in recent years, especially in the United States, where Sen. Ted Cruz (R–Texas) and then-Sen. Marco Rubio (R–Fla.) championed a Commercial Space Launch Competitiveness Act, signed into law by President Barack Obama in 2015. This gave all U.S. citizens and companies the right "to possess, own, transport, use, and sell [any] asteroid resource or space resource obtained in accordance with applicable law, including the international obligations of the United States."

In April 2020, President Donald Trump went a step further than Obama by signing an "Executive Order on Encouraging International Support for the Recovery and Use of Space Resources," explicitly rejecting the notion of space as a "global commons." The Moon Agreement, which the U.S. had never signed anyway, was also explicitly dismissed.

This executive order was followed just one month later by NASA announcing the Artemis Accords, officially called "Principles for Cooperation in the Civil Exploration and Use of the Moon, Mars, Comets and Asteroids for Peaceful Purposes." One key element of the Accords is the introduction of what are referred to as "safety zones"—geographically defined areas around a station or activity on the moon or another celestial body. These zones are not intended to contradict territorial appropriation, but rather to serve the practical implementation of the principle of peaceful use and to prevent potential conflicts arising from activities that are too close to one another. Section 10 of the Accords explicitly states: "The Signatories affirm that the extraction of space resources does not inherently constitute national appropriation under Article II of the Outer Space Treaty, and that contracts and other legal instruments relating to space resources should be consistent with that Treaty."

The Accords were initially signed by eight nations: the United States, Australia, Canada, Italy, Japan, Luxembourg, the United Arab Emirates, and the United Kingdom. Since then, the number of signatories has expanded to 67. Russia and China, however, have rejected the accords and criticized their interpretation of the Outer Space Treaty. China, in particular, is concerned that the United States may be using the Artemis Accords to assert sovereignty over lunar resources.

While the Artemis Accords were a step forward, the language suggesting that space mining does "not inherently" violate Article II—which prohibits "national appropriation"—has again created ambiguity, as space law scholars Michael Byers and Aaron Boley point out in their book Who Owns Outer Space?: "Is Space mining sometimes 'national appropriation' and sometimes not? Was Space mining originally not 'national appropriation,' but capable of becoming understood as 'national appropriation' as understandings and interests change? Can a term such as 'national appropriation,' which has no 'ordinary meaning' because it is not used outside the Outer Space Treaty, 'inherently' mean anything?"

Designing a Space Economy That Actually Works 

What should the goal be? Without full private ownership, there will be no colonization of Mars, and the economic exploitation of asteroids and the moon will also be difficult. And who should own land on Mars or the moon first? Various people, including the American Dennis Hope, have made a business out of selling land on the moon without being able to clearly explain why they consider themselves entitled to do so. Space law expert Virgiliu Pop has written an entire book with the delightfully evocative title Unreal Estate: The Men Who Sold the Moon, in which he establishes that from the 1890s to the present day, numerous individuals have claimed ownership of the moon or other celestial bodies—and found plenty of buyers for their properties. It should be clear, he writes, "that claims to extraterrestrial real estate unsubstantiated by physical acts of possession are not valid means of acquiring ownership….A mere claim is not tantamount with ownership—or, in plain language, claiming does not mean owning."

But apparently, the desire to claim ownership of property in space is so strong for some that it overrides their reason. At the same time, it's also good news to see so much interest in plots on the moon. Six million customers are said to have bought from Hope. These transactions offer hope that there will be sufficient interest when plots of land do actually become available on the moon or Mars, although they will be much more expensive than Hope's offerings. 

So, who should have the right to acquire property in space? My answer: those who have the financial means to get there, develop, and use the land. For instance, if SpaceX succeeds in reaching Mars and starts to build permanent settlements on the red planet, then the ownership of land should go to SpaceX first. Not of the entire planet, of course, but of a practicable area, for example the size of Singapore. The surface area of Mars is 200,000 times that of Singapore, so SpaceX would initially only own 0.0005 percent of Mars. That would be enough to develop multiple settlements, but not so many that others would no longer have a chance.

SpaceX could fund its flight and development costs by listing the land on Mars in a real estate investment trust (REIT). The price would then be determined by the market. Most people would buy shares not to live there themselves, but in the hope of value appreciation. As an incentive for people to settle on and develop Mars, colonists could be offered stocks at a preferential price as a "golden hello" once they reach Mars and spend at least five years there.

When the Chinese reach Mars, they may assert their claim to plots of land on the planet according to the idea outlined above, and this would probably remain the property of the Chinese state. But it is likely that they would adopt the customary practice in China of selling hereditary building rights for a period of 50–70 years. 

However, we would need to tread carefully: If the Chinese were the first to reach Mars, it is possible they would declare the entire planet as belonging to China. This would constitute a clear violation of Article II of the Outer Space Treaty, but according to Article XVI, the treaty can be terminated with one year's notice. The potential response from the United States in such a scenario raises concerns—would it lead to war? Or sanctions? Therefore, it would be prudent to negotiate a new space treaty before it is clear who wins the new space race. Moreover, competition for premium real estate on Mars, such as in areas with anticipated water sources or suitable lava caves for settlement, would likely ensue. It could be similar on the moon.

As far as asteroids are concerned, at least in the case of smaller celestial bodies, ownership could be granted to those capable of mining and extracting resources such as water and platinum. The best option would probably be to list the entire asteroid on the stock exchange as a REIT, which would fund mining operations and enable shareholders to receive dividends from the extraction of raw materials. Even before a single dollar was earned, or a single penny in dividends could be paid out, this would allow a market for trading in such stocks to develop. 

While this is all just a thought experiment, it illustrates the direction things would need to go in. Whether these ideas are realistic or if different concepts will prevail is something no one can know today.

Why the Case for Space Socialism Doesn't Work

One thing, however, is absolutely clear: As long as there is no legal certainty for investors, they will not invest. To return to the starting point: Who will invest in asteroid mining if, as some envision, they are expected to share the profits with others who have taken no risk themselves but simply want to profit as free riders?

The best-selling authors Kelly and Zach Weinersmith cite the Moon Agreement as a model in their book A City on Mars: "The Moon Agreement would have set up the solar system as a particularly communal form of res communis, known in international law as 'common heritage of mankind' or just 'CHM'…a commons collectively owned by all of humanity. If the Moon were under a CHM framework and you wanted to use Moon water, you would have to compensate all of humanity by some means." 

They envision something like a large international planning authority to regulate how the proceeds are distributed: "An international regime to oversee exploitation…a big entity established by states that were parties to the Moon Agreement looking over things, and in particular making sure developing nations got a fair cut." This international regime would regulate both "where people are allowed to set up shop and what they're allowed to do with the local resources once they get there. It wouldn't be dynamic, it wouldn't be like a science fiction novel, and frankly it would be very slow and bureaucratic and boring." In this vision, there would be no room for private companies, no room for the formation of fair prices in the market, no room for entrepreneurial ingenuity. It is space socialism, doomed from the start. 

On Earth, only capitalism has worked, but for a few decades, socialist systems without private property were also able to survive, albeit at the cost of widespread poverty, authoritarian rule, and famine. In space, where the challenges are immensely greater and living conditions infinitely harsher, socialism would be doomed from the outset. 

The question of whether establishing private property rights on celestial bodies will be possible, and whether Martians will opt for a capitalist or socialist system, is essentially the same as asking whether colonization is possible at all. Even if Martian settlers were initially prohibited from establishing property ownership and introducing a capitalist system, they would inevitably have to do so sooner rather than later anyway, because they simply couldn't exist on the red planet otherwise. I'm sure the Martian settlers won't care all that much about a space treaty signed over 100 years ago and would establish private property rights. And how would Earth's governments respond? Would they wage war against the Martian settlers, or kill them with sanctions?

This article is adapted from New Space Capitalism: The Entrepreneurial Path to the Stars by permission of Skyhorse.

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